Ecommerce is forcing China’s retail landscape to change. While countless new stores open online every month in China, more than 200 physical retail chains shut their doors last year. Even China’s leading property firm Wanda is busy closing department stores. 5.6% less people worked in retail in 2014 than 2013 according to the China Retailers’ Association.
Online sales in the Mainland are now larger than China’s top-100 retailers’ turnover. The 19 million new Internet users who came online in the first 6-months of the year, will only increase the pool of potential purchasers.
One of the hot topics about online shopping right now is cross border commerce. Initiatives such as Free Trade Zones allow foreign goods to be shipped to consumers significantly faster than in the past, and removal of 17% VAT duty on imports. This is coupled with increasing demand from consumers who want safer, trustworthy, and often cheaper goods from abroad.
Ecommerce’s big players such as Alibaba and Jingdong are taking advantage of the trend, launching national pavilions that allow easier access to imported goods. The most recent was JD’s US Mall last week, selling everything from American shoes and luggage, to Taylor Swift’s fashion line.
Two-thirds of Chinese cross-border shoppers on Tmall Global are female, with 44% earning between $15,000 and $40,000 a year. 60% are married with children. They are some of China’s most discerning consumers, who do a lot of research before buying products.
Unfortunately, just listing on a cross border platform is no guarantee that you will sell a single item in China – many don’t. The most successful brands are those who ensure their positioning appeals to Chinese consumers, coupled with smart and well executed marketing campaigns so they can be found and engaged with.
Great products and marketing need to be backed with excellent customer service online. 90% of ecommerce transactions involve some form of interaction between the customer and vendor, and poor service often ends up with a negative review that will effect customer perception and search results. There are plenty of opportunities with cross border commerce, but only if it is done right. China Skinny can help with that. We hope you enjoy this week’s Skinny.
Ecommerce Forces Change On China’s High Street: While one-stop shopping centres are thriving in China, department stores are closing – squeezed by larger high end malls on one side, and price competition from online stores on the other. In 2014, 201 retailers closed across China – 474% more than the previous year.
Wanda Scales Down Department Store Business: China’s leading property firm Wanda is scaling back its diversification drive and closing 10 department stores, mostly in Tier 3 and 4 cities.
Buzzwords: China’s Niche Consumers: Descriptions of those fascinating consumer tribes that are unique to China.
China’s Netizen Population Hits 668 Million: China’s online population grew 18.9 million to 668 million in the first half of the year. 36.8 million more people accessed the Internet by mobile, with 594 million – or 88.9% – of online Chinese accessing via smartphone. Rural residents account for 27.9% of online Chinese.
China’s Rural Consumers Buy More Online: Online shopping by China’s rural residents grew 18% faster than urban residents last year, although they still account for just under 10% of all sales. Mobile shopping grew 250% in rural areas in the past 12-months. The less economically developed a region is, the faster its ecommerce growth, with 75 of the top 100 growing towns in China’s Northwest region.
Chinese Consumers Want Fast Delivery, Alibaba Executive Says: Free Trade Zones are making delivery times for cross border commerce much more acceptable. Beauty products (31%), baby care (17%) and food (11%) represent the three largest cross-border ecommerce categories.
Price War Looms As Smartphone Market Booms: China’s hyper-competitive smartphone market is a win for consumers who are getting higher-speced devices for less. Last year’s darling Xiaomi is falling short of its ambitious 2015 growth targets with first half year sales increasing 33.5% to 34.7 million smartphones. Huawei is hard on its heels, growing 40% to 31 million.
China Is Now The World’s Biggest Ice Cream Market: Icecream is said to have been invented in China, but it’s taken 2,000 years for consumers to warm up to the dessert. One third of the world’s icecream bought is now consumed in China. Chinese spent $11.4 billion on icecream last year – 54% more than 2009, and just ahead of the $11.2 billion spent in the U.S. according to Mintel.
Walmart Wholly Owns China’s Ecommerce Platform Yhd: Recognising the growing importance of online grocery sales in China, Walmart has increased its share of Yihaodian to 100%. The company first invested in 2011 and raised its share to 51% in 2012.
Remy Martin To Export ‘Smart’ Cognac To China To Stop Fakes: A “smart” bottle of Remy Martin Club Connected Cognac will be available “in nightclubs in three big Chinese cities.” Consumers can download an app which will communicate with a chip in the bottle cap, allowing them to be sure the bottle has never been opened, along with other information. The bottles will only be sold in China.
Chinese Seek Modern Elixirs For Health And Longevity: Chinese consumers turning to vitamins and protein supplements to proactively maintain their – and their pet’s – health. Protein powder, calcium supplements, laxatives, vitamin E and weight loss products are the most popular categories, with most selling through direct sellers.
Alibaba Is Swooping In To Fix China’s Serious Sperm Shortage: Within three days of Alibaba launching its latest bank, 22,000 Chinese men had given samples earning subsidies of up to ¥5,000 ($805) a pop. The initiative is hoped to address the shortage of deposits – in part because 55% of depositors are turned away for inadequate sperm count – leading to a black market for sperm in China. Men can only donate sperm once in China.
The Taylor Swift Tiananmen Square Fake Controversy, Explained: Taylor Swift is launching a new line of branded clothes on JD and Tmall next month emblazoned with ‘T.S. 89’.
China’s Consumers Embrace Credit Cards As Regulators Rebuff New Industry Entrants: 91% of China’s cards issued are debit cards, nevertheless, the 9% that make up credit cards, accounted for 34% of China’s $6.8 trillion card-based purchases last year. Credit card purchases grew 43.3% in 2014.