What strategy should an ecommerce retailer pursue in China?

When was the last time you pressed the “buy” button to purchase something online? You are probably among the 95%i of British consumers who now shop online and mirror a global trend. In the world’s most populous nation, it is estimated that half a billion Chinese are online. To put that into context, picture a market that combines the populations of the United States and Brazil – yes, that’s pretty sizeable. Now take into account that China’s economy is worth nearly $11 trillion and the 2015 Singles Day shopping festival generated $14.3billionii – smashing the 2014 record by

$5billioniii. You have a large, lucrative market that online retailers just can’t ignore. So, what

strategies should an e-commerce retailer pursue to succeed in China?

The always-connected Chinese consumer

One of the biggest mistakes some companies can make is to generalize and assume that all Chinese consumers are homogenous. China’s working age population is around 915 millioniv and Goldman Sachsv identified four tiers of potential customers every business should be mindful of:

• 4 million movers and shakers have an annual income per capita of around $500,000.
• 146 million people belong to the urban – ‘narrow’ –class with an annual income per capita just over $11,000.
• 236 million blue-collar and migrant workers belong to the urban mass and have an annual income per capita just over $5,500
• With a population of 387 million, China’s rural workers have an annual income per capita just over $2,000.

Each of these customer segments have different requirements when shopping online. A survey conducted by KPMGvi on why Chinese consumers shopped online found price as the key reason why people chose to buy online. China’s digital consumers, the report notes, are more aware of price.

Other factors included convenience and variety. Younger Chinese consumers revealed that they could buy unique or bespoke items online – unlike at shopping malls. Consumers outside the main cities – where brands may not have physical stores – responded that they shop online to have access to a better range of products and brands.

Mobile strategy

At its recent earnings announcement, Apple revealed that its iPhones sales were up 87%vii in China. And along with Apple, handset makers such as Huawei, ZTE and Xiaomi have all helped China achieve an impressive mobile penetration rate of 95%viii. Given that 80% of Chinese consumers access the web via a smartphone, no wonder mobile commerce in China grew by 100% in Q3 2015ix. Put simply, retailers must take mobile into account – like any Western market – when planning an ecommerce strategy in China. In terms of apps, for iOS it is Apple’s App Store. However, instead of Google Play, it is 360 Market, Baidu’s 91 Wireless, UCWeb, Tencent’s MyApp, Xiaomi’s Mi Market, and Wandoujiax.

One of the most effective means of reaching Chinese consumers, especially millennials, is via the

country’s unique social media platforms. The likes of Baidu, WeChat, Youku and Weibo have soared in popularity and had over 630 million users by the end of 2014xi.

Chinese consumer spend an average of 25 hours a week on social mediaxii and their buying decisions are certainly influenced by it. Like their counterparts in the West, Chinese shoppers often showroom at bricks and mortar stores, then go online to research and purchase the product – then they share reviews of it via social media platforms. No business hoping to tap the Chinese market can overlook the country’s popular social media and mobile app landscape.

Web strategy

Retailers have two options when it comes to their online strategy. They can partner with a local company such as Alibaba and find a home via its Tmall or Taobao marketplace. The platforms attract millions of Chinese customers a day and is home to over 70,000 brandsxiii. One retailer that recently chose Tmall is supermarket behemoth Sainsbury’sxiv. The company is hoping to take advantage of China’s online grocery market, which IGD estimates to be worth over $180bn by 2020xv. Given that there are thousands of competing brands on Alibaba’s platforms, some retailers prefer to launch their own ecommerce website.

If you choose this option, at the risk of stating the obvious, ensure that ecommerce solution is localized – rather than relying on an English language website to reach Chinese netizens. While a growing number of Chinese speak fluent English, a Mandarin website would ensure that you don’t exclude potential clients.

Provide value and local insight

Chinese consumers – like most online shoppers in the world – have little time for sluggish websites and apps. It is estimated that nearly half of all shoppers abandon their shopping carts because of dead or slow loading dataxvi. Even a few seconds in data transfer times could cost you customers. That’s why the location of your data centre can make a crucial difference.

China Telecom Europe has local data centres to ensure that your platform is reliable, robust and works 24/7/365. The network provider has over 250 data centres spread across mainland China and can provide high quality bandwidth with lightning fast connectivity. Retailers can’t lose customers because of poor technology – remember that a competitor is only a click or swipe away.

Similar to how slow loading websites annoy shoppers, consumers also need their orders delivered on time. China Telecom Europe has provided advanced technology to enable local logistics companies to offer enterprise-class delivery services across the nation. Thanks to this, ecommerce retailers can now offer a one-stop shop that includes order dispatching and the mobile tracking of orders to offer added value to their clients.

China Telecom Europe can provide local insight and experience to help ecommerce retailers establish their business in China. To find out more

Please contact: emea.marketing@chinatelecomglobal.com Or visit: www.cteurope.net