China’s eCommerce Market: A Westerner’s Perspective

Before arriving in Shanghai in October 2015, I had the perception that China's ecommerce ecosystem was more advanced than the US or European markets.

After nearly a year of working with the Clavis APAC team and with our customers (all global consumer product manufacturers) it is clear to me that China is not only ahead of the West, but extending its lead.

China's eCommerce Market Growth

In broad economic terms, China will contribute 39% of global growth in 2016. e-Marketer has forecast China’s retail ecommerce market to grow from $900bn in 2016 to over $1.5 trillion in 2018. Today, approximately 320 million Chinese ‘netizens’ shop online. Key drivers include: the urbanization of China; the dramatic rise in disposable income and corresponding mobility into the middle to upper classes; an inherently online and mobile-enabled culture fostered by government support, the rise of Alibaba; and the investment in brand manufacturers and technology in China.

China: A Digital and Mobile Nation

Chinese citizens are mobile-first and demonstrate all the traits of a truly digital nation. They are quick to buy and try new products and share their experiences on social media--mostly on Wechat, QQ and Weibo. These social media channels have merged with e-commerce to form a ‘social commerce’ ecosystem that is enabling a cashless society in China’s major cities. My Chinese colleagues communicate, exchange money, pay for meals, book tickets and vacations, and, of course, shop across a range of categories online.

China's eCommerce Ecosystem

China's ecommerce ecosystem is dominated by three players, making up ‘BAT’ – Baidu (China’s ‘Google’), Alibaba (led by Jack Ma, referred to by some as the 'founder of prodigal women' and worshipped materially as the ‘God of wealth’), and Tencent (holding company of Wechat, QQ and significant stakeholder in JD - second to TMall in B2C online retail). From the product manufacturer’s perspective, winning online is all about executing a BAT-focused strategy.

Key Opinion Leaders (‘KOLs’), China’s nouveau celebrities, are commanding multi-million dollar investments from global brands now treating KOLs as a critical influence channel. Papi Jiang, a Chinese online comedian (aka ‘Wang Hong’), recently received funding of $1.8 million and was paid $3.4 million for a single ad.

Singles Day (‘Double 11’), the ultimate online shopping holiday held on November 11, is forecast to exceed US$15 billion (CNY100 billion) in sales in 2016. And If you thought the ecommerce market in China was going to slow down any time soon, consider Alibaba’s ‘Rural Taobao’ - a $1.6billion investment by Alibaba to turn China's 600 million rural residents into online shoppers - and sellers.

In a world where the only constant is change, China leads in the exciting evolution of ecommerce

Declan Kearney
Article by:
Declan Kearney
Managing Director, Edge by Ascential APAC

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