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China is the fastest growing e-commerce market in the world and there’s no indication that this is about to change. E-commerce in China is constantly improving for both consumers and sellers. Internet giants, using the latest technologies, have created the best e-commerce platforms in China. Thanks to their efforts, sales platforms, or marketplaces, are constantly being developed with new features and innovative business models. All this to simplify the buying and selling process, increasing profits for companies and making shopping more enjoyable for consumers. That’s why China is a great resource for monitoring e-commerce trends!
- Taobao, WeChat, and JD.com are the e-commerce industry leaders in China.
- The e-commerce trends of today are mainly influencer partnerships, live shopping, and selecting products by scans or photos.
- Digital wallets and group shopping are also gaining remarkable popularity.
China’s E-commerce Leaders and their Key Tools
Over the past few years, many solutions in the e-commerce world have been refined to adapt to the demanding and changing needs of consumers. China’s online commerce is mainly based on marketplaces and social media shopping, with e-commerce leaders Alibaba Group, JD.com, and WeChat. Let’s take a look at some of the most popular Chinese e-commerce sites and learn about the solutions they offer.
E-commerce industry leaders in China:
Alibaba Group and Taobao
The Chinese e-commerce market is dominated by the Alibaba Group. It includes two of the most famous platforms – Alibaba.com and Aliexpress. Their popularity stems from the fact that they sell overseas. Alibaba operates in the B2B model, while Aliexpress operates in the B2C model.
The other sites in the group are platforms aimed at Chinese users. One of them is Taobao.com, China’s largest online store, which operates on a C2C basis. This platform, which allows small businesses and entrepreneurs to list and sell a wide range of products, from toys and clothes to electronics and cars. Launched in 2003, the site operates on similar principles to American eBay. Goods can be sold at a fixed or negotiated price or by auction.
There are several tools on the Taobao platform designed to help brands reach more consumers and support marketing efforts. All of these tools have different functions, but one goal – to facilitate the sales process:
Image search: The option available on Taobao allows you to quickly search for a product based on its image. Just upload a picture and the portal will search for graphically similar items.
Weitao – social media integration: A social media platform built into Taobao for better communication between sellers and consumers. Brands and influencers use Weitao to publish content, engage consumers, and ultimately attract customers and increase sales. Consumers, on the other hand, use Weitao to stay up to date with news, read product reviews, and connect with brands.
With this option, when consumers see something they like, they can go directly from viewing the product to purchasing. This eliminates any additional steps that may distract a potential customer from completing the transaction.
Taobao Live – live streaming with the seller: E-commerce live streaming is a sales method in which streamers present products and viewers can make purchases in real time. The opportunity for more dynamic, interactive sales based on real-time feedback has been extremely popular with consumers, and in recent months has been breaking records for sellers. Brands and companies that have been affected by pandemic restrictions are increasingly turning to Taobao Live to relaunch their businesses and reach the largest possible audience.
WeChat is a multi-functional application developed by Tencent for social media, messaging, making payments, and making purchases. It is the Chinese equivalent of Facebook, Instagram, Twitter, WhatsApp, and many others. All in one place.
An e-commerce option has been introduced to the app that was initially intended as a messenger. With the introduction of WeChat Store and WeChat Pay functionality, it has become a commerce platform. Wechat Pay allows you to make online and offline payments using QR codes. Moreover, the application’s functionalities are being developed all the time, thanks to mini-programs.
Mini-programs are smaller applications inside one application. Here are the possibilities they offer:
Scan-and-go shopping: Shoppers can use the mini-program to scan products and make payments without waiting in line. There’s also a home delivery option.
Multi-channel sales: Uniqlo’s mini-program allows shoppers to place an order online and have their purchases shipped to the store. Within an hour, the goods are ready for pickup.
Group shopping: Companies offer discounts to an entire group if a certain number of shoppers are found willing to shop. It works like this: the leader of a community promotes a product with a discounted price in their network to a group on WeChat. If enough people make a purchase, each buyer receives the product at a discounted price.
Influencer sales: Influencers, also known as KOLs (key opinion leaders), promote products on their profiles and lead buyers directly to the product-specific page. The entire buy-sell transaction takes place inside the app. Influencers have various tools at their disposal when creating promotional content within WeChat KOL.
WeChat Article – an option with which to create content that includes text, images, video
WeChat Channel – a video channel for content creators, brands, companies and individuals to reach audiences outside their circles of friends/observers
WeChat Live Streaming – Tools for Easy Implementation of Live Streaming
Unmanned stores: Owners of unstaffed stationary stores use WeChat to allow shoppers to enter the store, leave with their purchases, and receive a receipt through their WeChat account. The EasyGo mini-program provides a QR code that shoppers scan to enter the store. Payment is made through WeChat Pay.
JD.com is the second largest e-commerce platform in China. It offers millions of different products that include categories such as cosmetics, fresh food, clothing and electronics. JD.com allows sellers to open virtual storefronts, but unlike Taobao.com, JD.com has its own warehouses and it’s possible to sell directly to end customers. Thus, JD.com operates more like a traditional online store, on a similar basis to Amazon. JD uses three basic models:
JD.com Direct Sales: JD processes orders and is responsible for things like international logistics, customs, warehousing, product page design, marketing and after-sales services.
JD.com Marketplace: The salesperson fulfills orders. He or she handles customer service, marketing, and sales in general. However, it can use JD.com’s international logistics services, meaning it does not have to deal with customs issues, warehousing, and delivery to customers.
Selling Worldwide: JD Worldwide is a cross-border e-commerce platform. It offers international merchants the opportunity to enter the Chinese market by providing shipping and warehousing solutions. JD Worldwide is open to brands, retailers that are legally registered outside of China and sell products originating outside of China.
Ecommerce Trends in the Chinese Market
When it comes to innovation in the world of e-commerce, China is definitely a trendsetter in this regard. Over the years, e-commerce in China has evolved a lot, responding to the needs of customers and sellers. The above-described solutions and functionalities are a response to e-commerce trends, although it’s difficult to say whether they were always an effect or a cause. Here is a list of e-commerce trends that we can observe in China.
To boost brand sales, companies engage influencers, or key opinion leaders (KOLs). These are paid collaborations to promote a particular product. A KOL is an expert whose opinion is valued in a specific industry. They are people who are trusted and respected in a given environment, who have authority by building long-term relationships with their audience. When a brand chooses a KOL to collaborate with, the brand or product fits into the content created and promoted by the author. It all depends on the product they want to sell. KOLs can be models, movie stars, singers, fashion icons, etc. Not every famous person or celebrity can be a KOL.
As Chinese e-commerce rapidly responds to changing consumer preferences, another type of influencer is increasingly being used to build brand awareness and increase product interest, namely the KOC (key opinion consumer), or opinionated customer. This is a customer who has reached out for a product themselves and shares their honest opinion about it. Chinese Internet users increasingly suggest the choices of ordinary users, trusting that their reviews have not been paid for.
In a culture so heavily involved in mobile, the strong interest in digital e-payment does not seem surprising. Tencent (WeChat Pay) and Alibaba Group (Alipay), for example, offer such a solution. Digital wallets are a complete payment method that allows you to make payments from your smartphone in a very simple way. You can pay on a website, in an app, and also in a stationary store. Users store funds in their mobile digital wallets. Based on these funds, a QR code is generated that can be used to pay by scanning it in stores. This trend has integrated online systems into everyday offline shopping.
Online cross-border commerce (cross-border) is a relatively new type of sales channel that was introduced to help foreign brands enter the Chinese market. In the cross-border model, goods are sold online on platforms designed for foreign companies (such as the aforementioned JD Worldwide). Listing your products on such a platform is the fastest way to test the prognosis of a product on the Chinese market. Another big advantage is that you can sell your products directly to end consumers. Sellers and consumers making transactions in this model can count on special conditions when it comes to customs, sanitary issues and necessary certificates.
Shopping via Social Media (social e-commerce)
The largest e-commerce platforms in the country are strongly integrated with the most popular social networks, offering innovative services such as mini programs and live trading.
Social e-commerce is a response to an oversaturated market, increased competition and rising consumer acquisition costs. Undoubtedly, the rise of a new class of consumers – affluent, discerning and mobile millennials – has helped accelerate the e-commerce revolution. Because this demographic dislikes traditional advertising, marketers have had to come up with alternative ways to drive engagement and build strong connections with customers. Millennials are educated and innovative young people who like to be pampered. They choose to shop on social media because of their need for entertainment and instant gratification.
Innovative technologies have also improved the overall shopping experience by making the process more convenient, positive and quic, resulting in the popularity of live streaming, partnerships with KOLs, group buying, and flash sales (sales consisting of a short-term discount on a product).
Integration of Online and Offline Channels
Customers add offline products to their online wish list, compare products online then watch them live, make final purchase decisions in front of a desktop computer, pick up online orders in-store, scan QR codes in stores, use self-service checkouts. Based on these consumer behaviors, we see online and offline channels becoming increasingly integrated, creating new hybrid shopping models. The O2O trend has been around for several years in China and continues to grow in strength.
The term O2O (Online-to-Offline) basically refers to anything in the online world that draws customers to physical stores or makes them buy products and services that are traditionally sold offline. Although e-commerce in China has tremendous benefits, O2O companies can still compete by focusing on reaching the right consumers who are willing to go to a store to test a product or save delivery time when purchasing a product.
A big part of integrating online and offline channels is QR codes, which in addition to serving as a payment method, can be easily shared online or printed on marketing materials such as posters, packaging, banners, and then scanned with any smartphone. QR codes can link to websites, social media accounts or any other appropriate online channel.