Today, China leads the global e-commerce industry with 50% of the world’s transactions coming from the country. It is estimated that the country’s online retail transactions will reach USD 1.99 trillion by the end of 2019. Moreover, digital buyers in China are expected to reach 634 million by 2020. With such astounding figures, China’s e-commerce market is set to exceed the combined markets of US, UK, Japan, Germany and France [Export].
Chinese consumers are one step ahead in the world of online mobile shopping with over 80% of e-commerce dollars being spent through a mobile device as compared to just 64.4% worldwide. Besides mobile shopping, 81% of Chinese shoppers utilise mobile payment apps for their online purchases.
The catapult of China into the top ranks as an international e-commerce powerhouse is due to the globally-recognised Singles’ Day. Alibaba’s Singles’ Day sales in 2018, Alibaba reached USD$31 billion in sales in 24 hours, however 2019 saw the Chinese e-commerce giant surpass that figure is less than 12 hours, reaching a new sales record of 268.4 billion yuan (US$38.3mil) The success of this shopping holiday is attributed to a personalised shopping experience. The usual experience where customers need to search and buy individual products from separate stores is replaced by one-stop online retailers. In this manner, everything can be bought in one place, making the buying experience seamless and hassle-free.
As the online retail sector continues to grow at an exponential rate in China, companies are challenged to keep their competitive advantage by looking to provide shoppers with a unique and personalised buying journey. Many are providing shoppers with a wide range of customisation and shipping options These companies built their technology from scratch so they can improve their shoppers’ personalised experience. At the same time, they can utilise and analyse data efficiently to study consumer behaviour.
New entrants to China’s e-commerce landscape broke into the market through effective retail journey management. The strategies adopted by these market entrants can provide insights to investors and business owners looking to venture in this industry.
New Business Models in China’s E-commerce Sector
In China’s large and lucrative market, companies need to highlight their unique value proposition in order to stand out. New entrants like iQiyi, Pinduoduo and Xiaohongshu were able to cut through the noise break into the tightly contested market. iQiyi, an online video platform with over 600 million hours of video content is more than a streaming site. Viewers are able to purchase a wide range of products from clothes to gadgets straight from the video that they are viewing without the need to search individual sites for the item that they wish to purchase. Adopting a seamless integration from videos to retail allows businesses to generate more sales and increase customer’s loyalty.
Pinduoduo combines online shopping with social media. By utilising popular social networks such as WeChat and QQ, the company shares up to date information about the products. In order to make the shopping experience more fun and interactive, users can gather their friends and contacts to create a shopping group and unlock exclusive discounts for their purchases. It is no surprise that the innovative and witty use of strengths from the different media platforms that Pinduoduo rose to become one of the most prominent e-commerce platforms in the country with a USD 340 million market cap [Investopedia].
Xiaohongshu, an e-commerce platform that specialises in beauty and fashion relies heavily on influencer marketing. Users are able to upload photos and videos of their purchases onto the platform so that buyers can gain a better insight into how it will look. As the majority of shoppers on the platform are still in their teens, social media influencers are engaged to aid in persuading the buying decisions of the Generation Z.
For investors who are looking to venture into China’s online shopping industry, here are five e-commerce trends to note
Brands and Cross-platform Partnership
Even though China’s e-commerce markets remain attractive to foreign investors and companies, in-depth market and consumer insights can help companies circumvent the undulating business terrain. As personalised buying journey is essential for Chinese consumers, foreign brands should look into tailoring their products and services to create effective strategies and stand out among online shopping platforms. Cross-platform partnerships help optimise resources for market insights while providing cost savings through scale when conducting consumer behavioural studies. Such partnerships level up the industry as a whole while product differentiation sets merchants apart.
Xiaohongshu utilises the power of key opinion leaders (KOL) to influence customers in their purchase decisions. Chinese consumers trust these KOLs, many of whom are social media influencers whose opinions are highly regarded as expert opinions by the public. Companies that partner with influencers or KOLs are known to see their sales increase and become synonymous with the consumers in the Chinese market.
Integrating Social Media, E-commerce and Mobile
E-commerce platforms that effectively integrate the elements of social media, e-commerce and mobile are the most popular amongst Chinese consumers. WeChat is one example with over 800 million monthly active users. Chinese consumers utilise social media to discover the latest trends and check product quality through customer reviews, making social media a key player in the customers’ buying journey.
As Chinese consumers are bombarded daily with ads and products, a simple, efficient and fast shopping experience is essential. Mobile-friendly e-commerce platforms are excellent places to showcase a brand’s products as this makes it easy for potential customers to browse and purchase with ease and on-the-go.
Fast Delivery Time
Brands who can consistently deliver in a fast and efficient manner can thrive in the Chinese market, hence companies are adjusting their logistics to accommodate the growing demand for faster delivery time. Some companies have even set up warehouses in Hong Kong or in other free trade zones to meet this increasing trend.
Breaking into China’s E-commerce Industry with Solutions from DesFran
China’s e-commerce industry is brimming with opportunities for investors and foreign businesses. A thriving business landscape requires robust and trustworthy support in the management of regulatory compliance and payment solutions. With DesFran’s wide network and years of experience in corporate consultancy, regulatory compliance, and payment solutions, we are a one-stop cross-border solution for your business needs in China’s e-commerce landscape.
Gain an advantage over the competition by tapping into our network of skilled professionals as we guide you through China’s complex business climate. Contact us and stay ahead.
E-commerce in China: A market overview, Retail-insight-network.com
The Brave New Business Models Making Waves in China’s Ecommerce Market, Chinabusinessreview.com
7 New Chinese E-commerce Trends to Watch in 2019, Qpsoftware.net
Latest E-commerce Trends for Brands in China (2019), Marketingtochina.com
The incredible rise of Pinduoduo, China’s newest force in e-commerce, Techcrunch.com
The Future Of Shopping Is Already Happening In China, beautybusinessjournal.com
Alibaba breaks Singles Day record with more than $38 billion in sales, CNBC.com
Global Consumer Insights Survey 2019, PwC
About the Author
Terence Tay is Strategic Communications and Research Executive at DesFran. Terence has more than six years of experience in the banking industry, with a keen interest in wealth and customer relations management. Having committed more than 15 years in the entertainment and performing arts scene in Singapore, Terence wishes to develop himself further in both the finance and communications realms by pursuing career and academic opportunities related to strategic and business communications. Terence holds a Bachelor’s degree in Management and Human Resource Management, and will be studying Master of Science in Communication Management at the Singapore Management University in 2020.