Here Are the Latest Trends in Chinese E-Commerce
Even before Covid-19, China was the world leader in e-commerce and online retail. The B2C gross merchandise volume was then bigger than the next 10 markets combined. During the pandemic, the role of e-commerce has grown even more since the physical shops are either closed or under restrictions.
According to McKinsey’s China Digital Consumer Trends Report 2019, China’s online B2C and C2C retail market are estimated at 1.5 trillion USD in 2019. For Alibaba alone, they have achieved a historic milestone of US$1 trillion in GMV in their own fiscal year for both China and the global market. There is no doubt that China was and still is a pioneer when it comes to the world of e-commerce.
The Chinese e-commerce market has millions of digital consumers, avid users of mobile phones and social media, advanced online payment technologies, and the spirit to embrace whatever is new.
To recap the big players: Alibaba Group is leading the market with Tmall, Taobao, and Alipay are under the same roof. JD.com comes in at second place with a market share of 29% compared to Tmall’s 53%. However, other new platforms such as WeChat Store, Pinduoduo, VIP are also increasing in popularity when Tmall and JD are becoming costly.
International brands need to understand the landscape in China to figure out how to make a successful entry. It is also a learning process to comprehend how the trends and experiences can be adopted in other markets.
Social E-commerce
Chinese netizens spend 1/3 of their online time on social media, another 11% on short video platforms such as Douyin and Kuaishou, and approximately 5% on online shopping.
When people go to an e-commerce app, they usually have a clear goal in mind. But what if all the other social media, short video, and even gaming time can also be integrated with e-commerce? Time usually spent entertaining and browsing could be turned into an e-commerce possibility.
On many Chinese social media apps like WeChat & Weibo, it is already possible to directly link to e-commerce shopping page within the app and purchase, or even add products to a shopping cart when you see something interesting.
The second level of social+ for e-commerce is to buy in groups, driving user engagement and growth. Pinduoduo is a perfect example to represent a “social commerce app” now with 487 million MAU. On Pinduoduo, discounts are offered if a user successfully starts a “purchase group” by sharing the deal with their WeChat friends and encouraging them to also make a purchase.
This leads to a situation where online shopping is no longer an individual action, but something social and fun.
Create Consumer Motivations
But why would consumers rush to different platforms to buy? You need fresh and innovative new ideas: more than a traditional discount campaign. Instead, you need to create a reason to increase user engagement.
An example is how lives streaming and e-commerce go hand-in-hand in China. A key opinion leader or influencer showcases and introduces different products, with millions of viewers watching and buying live. Boom, sales go through the roof all the time.
What does this mean for brands? The era of brands waiting for consumers to search, find them, and buy is coming to an end. Chinese brands are showing how you need to actively look for innovative opportunities where your consumers already are and attract them to buy with on-platform actions.
Be Results-Oriented
Stats show that there are currently more than 150,000 brands on Tmall - including 18,000 international brands. With market entry policies and cross-border e-commerce getting easier by the day, opening an online store in China is no longer a big issue.
However, a Chinese online store by itself means nothing. What matters is if the brand stands out with long term sales profits.
How to stand out? Look at the big picture, but take care of the details too.
The essentials:
A proper brand localization
Effective social media content marketing
Taking part in all major online shopping festivals
Maintaining good customer service hotlines
Innovative daily advertising campaigns.
It can certainly feel like an overwhelming task. I have seen quite a few international brands abandon the Chinese e-commerce market after a few years’ exploration for this very reason. This is not because the products are in poor quality, but because they lacked a branding plan and up-to-date marketing support.
You cannot really wait quietly and expect the world to find out you are a shining star, you have to shine yourself and do it properly.
Go embrace the TOP 1 e-commerce market in the world, and do it right.
