M-commerce in China
Each year Chinese e-commerce market is experiencing high double-digit growth. A great example showing how China’s consumption-led economy is evolving digitally is the November 11 Double 11 event which is also known as Single’s Day in China. In 2017 Alibaba the biggest online marketplace showed that its sales growth increased up to 36 percent compared with 2016. That clearly showed that consumption in China is growing steadily due to the fact that Chinese consumers are more confident about purchasing more products.
Currently, there are five key trends that are dynamically driving the Chinese market
1) E-commerce shopping festivals
The data showed great growth in sales on November 11, which is according to Nielsen’s survey, 79 percent of consumers were willing to take part I Doubt 11 festival. Moreover, Alibaba experienced a growth in sales as was mentioned previously up to 39 percent, while its competitor JD.com achieved over 50 percent growth with 127 billion RMB during Double 11. Consequently, it shows that in order to make consumers more desirable to buy goods many e-tailers are more into creating shopping festivals.
These type of festivals is a great opportunity for both local and especially foreign brands to increase their visibility and shopping enthusiasm among consumers in China. In this sense, new brands have a great advantage to get noticed by Chinese consumers. During this festival, consumers are more willing to get products that will be completely new to them and try some experiments with new goods.
2) Consumption upgrade
There are mainly two factors that trigger the “consumption upgrade” trend. Nowadays consumers due to their increasing income are willing to pay and spend more on such categories as food, clothing, and cosmetics. The main factor remains on top which is the quality of goods, Chinese consumers became more pragmatic about the products that they purchase. In addition, consumers from the middle to upper class are willing to buy more foreign goods that are not available in the Chinese market. According to the World Economic Forum’s Insight Report on the Future of Consumption in Fast-Growth Consumer Markets – China, it shows that niche and high-end brands easily get access the online platforms, while other shopping platforms are moving towards leading consumption upgrade.
Nielsen’s online shopper trend report stated that in comparison with 34 percent of the proportion of consumers that purchased goods through cross-border e-commerce platforms in 2015, it had increased greatly up to 67 percent in 2017.
In the sense of foreign goods, Chinese consumers perceive them as good quality, healthy and safe products. Today Chinese consumers have the access to purchase those products from all over the world through such e-commerce platforms as JD.com, Tmall Global, and Kaola.com.
3) Merging online and offline ‘new retail’ strategies
The term “new retail” strategies became a hot topic when Jack Ma mentioned it in 2016. All in all, online and offline retail elements, including products, services, logistics, big data, marketing, and management are integrated into such a concept as “new retail”.
To drive such integration many online companies are taking the initiative, for instance, t$2.9 billion in China’s biggest offline retail group were invested by the biggest e-commerce platform in China.
The retail industry is getting transformed by a new business model called Online to Offline (O2O) which is filling up the market with both challenges and opportunities. One of the great examples is Hema Supermarket which shows how the O2O landscape was successfully evolved by the e-commerce leader Alibaba. Hema is an online platform that allows consumers to purchase fresh food, dining services, and imported goods by downloading the app, while their profiles and spending will be saved and stored online. Even more Hema Supermarket provides door-to-door deliveries, in case if you live nearby you can get an order just within 30 minutes.
Furthermore, JD.com have launched 7Fresh which is similar to the previously mentioned app, moreover, it seems that 7Fresh within the O2O space has a chance to become a key player in a short period of time. Such e-commerce giants as Alibaba and JD.com perceive these types of grocery shops as places where further penetration of payment and e-commerce can be driven by consumer targeting.
4) Digital payment
Today Chinese online e-commerce platforms are very integrated with the most popular online payments in China such as Alibaba and WeChat pay. In addition due to low fees and convenient user experience go Alibaba’s Ant Financial and JD.com’s Baitiao such financial companies are becoming more and more popular among young borrowers. Consequently, consumers are encouraged to spend even more online due to the growing income and their purchasing confidence, and of course, because there is an availability of consumer loans.
Getting financing from e-tailers will create the same purchasing trend when the US market’s consumer purchases were driven by credit cards. Even in China consumers rarely use their credit cards to purchase goods online or offline. In addition, lots of those consumption loan providers collaborate with offline channels in order to extend their businesses, even more, they provide portfolios of services to consumers.
5) Media platforms
Social media nowadays has a great influence and it involves such features as allowing consumers to share their reviews on purchased products, comment and interact with one another. The influence on social media is completely dependent on the rising number of mobile users, which is increasing with each day. The transition of e-mail advertising and marketing from open to closed loop was driven by the high concentration of mobile commerce. Marketing is highly dependent on social media nowadays in terms of communicating and engaging with potential consumers.
To sum up, the top three strategic priorities were made by e-commerce growth and extension for both manufacturers and retailers. The Chinese e-commerce market is moving towards innovations, while the growth is driven b digital natives. Moreover, customer experience should be perceived as a basis of their marketing strategies. All in all, we will see later how the online landscape is quickly shifting, and most likely later such crucial trends as mobile commerce and digital payments and even online and offline integration will influence the rest of the e-commerce world.
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