Home  › Marketing › Retail
china

3 Key Trends Emerging From the Growth of Digital Retail in China

  |  April 28, 2014   |  Comments   |  

China is the world's second largest retail market, with e-commerce growth at 84 percent year-over-year. Consider these three trends and what they mean for brands.

According to figures from the Fung Business Intelligence Centre, China is now officially the world’s second largest retail market, and is expected to take the top spot from the U.S. within the next five years. Such significant growth is bound to have ramifications for the evolution of retail in China as a whole and e-commerce in particular, which has seen a massive 84 percent growth year-over-year. So what are the key trends emerging from this burgeoning market and how can brands exploit them?

1. Mobile Is Becoming the Most Important Digital Sales Channel

Growth in sales via mobile has driven the impressive overall e-commerce figures, with a 181 percent year-over-year increase in transactions – understandably, as it’s the channel of choice for Chinese consumers who might not otherwise have access to either physical stores or the Internet via desktop. But it’s no longer just about accessibility – the major e-commerce players such as Tencent, Alibaba and, most recently, Baidu, have all recognized the potential of the channel and used their size, reputation, and brand equity to develop mobile payment systems that are trusted by their customers and offer a secure, simple, and speedy way to pay for online goods.

What this means for brands: While mobile has always been a vital part of brand strategy for retailers with interests in China, they now need to acknowledge its importance by adopting a "mobile first" approach to their business plans. That means focusing on when, where, and how their customers access products via mobile, which platforms they use (iOS? Android?) and how they prefer to pay, ensuring business objectives include integration of all key channels via mobile, to guarantee supply chain integrity, seamless delivery of stock and ease of payment. This will allow retailers to access some of the $5billion+ in mobile transactions processed each year – a figure which is only likely to get bigger.

2. "Rural" Will Be Just as Important as "Urban"

While consumers in tier one and two cities are still responsible for the majority of digital retail sales, the most significant growth is coming from rural tier three and four territories. Ongoing investment in these areas has led to a steady increase in amounts of disposable income, and while they still lag behind urban levels, this, coupled with the influx of commerce-ready smartphones, has encouraged online spending in China’s more remote cities.

What this means for brands: The key message here is that retailers will be missing out on a significant revenue stream if they focus all of their attention on the more westernized urban areas of China. While it might be a step outside their comfort zone (it’s far easier to market products to consumers who are already brand-aware and used to western retailers’ content and style), it will add value to brands’ bottom lines if they research rural consumers’ behavior and preferences. For example, they shop less frequently than their urban counterparts, but when they do decide to buy, they tend to spend more. Analysis of their shopping patterns will allow for strategic online placement of promotions, deals, and offers to coincide with the buying cycle.

3. Domestic Brands Are Expanding While International Brands Are Becoming More Focused

Now that an increasing number of Western retailers are establishing themselves as viable brands in China, domestic retailers are upping their game when it comes to competition. They are looking to expand their presence, either by physical growth or more relevant to digital retail, by differentiating themselves through specialization and a focus on promotion through social networks. As part of this, they are making a concerted effort to understand customer needs so that they can hone their product offerings and online presence to meet their requirements. Conversely, in response to increasingly competitive market forces and the shopper’s desire for top quality goods at bargain prices, a number of international retailers are turning their focus inwards in an attempt to sharpen their price points, “localize” their business (rather than simply impose western strategies on an eastern market) and use this to offer a more compelling and relevant digital experience.

What this means for brands: It’s evident that retailers that chose not to heed advice about getting to know the local market and adapting their approach to suit customers in China is now having to re-evaluate their strategies. In the future, brands will need to pay specific attention to the way domestic retailers are behaving, learn from them and incorporate relevant approaches and activities into their business plans if they want to continue to compete in an increasingly active market.

Subscribe to ClickZ Asia to receive your weekly dose of the region's latest trends, tips, and insights straight to your inbox.

ClickZ Live Chicago Learn Digital Marketing Insights From Leading Brands!
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda, or register and attend one of the best ClickZ events yet!

ABOUT THE AUTHOR

Elisa Harca

Elisa Harca is a digital retail and engagement expert with more than 13 years' experience working with some of the world's leading brands, including Swatch, MAC Cosmetics, Samsung, and Ericsson. She has worked with clients extensively in North America, Europe, and most recently Asia, and at Red Ant she is responsible for leading teams of digital specialists in Hong Kong and China in bringing its award-winning mobile retail technology to businesses across the territory. Recommended as an expert digital and mobile consultant by market leaders, she is a regular speaker at industry events including The HUB and UKTI's GREAT Weeks, and also hosts workshops for high-profile industry executives. Harca is recognized worldwide for her professionalism, integrity, and her ability to help retailers navigate the increasingly complex global digital landscape.

COMMENTSCommenting policy

comments powered by Disqus

Get the ClickZ Marketing newsletter delivered to you. Subscribe today!

COMMENTS

UPCOMING EVENTS

UPCOMING TRAINING

Featured White Papers

Google My Business Listings Demystified

Google My Business Listings Demystified
To help brands control how they appear online, Google has developed a new offering: Google My Business Locations. This whitepaper helps marketers understand how to use this powerful new tool.

5 Ways to Personalize Beyond the Subject Line

5 Ways to Personalize Beyond the Subject Line
82 percent of shoppers say they would buy more items from a brand if the emails they sent were more personalized. This white paper offer five tactics that will personalize your email beyond the subject line and drive real business growth.

WEBINARS

    Information currently unavailable

Resources

Jobs

    • E-Letter Managing Editor--Stephen Petranek’s Tomorrow in Review
      E-Letter Managing Editor--Stephen Petranek’s Tomorrow in Review (Agora Financial) - BaltimoreWe’re looking for a talented, persuasive storyteller...
    • Executive Assistant
      Executive Assistant (Agora Inc. ) - BaltimoreAgora Inc., an international publishing company, located in the Mt. Vernon district of Baltimore, MD...
    • Paid Search Specialist
      Paid Search Specialist (Boathouse, Inc.) - Waltham  Boathouse is looking for a Paid Search Specialist to work as a part of the Digital Acquisition...