The changing nature of e-commerce in China

by Nigel Hollis | November 22, 2017

Hard on the heels of Singles day, during which Alibaba processed 1.48 billion transactions in 24 hours, comes the announcement that the Chinese e-commerce giant is buying a major stake in China's top hypermart operator, Sun Art Retail Group. The $2.87 billion investment represents a huge step towards the realization of Jack Ma’s New Retail vision.

Alibaba Founder and Chairman, Jack Ma, announced his New Retail vision at the company’s annual Yunqi Conference for developers in 2016,

 “Pure e-commerce will be reduced to a traditional business and replaced by the concept of New Retail—the integration of online, offline, logistics and data across a single value chain.”

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An interview with Kurt Li, Head of Business Intelligence at Alibaba Group, in Kantar Worldpanel’s Future of E-commerce in FMCG expands on this strategy and suggests that the Alibaba’s focus is now on reaching under-served, rural consumers in China.

Sirius Wang, Knowledge and New Solution Director at Kantar Millward Brown identifies three emerging trends apparent in the most recent Singles Day, starting with the blurring of online and offline:

  1. A purchase can happen anywhere, anytime

    Singles Day saw pop-up stores appearing in larger cities, augmented reality (AR) product trial, AR game (Catch the Cat) designed to drive traffic into physical stores. 100,000 physical shops around China were turned into "smart stores" by Alibaba for this year's event. Technology allows ‘in-moment purchase’ at scale. The theme of Singles Day was ‘See it now and Buy it Now.’ For instance, you see a nice shirt someone else is wearing on the street, take a photo and buy it immediately.

  2. Shopping is fun not a chore

    E-commerce in the US and Europe usually draws its appeal from convenience and price. However e-Commerce in China has been redefined shopping to be fun and worth celebrating via content and entertainment. The marketing mindset has shifted from focusing on sales of specific items to building the brand through content, where hot social topics, popular TV shows and games are leveraged to drive traffic to the brand’s video, information and brand story on the e-commerce web site.

  3. Mobile and AI create personalization at scale 
  4. Mobile purchase is up from 82 percent in 2016 to 90 percent of transactions from mobile in 2017. Chinese ecommerce players have the unique advantages due their breadth of services. Alibaba is Amazon, Twitter, EBay and PayPal combined into one ecosystem which provides huge amounts of data to fuel personalization. This year AI developed by Alibaba created 400 million display ads with details like the product image, message and price tailored to the individual and them across delivered on the e-commerce ecosystem.

China’s e-commerce environment has proven to be a challenge to many MNC brands who have needed to balance their sales and marketing across digital and physical domains. This distinction may be blurring but one thing is sure, local knowledge and insight will continue to be critical if brands are to succeed in this fast changing market.  But what interests you about e-commerce in China? Please share your thoughts. 

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