Why the growth has just begun and how you can take advantage.
“China’s ecommerce is booming!” That is an indirect quote from Captain Obvious. Also could have been Jack Ma, who has a penchant for the ‘overstatement’, as evidenced by his recent remarks to Donald Trump that “Alibaba will create 1 million US jobs by enabling 1 million American small businesses and farmers to sell American goods to China and Asian consumers on the Alibaba platform.” Classic Jack; however, the key takeaway here is the monstrous opportunity for foreign brands to sell into the Chinese market.
China’s ecommerce market represents almost half of the entire global ecommerce market and continues to grow at a faster rate than the U.S. market. U.S. ecommerce represents just over 8% of total retail compared to 12% in China, and is growing at 14-15% per year compared to China’s 25%. Significant for sure, but why? It boils down to need vs. want in our humble opinion. In the U.S. consumers have easy offline access to the brands they want; malls everywhere with convenient parking etc. so their online shopping is based on added convenience and not for lack of an offline option. China’s brick and mortar retail (the offline option) growth has lagged far behind its economic growth, especially in rural regions where wealth has seen the largest percentage increase. With that increase comes a demand for better brands and more choices that are simply not available offline in many areas of China. Tmall and JD.com, who add up to over 80% of China’s ecommerce market share, were able to solve this problem by solving an actual need not just a want.
Couple this together with the dramatic increase of Internet users due to mobile device growth and penetration into the rural areas of China. Because so much of China’s Internet user growth has been strictly on mobile (with these new users having skipped the personal computer age altogether) close to 79% of all sales online in China are done via mobile, whereas Amazon and Ebay would be thrilled to achieve 25%.
So what does this do for me you ask? As much as China’s ecommerce is growing, its cross-border ecommerce is growing even faster at 86%. It is predicted that by 2020 a quarter of China’s population, which accounts for 50% of all digital buyers globally, will be shopping on foreign-based sites either directly or via third parties. Opportunity knocks my friend, are you ready to answer the door?
There are 3 ways to be a part of China’s ecommerce: sell products on online marketplaces, create a personalized ecommerce storefront, or operate a stand-alone ecommerce website. Because the Chinese online market vastly differs its Western counterpart, you’re likely to find it very confusing to choose the best option for your business. To try and help you out, here are some short overviews of some options with their advantages and disadvantages. Enjoy!
Online marketplaces are great gateways for global companies to reach out to Chinese consumers. The main advantage of online marketplaces is that they require less work to get up and running, meaning you can start selling sooner. The biggest drawback of this setup is that you’ll definitely lose that personal touch; your products are going to be listed beside competing products whether you like it or not. If you do choose to go this route then Tmall should be your first choice (over the aforementioned JD.com). Tmall is the biggest online marketplace in China and has an established reputation.
An Ecommerce storefront is a great alternative to an online marketplace because set up allows for a personalized web page where your products are sold. The disadvantage of this option is that you will still depend on a third party platform. In other words, you do not have full control over the setup process or operations compared to a stand-alone ecommerce option (discussed below). A great platform, and the only platform we’d recommend to build a storefront and sell products on, is WeChat. Due to WeChat’s huge customer base, your products could experience huge exposure to the Chinese online community. Moreover, the set up of WeChat will allow you to speak with your customers directly enhancing your level of customer service and ultimately loyalty to your brand. Read here how to build a customized WeChat storefront.
Stand-Alone Ecommerce website
Stand-alone ecommerce websites are a great option for businesses that want to build a unique experience for their consumers. Obviously, a 100% personalized platform will allow you to adjust and adapt the web experience to the particular tastes of the users you are looking to attract. Moreover, this setup allows you to fully manage your company’s processes and operations. The main challenge of a stand-alone website is that it requires a lot of up-front work and time to build and manage. Here is the detailed description how to build a stand alone ecommerce website in China.
Beijing-based Web Presence In China (WPIC) is an independent, full service digital marketing and IT development agency. WPIC helps businesses setup and manage eCommerce customized platforms or storefronts. Having over 13 years of on the ground experience in the China digital sector, the firm has worked with over 300 global companies and leads a team of 120 people between their global offices. WPIC supports China and the greater APAC region in digital and IT solutions.