Chinese diary — chapter 2: Exploring the world’s biggest e-commerce marketHome Blends & Trends 14 February 2018
When it comes to e-commerce in China, the future is now. Or, at least, the future that Europe is moving towards is already a reality in China. In the Middle Kingdom, consumers can buy literally anything online, both goods and services, with same–day delivery at no extra cost.
And in 75% of cases, this happens on mobile. When I came to China I would never have imagined that in a few months’ time I would be doing my grocery shopping on a smartphone while commuting, but today – believe it or not – this is the way I do most of my shopping. Probably the most characteristic experience I’ve had with Chinese e-commerce would have to be the time I bought a new phone and a bunch of apples all on one platform. How cool is that?
The YHD app for grocery and household shopping is simple, user-friendly,
The advanced state of Chinese e-commerce is due to several important drivers, such as a highly-developed digital ecosystem, efficient logistics infrastructure, an immense number of internet users (731 million in 2017), and their rising disposable income. The B2C e-commerce market is dominated by Alibaba’s Tmall and JD.com, the former accounting for 51% of B2C e-commerce market (see chart below).
The role of these e-commerce giants should not be underestimated. I recently had an epiphany when one of our international clients expressed his concern that his brand was seeing more sales come in from their Tmall storefront than from their own website. The dominance of third-party platforms in some cases undermines the importance of retailers’ websites, because most retailers earn only 10% of their e-commerce revenue from brand-owned websites (source: PwC, Total Retail 2017). This means that it is very likely that a consumer will first go to Tmall or similar sites to search for an item or a specific brand. As a result, many international brands have launched their Tmall official stores, including big luxury brands including Burberry, Tag Heuer, and Zenith (learn more).
Nike’s official store on Tmall
This propels e-commerce giants to make use of the tremendous amount of data that lies in their hands. Big players such as Alibaba are beginning to unlock the power of data and analytics, thus enabling sellers to carry out advanced consumer segmentation and content personalisation. For instance, Alibaba recently introduced Uni Marketing Suite based on its so-called “unified ID” that tracks user behaviour across all Alibaba digital assets. This means users can be tracked as they use Tmall and Taobao marketplaces, social platforms such as Sina Weibo, entertainment platforms such as Youku, and location services such as Gaode. The unified user ID system allows advertisers to target users based on previous touchpoints within Alibaba’s ecosystem, as well as to tailor product recommendations and personalise storefronts based on individual user browsing and purchase history. Global brands such as Nestlé, Unilever, and Metro are already partnering up with Alibaba to leverage the data of its 460 million-user customer base for personalised product recommendations on official Tmall stores, as well as for micro-targeted advertising messages (source: PwC, Total Retail 2017). What’s more, brands can also personalise the look of their official store homepage and use omnichannel resources that integrate on- and offline commerce.
Given the fact that online sales will account for 23.1% of total retail sales in China this year (reaching $1.13 trillion) and are projected to grow to 40.8% by 2021 (source: eMarketer, 2017), all the data collected by internet giants will prove useful for those trying to harness the power of the Chinese e-commerce dragon.
At 55 China we have been helping our local and international clients to embrace these data opportunities through partnerships with major international and local tech players. Want to learn more? Get in touch!
Alina Mihaylova is a data analyst at fifty-five, the data company. She strongly believes that data can make the world a better and certainly more efficient place, which is why Alina moved from Paris to Shanghai in pursuit of tech and data inspiration. In Shanghai, she helps fifty-five clients to embrace and activate the data available in China’s digital ecosystem.
Read also Chinese diary — chapter 1: The miracle of Chinese mobile payments.
Translated from French by Niamh Cloughley.