Five major trends in e-commerce in China, What is the nature of e-commerce,Why is China’s e-commerce development so fast?

 

Five major trends in e-commerce in China

At the moment, China’s e-commerce has maintained a double-digit annual growth. November 11th, 2017 is the Singles Day, a festival celebrated by Chinese single men and women. At the same time, this day is also a clear example of the development of China’s consumer-led economy digitalization. Compared with 2016 Double Eleven, Alibaba’s sales volume increased by 39% in 2017, indicating that Chinese consumers are very confident about personal expenses, and this also indicates that consumption will continue to rise. Pkbazaar.Pk

China: a thriving market

According to the National Bureau of Statistics of China, China’s GDP growth in 2017 was 6.8%, indicating that China’s economy has maintained steady growth. At the same time, Nielsen’s data pointed out that China’s consumer confidence index in the third and fourth quarters of 2017 reached a peak of 114, 2 points higher than the second quarter of 2017 and 6 points higher than the fourth quarter of 2016.

A consumer confidence index above 100 indicates that the consumer is very confident, and below 100 indicates no confidence. At present, the consumer confidence index has reached the highest level in history. According to the National Bureau of Statistics, China’s personal disposable income growth rate is 7.5%. Both indicate that consumers are now very confident and consumer demand or consumption is expected to remain stable. While Chinese consumers’ spending has reached unprecedented heights, consumption has also maintained a high level of growth: compared with five years ago, consumption has increased by 43%, much higher than the US’s 24% and the global average of 33%.
Nielsen e-commerce tracking data covering 34 categories of fast-moving varieties shows that as of November 2017, the average monthly online sales growth of 12 months was 27%, while the annual sales growth of offline sales was only 6%. Last year, the ratio of companies with e-commerce services also rose sharply. According to the Nielsen Consumer Confidence Index report, as of December 2016, the proportion of companies that conduct online sales services exceeded 45%.

Undoubtedly, China’s e-commerce market is in an overall upward trend. At the same time, Nielsen also listed five major trends driving the development of the market. These trends are crucial for companies to manage their debts and guarantee victory in 2018.

Five major trends driving the development of China’s e-commerce market

E-commerce shopping festival

To stimulate consumer demand, online retailers are creating more and more shopping festivals and shopping themes. According to the Nielsen survey, 79% of consumers plan to participate in the shopping festival before the 11th holiday. On the day of the Eleventh, Alibaba’s sales reached 168 billion yuan, a year-on-year increase of 39%, while the sales of another major competitor, Jingdong, reached 127 billion yuan, a year-on-year increase of more than 50%.
The Double Eleven shopping festival not only brings opportunities to local brands, but also is crucial for foreign brands because they can mobilize the collective enthusiasm of Chinese consumers for foreign brands. On the day of the shopping festival, consumers usually try new things and products. In other words, the shopping festival provides a valuable opportunity for foreign brands to enter the Chinese market.

Consumption upgrade

There are two major trigger points that are setting off a wave of “consumption upgrades”. The increase in disposable income indicates that consumers are very confident about their spending power in many consumer products, especially food, cosmetics and clothing. Consumers place more emphasis on quality and fashion than other consumer needs. As a result, pelagic consumers are increasing their demand for goods that are not consumed domestically. As a result, online platforms that offer consumers a number of international high-end and niche brands are becoming more popular, while multinational shopping sites are leading a consumer upgrade campaign.

Nielsen’s online shopper trend research report shows that in 2017, the proportion of consumers doing multinational e-commerce shopping was as high as 67%, compared with 34% in 2015.

For Chinese consumers who value quality, health, safety and packaging design, imported goods are gradually being recognized. Through online platforms such as Koala, Tmall International, and Jingdong International, Chinese consumers can buy products from all over the world. NetEase, a rising online retailer in China, is closely selected for its quality and cutting-edge products. In 2016, NetEase’s e-commerce volume increased by 118% , driven by the selection of Netease .

New retail: online and offline retailing is beginning to merge, not competition

In 2016, Ma Yun created the term “new retail”. Since then, it has become a hot topic in manufacturing and retailers. This concept emphasizes that online and offline retail elements can be combined, such as products, services, logistics, big data, sales and management.

The employees are refining the parcel at a Baccar Express transportation center.

Image: Reuters/Stringer

Currently, online users in China are leading the trend of mergers. Recently, Alibaba, China’s largest e-commerce platform, invested US$2.9 billion in Gaoxin Retail, China’s largest offline retail operator.

The online to offline e-commerce model is changing the retail industry, creating opportunities and challenges for the retail market. For example, boxes of fresh raw horse on the perfect interpretation of the e-commerce giant Alibaba is how with this mode of development. Box Ma Shengsheng sells fresh food, imported products and kitchen supplies just like other physical supermarkets. Before shopping, consumers can download an app and use it to purchase merchandise, save consumer records and consumer information online. For customers who are close to home, they can choose the door-to-door service within 30 minutes. Jingdong also launched a similar offline supermarket 7FRESH, which is likely to become a key player in the online to offline e-commerce field.

Alibaba and JD are focusing on millions of consumers in other Chinese grocery stores because they believe that through these consumers, they will further enter the payment platform and e-commerce market.

Digital payment

Alipay and WeChat payment are the two most popular online payment platforms in China, and they have been fully integrated into e-commerce platforms such as Alibaba and Jingdong.

For Chinese consumers, especially young consumers, online financial companies such as Alibaba’s Ant Financial and Jingdong Baizhi are becoming more and more popular. After all, their service costs are low and user experience is convenient. With the rise in disposable income and increased consumer confidence, readily available consumer loans give consumers the ability to make more online purchases.

Consumers are trying to pay for Alipay’s face payment.

Image: Reuters/Stringer

Credit cards have stimulated consumption and opened the door to large payments for consumers in the US and other markets. Similarly, the financing services provided by online retailers have also set off a trend in China, which has reduced the use of traditional credit cards. In addition, providers of consumer loans are expanding their business by working with offline channels to provide a range of loan services to consumers during the new retail convergence period.

From online platforms to media platforms

On social networks, people can communicate with each other, and this feature makes it the best place for people to share and comment on various products. As mobile phone users rise, so does the importance of social media.

The high concentration of mobile commerce has accelerated the online retail promotion ecosystem from open to closed. Therefore, social media has become an important tool for product sales, especially in the process of communicating and communicating with potential consumers.

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Online retailers have become an important media platform, not a pure shopping platform. Recently, Nielsen’s advertising analysis tool Jingzhu Rubik’s Cube revealed that in all sales channels in China, the return on investment in digital sales is the highest, reaching 19%. Online advertising investment and offline advertising operations will continue to create higher consumer interactions.

unprecedented

For most retailers and manufacturers, the current size and growth of e-commerce is one of the three most important strategic priorities. Innovation is the moving target of China’s e-commerce market, while several Aboriginal people are driving growth. Internet giants are at the forefront of emerging technologies, and new businesses are opening up new business experiences, such as multinational commerce and private label products. As we move forward, retailers and major brands need to continue to follow the consumer experience as the core of their market-oriented strategy.

The rapid changes that are taking place in China today are unprecedented. Next, people will continue to witness how the Chinese trend of mobile commerce, digital payments, online and offline mergers affects the world. Get ready, China’s actions have just begun.

 

.What is the nature of e-commerce?

E-commerce is divided into two parts, “electronic” and “commercial”, each with its own nature.First of all, business, to put it bluntly, is the business, the essence of which is based on the products or services provided to meet the needs of users. No one will equal business or business to retail, but so many people equate e-commerce with retail sales. Many e-commerce companies and even most e-commerce companies do not understand the essence of business and electronics. What they do is indeed The “low-buy and high-selling” differential retail model has confuses the understanding of e-commerce. Just as business can’t have only one retail model, e-commerce is less likely to be limited to the retail model. Even if it is only for individual users, aside from the refinement of Maros, from the basic needs of users, I think it can be divided into 13 items: eating, wearing, sleeping, living, traveling, sex, making friends, entertainment, learning, health, Family, earning money and doing things, some only provide products or services around a demand, and some integrate a few needs to do business. So, is Ctrip an e-commerce company? Is worrying about e-commerce? Is Shanda an e-commerce? Thus, the understanding of the essence of business can also refute the false proposition that “e-commerce does not make money.” When your vision is only to provide users with standard products that are indistinguishable at a lower price, the difficulty of earning money is itself a fate that you can’t keep. The same is to meet the needs of eating, why so many people are willing to take the initiative to wait for a few kilometers or so to wait for an hour or more to enjoy a sea fishing, but few people are willing to spend cheaper to eat a better taste without waiting Zending pick (made)? Yes, improving service and brand is the root cause of self-purification. Deciding whether a business can make money and how much it earns lies in the difference in quality service creation and brand guidance. If we say that the three mentioned above, everyone still argues whether they are e-commerce, at least no one suspects that Lanting is not an e-commerce, is she making money?

What about electronics, including the Internet and wireless Internet? If we combine business or business perspectives, I understand that the essence of electronics lies in two. One is to use “code + server” to cope with the growth of business scale rather than the proportion of “reinforced concrete + manpower” as in traditional business. Second, strong media. Looking at the electronic giants that have already determined their competitive advantage, no way is the advertising mode, social mode, game mode or trading mode, which strictly conforms to these two articles. The combination of technology and products (under the definition of the Internet, non-commodities) is one of the two core keys to leveraging the advantages of electronics. We assume that when you come to an e-commerce site, all merchandise displays are assumed to be your consumption. Intentional (difficult? There are cookies, there are RBT, you know!), and the product has been the core, classified and integrated the useful information of the product and associated users (business, purchase users, content sharers, etc.) What you want to know, even if you don’t know the orderly integration you need to understand (difficult? Snowball’s stock page, what do you say? This concept product page must not work?), this is a level of product Add technology application. On another level, you are a food consumer. I am not only offering you the purchase of food. I am telling you from a health perspective. From a nutritional point of view, what do you need to eat every day, and help you eliminate it? GM, Sanlu, etc., present to your choice is to meet the nutritional structure needs and the seasonal cost-effective, and then give you a choice of self-love (such as the daily meat can be selected from cattle, sheep, pigs), It also gives you a random selection of stimuli (the combination of four fruits per day, not to mention that you don’t need it. The truth is that many times you don’t know what you really need, for example: before you eat durian and get used to it, How many people will say that they like durian?). If you do this, will you only decide whether the price is high or low? Do you only mean when such a website is retail?
Let us sayThe media nature of electronics is only because of the diversity of graphic and audio-visual display forms that it can be applied, and the timeliness of instant interaction, including the universality of everyone’s ability to participate in UGC, which enables electronic media to become integrated. The master of media advantage. And how much e-commerce in this part has played its value and even intends to strengthen it? Media is placed on the Internet, especially e-commerce. The core of the media can be cultivated to build its credibility and effectively persuade users’ consumption. To give another example, if you want to buy a thin quilt, I use media means and features to show all kinds of locusts, how many locusts accumulate every day, what kind of impact on the human body, and then display the nano quilt in all directions. Compared with the advantages of ordinary quilts, you can use the experience of buying and interacting with users who have already purchased nano quilts. Can you be persuaded to buy, even if the price difference between nano quilt and ordinary quilt is more than 100%?
Don’t be simple, because most websites don’t understand enough or appear to look like e-commerce is equal to retail. Ali has told us how much space is e-commerce, and Ali may only say that it is an iceberg for e-commerce. Just a corner, even if you only stand in the retail point of view, the current online shopping market does not only account for less than 6% of total social sales, isn’t it?

 

Almost in every country I have been to, someone will ask me this question. Usually everyone will immediately ask: “So will the same situation appear in our country?” I want to answer from the following six aspects:

1. First of all, almost all products in China are overcapacity.

This means that the product supply is sufficient, and manufacturers, distributors and retailers want to sell these products as quickly as possible at marginal prices, preferably in non-primary markets. China’s small retail stores, distributors and hundreds of millions of small processing plants are well positioned to seize this opportunity.
The development of e-commerce has made this goal possible. The C2C model means that the industry has no entry barriers. Whether it is selling only one T-shirt or the authenticity of the goods sold, anyone can become an online merchant.

2. There is never a shortage of funds.

China’s investment community has always been keen to invest in start-ups in e-commerce. For example, Groupon, a group-purchasing website with Chinese characteristics, has seen more than 5,000 group-buying websites in China. This makes China’s e-commerce website pay more attention to business growth rather than profit, so it takes a long time to wait. Get funding through listing.

3. Consumers must have a willingness to spend, and in China, they do.

By the middle of the first decade of the 21st century, China’s middle class has reached a certain level of affluence, rising from the necessity of only buying essentials to making selective purchases, but they are still very concerned about whether it is worth the money, hope Can buy good quality and cheap goods. These consumers usually already own a personal property and now want to add a variety of products to their home. Driven by the government’s 10% annual salary increase policy, the middle class’s consumption level has increased since 2008. In China, spending and income are closely linked.

4. There is a need for an internet and physical infrastructure that connects sellers and buyers.

The Chinese government has set a goal of expanding the construction of broadband networks and covering tens of millions of households every year. China’s state-owned telecom operators have responded positively. Thanks to this, Internet penetration has grown rapidly. Middle-class consumers can browse the Internet at home without having to go to Internet cafes. E-commerce logistics also benefits from the physical infrastructure that China has built over the past 20 years, which was previously used to transport products from the factory to the terminal for export. Most of the infrastructure can be used immediately, sending products from factories to middle-class consumers in China, most of whom live in coastal cities.

In addition to the state-owned China Post Parcel Service, China has many logistics providers of “Strong Strength Day”. These truck drivers, operated by private owners, have reduced the price of transportation between cities to a marginal level, while couriers who travel by car and door-to-door have formed a new industry that is growing rapidly in the city, although each of them The income of the month is not rich. As a result, the cost of buying a product is very low, and this low cost is borne by e-commerce sites that focus on growth rather than profit.

However, several large companies did not prepare for this, which means that they did not realize the threat at all, and some may have realized but did not respond. Large retailers are still focusing on competing for physical locations, and are not aware of new changes. The nature of most retail companies is still mainly real estate companies rather than excellent retail companies, so even if they perceive new changes, they mainly rely on the rental of storefronts to the brand companies, and do not have the ability to quickly form e-commerce business. .

For a long time, brand companies themselves rely mainly on distributors and franchisees to expand their business coverage in China, and the control of channels is very limited. When hundreds of sellers start selling their products online, it is difficult for brand companies to control them, and they may even have very limited control over the factories used to outsource production. If the excess product is sold online, what remedy can the brand company take? Private and state-owned large-scale shopping malls only focus on the expansion of large-scale retail enterprises, and continue to promote their fierce competition, but did not find that some of the core commodity categories of the mall, such as electronic products and clothing, are gradually shrinking in the mall. Not expanding.

5. Banks also failed to predict the development of e-commerce.

Banks missed the opportunity to enter the online payment space and failed to access the trading and financial information of hundreds of retail companies, and this information can actually help banks better assess the risk of lending to small and micro enterprises in China. On the contrary, Internet companies have created their own payment systems under this regulatory grey area, and then developed lending and investment businesses, and are now moving towards full-service online banking.Pkmarts.com

Why is China’s e-commerce development so fast?

6. Sometimes inaction is also a key enabler, as is the case in China.

The Chinese government has no overall plan to support or oppose the development of e-commerce. In the early days of e-commerce development, the government basically observed whether it would have a positive impact. And this position seems to help hundreds of small businesses to build and thrive. “Inaction” seems to be successful, even if companies in this industry sometimes fail to obtain licenses in accordance with regulatory requirements, or their ownership structure does not fully comply with regulatory requirements

 

 

 

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