What if the newest hottest thing in shopping isn't to buy, but just to try?
Free tastes, test drives and no questions asked returns are transforming malls into showrooms for the trial economy.
It's a win-win on the surface.
Stores build trust and you feel zero risk.
But when does trying stop being a preview and start being the whole show?
And what happens when the free samples run out?
After that, three stories from our previous week of shows that have absolutely nothing to do with each other.
Or do they?
The full circle draws the invisible line connecting one to the other to the other.
We're live from our studios in Beijing.
This is Roundtable.
I'm Steve.
Thank you very much for being with us today.
And for the show, I'm with Yishun and Yishan.
First up.
Walk through a shopping district today and you might not even need to stop for lunch.
Between cake samples and roast duck bites, mmm, yum, free tastings are everywhere.
What looks like a lively food carnival, though, is actually a strategy.
It's the rise of the trial economy.
This model try before you buy or return if you don't love.
It is reshaping brick-and-mortar retail and online shops too.
It's not just about lowering risk and building trust.
It's about selling an experience and a feeling.
But can sampling truly drive meaningful purchases?
Does it increase sales?
And if it does, at what cost?
As businesses gather more data on what we try and also why we return?
Are we trading privacy for convenience and control for a free sample?
Yushan and Yishan, good afternoon to you both.
But before we start, I mean, who doesn't love a free sample?
Yeah.
Usually that happens and make me the happiest when I pay a visit to one of those.
You know, the gigantic supermarket, Costco and even Fresh Hipple and all of those.
You walk around with empty belly and you walk out of it with a full belly.
Yeah.
Yeah.
It's a genius way to have a little bit of lunch while you're doing your shopping.
All right.
So let's get into it.
So trial economy is the term that we need to tackle first.
What's that all about?
Yeah, I see that as a commitment of purchase that's wrapped up with smaller samples and trials.
So this is what the business do nowadays.
Instead of asking you to commit to a purchase, they invite the consumers to try first, to taste, to test, to wear or even experience a product before deciding whether it's worth the money.
So by lowering the cost and risk of trying or just buying something.
Shopping nowadays are made to make you feel less like a gamble and more like an invitation.
That's another way of looking at shopping.
It's kind of treating these trials as a low-cost advertisement and promotional tool.
Yeah, and in real life we see a lot of free samples, including foods like how I mentioned, in the supermarkets.
And also trial-sized products, especially in skincare and makeup industries.
We see a lot of mini-sized powder or mini-sized eyeshadow stuff like that.
And then for demo classes, especially for online classes.
Nowadays, rather than talking up a product with endless ads Brands nowadays, they let the experience speak for itself and trust that a good try will naturally lead to a buy eventually.
Yeah.
And the demo classes that can come in different shapes.
Right.
So I've seen the ones and I think it's very common even internationally, like at the gym.
Yes.
If you sign up for your membership, you'll get one free trial with the personal trainers.
Yeah.
Yeah.
And of course, there is the hope is that you'll like it and you'll sign up for more classes.
Sometimes just a cheaper one that you can experience the whole setup in the gym.
And then with a really, really low price for around like 10 yuan for one day or 10 yuan for a whole week of experience.
And then there is just so many ways or manifestation in terms of these trial economy, food and beverage, as we mentioned before, retail and apparel.
Like iterations include like try at home before returning policies where clothing brands encourage customers to just take their items home.
Of course, you need to pay for that first and then offer extended return.
Windows up to like 30 days to bypass that kind of fitting room cues or something like that.
That's for me.
That's a little different than the try before you buy policy because that's just for me.
That's a return policy.
You're paying for the product in full, right?
You're paying 100% of the price.
It's just, you can bring it back if you're not happy with it or it doesn't suit your needs, or what have you?
But the try before the buy model is a little bit different.
It doesn't require any payment whatsoever.
And that's why, for me, the true examples of this would be you know, in the opening I said roasted duck bites, you know, outside.
There's one nearby, actually a duck restaurant, where they'll hand out samples to the people walking by on the sidewalks.
And I always feel like don't take it, don't take it, don't take it.
Because I know how delicious it is.
I've eaten there before.
But there's no investment on the behalf of the customer or from the customer to try out the product before you make the purchase.
And also for the shops and the businesses.
They had this in mind when they designed this whole.
Rule of the game is that part of that free sample is definitely going to be quote unquote, wasted in some ways, because it's not always lead to a full purchase afterwards.
Or come back to the restaurant.
It can't guarantee that, but that's a good way to promote.
Sure.
So this applies to offline stores, of course.
The examples would be the restaurants.
You could also talk about bakeries.
Bakeries do this a lot, too.
There's a little shop not far from us that sells things like chestnuts and other small snacks.
Yeah, they'll be out on the sidewalk, often handing out chestnuts to people, which are tasty and delicious.
So there's the offline trials.
Then there's the online trials, too.
And I think Daobao might be a good example of that.
They offer these kind of policies of try before you buy and then you can just like place this order of this product that you want to buy and you don't need to pay anything for that.
Yeah, actually different platforms offer the policy differently for Taobao and JD.com.
I believe it's about, sorry, for Taobao and Pinduoduo.
Actually, they allow a 15 day of time period for you to make the final decision of whether I'm paying it and keeping this product or returning the product as soon as possible without paying anything.
Right.
So you can actually get.
The product sent to your house.
First, yeah, before you pay.
And then you kind of check it out, make a decision, and then you go back to the platform, to the app, and you click the received button.
Yes, that's when the reception is done and the confirmation is made and your money flies to the business side.
Yeah, so that truly is a try before you buy.
You mentioned the sample purchases as well.
This is somehow related, but also just a little bit different.
But I've never heard of this before.
You said the makeup samples or maybe perfume would be another example where instead of how does this work?
Instead of buying the full sized bottle, you'll buy just a little tiny one at a fraction of the price.
Yeah that's, I think, another big part of the sample economy or trial economy, because people will just intentionally buy these sample size cosmetic products or a lot of things.
Because, first of all, they can buy these mini versions of some high-end brands at a fraction of the cost, which is, I think, more affordable to a lot of people who would like to try maybe, if this color is suiting my skin or that product is really suitable for anything that I am wearing, or something like that.
So that is a good, first of all, starting point.
And then some people will intentionally, as I said, to buy these mini size versions of these products because they don't think that full size is something that they can actually use all of them.
Yeah, and it's a good idea for luxury brands, because those are often really expensive purchases.
So if you get a little tiny bottle of something, then that can be an incentive for a later purchase.
So here's the time when I get honest about this whole trend, because I have a bag that just for the samples.
Yeah, right.
And you know what?
Because sometimes I delay the using of certain products.
And I believe it's the thing for a lot of consumers out there.
We delay the using or just use it for certain seasons.
Vacations.
Yeah.
Yeah.
Vacations, too.
And business trips.
And.
And then sometimes the bigger bottles or whether bigger product size, they go bad or overly oxidized as you don't use it a few months later, or just maybe a few days later.
This makes samples seems like a good option to always use freshly, and you can finish it within one week and then start a new one soon after.
Well, we'll come back to the potential problems in just a sec.
But first I want to ask why is this so effective? in getting people to actually spend money.
These free tastings, free try-ons, free giveaways.
Yeah, for businesses it is a kind of high efficiency tool for attracting traffic and also acquiring customers, right?
By offering these samples or trial run, these businesses can lower consumers' psychological defenses and build initial trust because they're you're getting something free right yeah and you got attracted to the store maybe they just want you to get into the store that's all that's the cost for these samples that's they include these costs into their maybe marketing or promotional cost budget so the only purpose is not letting you buy it's making you to be in the store and then they increase the chance that you buy some I'm smelling a trap here.
Well, I mean, that is kind of one perspective.
I remember visiting one of the popular hutongs here in Beijing, and a lot of the shops there will give out free samples.
One that stood out to me, I remember it because I did make a purchase, was the tea shop.
They're out on the street.
They made you try each tea, right?
And they give you the little cups, the paper cups, and they use the most colorful, delicious-looking teas too, right.
And then you try it, and it's amazing.
And then you go inside, and yeah, you make a purchase.
You see, that stimulates a desire to impulse-buy things, especially if you're traveling.
And, well, this tastes good.
Let's just get a pack.
1,000% true, because I didn't visit that hutong. with the idea of buying tea, but I left with tea.
Their plan worked.
In the meantime, these trials.
We see it also as a low-cost, high-impact marketing mechanism too, and that the free or low-cost trials function like inexpensive advertising for the brand and it's also like a relatively lower-cost option for consumers to enter and to try out as well.
It's with a minimal cost and the promise of experiencing well-known or higher-end brands.
For my case is always for skincare.
For a fraction of the full price, it's a major draw for many of us.
And the advertisement, I can even remember how they marketed it.
You get a 30 milliliter of full-sized product with 500 yuan or even higher.
But with a sample of 10 milliliter, that only costs you maybe 30 or 50 yuan.
And three of those samples can equal the amount of product, of a full-sized sample product in the first place.
So why not?
A lot of people just get like people like me just get trapped by that loophole and and we think we're getting you know, we're taking the advantage from the brand.
It's hard to call it a trap though, because ultimately, it is your decision as the customer, whether you want to make the purchase or not.
Uh, benjamin davis is the founder, um And CEO of Try Now.
I found this and I thought it was really applicable to what we're talking about today.
Try Now, it's a try before you buy software platform.
It's for Shopify merchants and it allows customers to order products, try them at home.
And for a set period of time, it's usually about 70, seven days, excuse me.
And the customers only pay for the items if they keep them.
And, according to him, it enhances e-commerce conversion rates by reducing friction and allowing customers to try items before having to commit to that.
So when we talk about conversion rates, you know people will put stuff in their cart, but oftentimes that cart will remain full and they'll exit the platform without making a purchase.
Yeah.
But when you can try it for a week at zero cost, according to him, then it's a really really successful way of doing business.
Yeah, it reduces that kind of decision making risks and also costs, making consumers first of all taking the first step so they can test the waters with small amount of money or time before committing to a full.
I watched an interview with him as well because I was so kind of curious after I was looking at his website.
And these are some of the quotes from the interview.
If you wouldn't pay up front to try something in a store.
Like a fashion store.
You try on a t-shirt or something before you buy it, then why would you do that online?
That was one quote that stood out.
Another one customers don't want to pay in the face of doubt, so try before you buy.
Removes that hesitation that people might have and therefore increase the conversion rates.
Another one, brands need to reduce reliance on discounts.
So try before you buy.
It is a better conversion driver than applying discounts to the products.
I thought that was interesting too.
Yeah.
And in a way, it's changing how people view shopping and think about what to buy nowadays.
Because previously, for example, when I was trying to get setting powder, Instead of just going online and buying a full package product, I just look in each of the brands that I usually use and see who offers samples.
If there's one that offers cheap samples within 15 yuan, then that's the one.
I'm going directly to the samples.
So it works, right?
It works, yeah.
All right, so that's the effective side of this strategy.
But what are some of the things that can go wrong?
So when we hear the word like free or trial, we usually think we're getting a great deal right.
But as, like the saying goes, there's no such things as a free lunch, or in chinese we have a more localized one, it's called there won't be any.
Uh, free pancakes.
Uh, falling from the sky, exactly yeah.
So the trial economy actually carries some pretty significant costs, not just in terms of money, but also in terms of like, time or maybe trust in terms of both from the merchants or the customers.
So first of all, from the business perspective, it is an investment.
It is kind of a commitment that you are deciding to do these kind of strategy, using the trial things or samples to attract more consumers.
That means that you will need to spend a certain amount of money on the cost, on label, on the raw materials and ingredients and everything.
So that is something that we need to consider.
And also from the consumer's perspective, you will think that, okay, that is the cost.
They will use anyway, which means that you may.
When you're purchasing a product from them, you may already paid for the example.
I think another downside for the businesses is let's say that you get that free sample of something.
And you're a review person.
I'm not so much a review person, but some people are super review people, right?
They'll try something and whether they like it or not, they'll put a review online.
So imagine the scenario where you give a customer a free sample of your product, they don't like it and then they post a negative review online.
That's like the worst case nightmare scenario for a business, because not only did they not make any money from a purchase, they're getting negative attention for their product too.
Well, both cases you guys mentioned are kind of under the premise of the fact that these products offered as trial products.
Or samples are legit.
They're good enough.
But what if, in other cases, the quality of the samples is concerning?
Yeah, I wanted to come back to that.
That's what you briefly touched on before, where it's not what it's supposed to be.
Yeah.
And sometimes we see a lot of cases online, too.
Sometimes shoppers.
They notice that out of three sample tubes labeled with the same weight, one was visibly deflated.
That's meaning that one is lighter than the rest.
And customer service insisted that there was no error because the product were electronically weighted and they ought to be all the same.
And then there are other times when consumers tested out a lipstick sample, loved the color, bought the full-size version, only to discover later that the color looked completely different from the sample they tried.
Then somebody else reported online that the sample-sized perfume she bought online from a well-known brand smelled nothing like a full-size version.
Now, that one I've never encountered before, but I can't imagine.
I can't understand why that would be beneficial to a company at all to make their samples a lower-quality product, because that's the meet and greet, if you will, for the customer and the product itself.
So if you're lowering the quality of the samples, then that's only going to hurt you.
That customer is gone forever.
What if the sellers of those samples are not exactly the companies themselves but instead of a third-party seller or like a bulk buy center or something?
Because it happens too.
There are places where, all over China, where there are stores that just sell samples of all different brands.
And they claim that these sample products are from authentic origins, but we never know that.
There's no way of verifying that.
Sometimes there are even samples out there in the market.
That's outnumbering the real production capacity of the original brand.
There are things like this out there that people just feel so frustrated.
But in the meantime, A lot of us just confused.
Another downside for a potential downside for the businesses is reflected in a growing trend.
I'm not sure if this is happening in China, but it's happening in the West apparently, where shoppers are offered a try before you buy and they'll buy a lot of items that, let's say, 10 in total, but they'll have the intention, at the moment of ordering, they'll have the intention of returning seven of those items.
So it's like taking a lot of clothes into the change room at the clothing store.
You're not going to buy all of those clothes.
You're going to choose one or two items and you're going to give the rest back, right?
Apparently, this is a growing trend among shoppers.
And 44 of retailers.
This is from ShipStationcom.
44 of retailers say that their margins are being strongly impacted by handling and packaging returns.
70 said that they're being squeezed further with the increase of try before you buy.
And to the point of people returning things.
Um, i said that if they get maybe 10 items, they'll return seven.
87 percent of people do that, according to ship station.
So that's a lot.
That's a lot now if you think logistically how a company needs to handle the packaging and the returns and the restocking.
That's a whole lot of extra logistical work.
Yeah, this has been the, I think, discussion or controversy for quite a while, to be honest.
And for like Chinese market.
A lot of these platforms are trying to make sure the right of consumers is guaranteed.
That's why some of these we previously have also discussed that policy of return without the product.
You can get your money back without returning the product, actually.
That's to protect the right of consumers.
But after a period of time of doing this, they realized that the rights of the merchants cannot be guaranteed.
They are losing a lot of money by using these policies because they are putting all the trust on the consumer side, and then so they they started to doing that again.
And also, we know that the like returning rate of female clothes online shopping, female clothes is also really high and that is why um, they are using a lot of um like really gigantic, dramatically big tags on the clothes.
Yeah yeah, of course you can try, but don't Try it when you're actually using it.
Is that a thing in China too?
Because that was big news in America, I think, maybe the UK and Canada, where people will go and buy some clothes.
They'll take the tag off or sometimes leave the tag on.
Just hide it.
Yeah.
And then they'll go out on a Friday night for a nice dinner or a party or something.
And then they'll return that the next week.
It's a total scam that the customers are running.
They're getting it for free.
Oh, so that happens in China and the stores put larger tags on.
Yes.
That's also kind of a smart combat way of these merchants that they're trying to.
But that's not like.
Legit right, because you are actually using it and you and you don't want to pay for anything for that.
So, but what we were talking about is that this is simply the cost of using this kind of promotional strategy yeah, as a bit as a business, so something that merchants need to understand and be prepared to take on, because You should take this into consideration.
It's part of the risk.
It's baked into the process, if you will.
Well, speaking about protecting rights and everything, are there any laws that apply to this particular type of consumption?
Try before you buy or trial consumption?
You say it's a particular type of consumption, but at its core it's still just one step in the overall consumption process.
It's still within that box.
So this means that existing laws and regulations can still, if not already, apply to trial consumption and that, when problem arises consumers, you can still rely on existing legal frameworks and establish complaint channels to defend yourselves.
And also some merchants they like.
I don't remember which one of you exactly, but You mentioned that being requested to write a good review even if you don't like a trial after you taste it.
Some merchants, they do that.
They treat samples or free trials or free taste as a dumping ground for flawed, overstocked or downgraded products.
That's the answer to what we were bringing up, what I brought up before, when I said I don't understand why companies would do this.
But if they treat the samples not as a serious thing.
But oh, this one's a little flawed, let's just put it in the sample pile.
Well, that's definitely not a wise choice.
It's lowering cost in the meantime.
And that may violate consumers' right to information and fair trade.
And that's going to drag the business into big problems.
So for these samples, or whatever products that that's listed as samples, failing to truthfully disclose the real quality or trial products violates the consumer rights protection law, which requires businesses to provide accurate and comprehensive information about whatever you're offering out there.
I don't think a company is allowed to ask you or tell you.
If you write a positive review for us, we will give you.
We will give you a free sample.
We will give you a free something, right?
A review is one thing, but requiring a positive review, that's a different thing.
Yeah.
Sometimes they will offer that, but it never in my previous encounters of this kind of scenario it never happened shows up as a requirement.
It's just something that they're willing to offer.
That's a kind of a promotional tool that they are trying to use.
I'll offer you a free beverage if you give us a five-star review.
If you really like it.
But again, that's requiring the positive feedback, not just feedback in general.
And according to a member of the Corporate Law Committee of the All China Lawyers Association, That is quote crossing a legal line requiring that positive review condition.
Yeah, so there you go.
All right, so now that's the situation.
What can we do to make it better?
Free testing and trial use offers probably still are in the gray zone of in lack of clear and unified quality standards.
That's for one that's pointed out by the head of the Consumer Rights and Product Safety Committee of the Beijing Lawyers Association.
So this is especially true for cosmetics and certain food industries, even when trial products often don't have the same traceability system as full-sized items.
So still, we need to prioritize safety for whatever products that's out there.
Yeah.
And also, speaking of improvements, I think that, at least for now, the rise of these trial-based economy has been gradually built on mutual trust between people.
Because in itself, it's already a major step forward.
That's what I think.
Because consumers placing order before deciding whether to buy is a kind of trust on the merchants right.
And the merchants starting to have these, like unconditional return policy or no question asked return policy.
That is also another trust on consumers.
So what?
This kind of healthy mutual trust as a foundation in this model and even the broader economy can enter a kind of positive, healthy or self-reinforcing cycle to make the two parties to have a better relationship and then they actually can encourage more consumption.
And to your point about how sometimes the sample will not be of good quality, especially when compared to the product that you buy.
I think that might hold true with other things as well.
I'm thinking demo classes.
If you take a demo class and you're thinking, This teacher is amazing.
I'm going to sign up for three months of these classes after this one hour free trial.
Then you get in the room.
It's a different teacher.
Yep.
No qualifications.
And the quality of the material is not very good.
Maybe some protective measures to make sure that what you're sampling is exactly what you're buying.
Not only when it comes to makeup and perfume and things like that, but also human to human interaction too.
Yeah.
Interesting topic.
