Why should we be interested in China’s ecommerce industry?
Simply put, China’s digital surge not only creates an opportunity to tap into this country’s market but has far reaching implications on shopping platforms in the West and can provide key insight into what’s coming next for ecommerce trends.
More and more, traditional Western brands are seeing the fruits of China’s ecommerce boom and this is not expected to stop. For instance, Mondelez (Formerly Kraft who own Cadburys, Oreo and many others) saw online sales grow by 30% last year in China, Africa and the Middle East with ecommerce sales contributing 30% of total sales for China in particular.
With all this big business, Alibaba and JD are also tapping into other international markets in a bid to rival Amazon in the online sales space – and they’re starting to make gains, particularly in Eastern Europe.
As traditional ecommerce platforms in the West face greater emerging competition, it’s key to look at what’s going on in China and how this market will change the face of Western online retail in the coming future. Plus, there’s now a lower barrier to entry with cross-border online marketplaces, like Tmall global, for vendors outside of China to sell directly into the Chinese market from overseas imports.
Why is ecommerce growing so fast in China?
This rapid growth is generally attributed to a combination of China’s strengthening of its domestic technological infrastructure and reforms in Chinese trade policy. Changes in Chinese trade policy were in response to increased tariffs imposed on China by countries such as the United States. As a result, the changes lowered trade barriers for a large number of overseas businesses. The country has also seen mass digitisation (even in traditionally rural areas), despite having less exposure from the Western world, and yet other countries have become increasingly dependent on China.
China’s population of internet users has accelerated vastly over the past few years which has culminated in a drastic increase in online shoppers. Here’s a few quick facts to get you up to speed;
- China boasts nearly 1 billion internet users – three times the entire US population!
- China is on track to beat the US in retail sales in the next two years.
- 98% of China’s internet users use mobile with 72% using online payment methods.
- Alibaba & JD.com have a clear monopoly in the e-commerce market.
The infrastructure created by the likes of Alibaba, inline with the mobile-first preference for users, has created a matchless system of convenience for same-day/next day deliveries, even in difficult-to-reach areas.
4 Key facts about ecommerce in China
If you’re thinking about developing a strategy to focus on expanding your reach into China or wondering how this might influence platforms like Google or Amazon there’s some things you might want to consider.
1. China has a “Google” but it’s called Baidu
Google has been banned in China for over a decade now. Since then Baidu has increased its market share and knowledge of local users which has been one of its key successes in dominating the market.
The key difference between Baidu & Google is how they rank URLs. Google is generally considered impartial and more about matching the user intent above anything else. Baidu favours certain other aspects like having a website’s servers hosted in China. Meta keywords are also important and biased toward Baidu’s own product offering – a criteria which was removed from Google’s own ranking factors over a decade ago.
If you’re considering expanding your website to target China, it’s important to consider that the process won’t be the same as launching into any other market and there are key differences that need to be considered.
2. Live-streaming is dominating the ecommerce revenue
37% of China’s online shoppers made livestream purchases in 2020 according to Forbes. With Alibaba’s Taobao Live being the most popular platform. This form of content has been traditionally owned by TV shopping channels in English-speaking markets such as QVC or Home Shopping Network. The difference now is that users can interact with the stream in real time, giving it an interactive spin which has been a hit with China’s online shoppers.
This form of live streaming or “shoptainment” is slowly encroaching more in Europe and the USA with Amazon and other retailers trialling this and should more than likely be considered for any local or global ecommerce strategy.
3. Social media is key but it’s nothing like Facebook
It’s well known that China’s access to social media platforms is heavily censored, with the likes of Facebook and Twitter blocked for users. However, China’s homegrown platforms are huge. One of the biggest ones by far is the messaging platform WeChat which has more than a billion monthly users. More than just a messaging platform, it has become something more than social media or anything like the traditional internet and has instead become its own ecosystem encompassing it all. Via WeChat you can create your own store and control your imagery/messaging like a website.
4. Consider the big online shopping platforms
Despite recent crackdowns by China’s government on local tech giants, if you’re thinking about penetrating your market presence into China, the big ecommerce platforms can help make this process easier. The biggest is definitely Alibaba’s various channels which can be split out into:
- Alibaba.com (B2B)
- Taoboa (B2C)
- Tmall (B2C)
As mentioned, Tmall global is particularly important for International vendors as it allows Western companies to sell directly to China. Shopify has recently announced that they’re partnering with JD that will also help merchants in the US sell to China.
Are you ready for ecommerce in China ?
There’s an enormous amount of potential to tap into the China ecommerce boom but there’s a number of key factors to consider before you take the initial steps:
- Does your product(s) have a USP for the China market? And is there an audience?
- Do you have resources available to translate your company/product information into Mandarin?
- Does initial assimilation start with the established ecom platforms?
- Does your website have the infrastructure to accommodate a China focused ecommerce store?
If the answer is no to all of the above, expanding your audience targeting into China might not be something that you’re likely to consider right now. That being said, it’s still worthwhile closely following what’s trending as this is likely to influence the digital landscape over the coming years as Asia-Pacific (APAC) countries continue their continuous growth period.
Interested in learning more about the topics raised in this post, or if you’d like to see how Impression can help your business stand out online, get in touch!
