Daily Digital Pulse of China: China E-Commerce, China Multichannel
JD.com Gets an IT Makeover
E-commerce in China is skyrocketing. The average number of users accessing online retail platforms via the mobile Internet was 122 million per month in the first half of 2013. JD.com, which accounts for 50% of the B2C market, saw its revenue increase in line with the rise of the mobile Internet – a 22% rise on its 2012 figure. However, such unprecedented levels of growth present online retailers with new challenges – how do IT systems adapt to the rising tide of Internet traffic? Will they be overwhelmed the sheer volume of hits, searches and payment requests? Faced with an ever-increasing number of online shoppers, JD.com has taken the initiative. The company has announced that it plans to upgrade its entire IT system in partnership with Fusion-io – a Salt Lake City-based hardware/software developer. Fusion io’s input will enable JD.com to gather big data in new ways, as well increasing the speed at which its online platform responds to user searches, queries and credit card purchases.
E-Commerce is On the Move
For Internet newbies, mobile devices are now their first point of contact with online shopping. 2013 is expected to be a landmark year for Chinese mobile e-commerce – “This is the year in which online retailers have shifted their strategic focus to the mobile realm”, say market gurus. Broadly speaking, R&D investment no longer goes into developing new technology to enhance the PC user’s customer experience. Companies are churning out mobile apps for smartphones and tablets instead. The shift of emphasis from static to mobile technology is not just confined to China’s online retailers. Baidu’s recent acquisition of 91 Wireless was widely interpreted as a long-term, strategic move. Although PCs and laptops aren’t likely to become obsolete in the near future, it seems they are less and less popular when it comes to e-commerce-related activities – browsing, price comparison, and online payment.
Tencent and Alibaba – the Battle of B2c
WeChat users can now make online payments. The payment function can integrate bank accounts, be they debit or credit, with a customer's WeChat account, which will enable more than 300 million users to make purchases on several e-commerce platforms. Items can be scanned using a product's barcode, allowing the user to jump directly onto the e-commerce website selling the product and order it immediately. Tencent's move is seen as the latest counteroffensive against Alibaba Group, which said last Wednesday that it would block online sellers' access to WeChat, citing security reasons. Shoppers have instead been offered the option to log on to Alibaba's Taobao marketplace using their accounts on Sina Weibo, on the same day that Tencent released WeChat 5.0. The move is seen as an attempt to help advertise the products of some online vendors on Sina Weibo, and try to redirect potential shoppers from Sina Weibo to Taobao..
Source: People's Daily
Smartphones are on the Rise, Yet Mobile Advertisement . . . Not so Much
Mobile phones keep gaining terrain in people’s daily life. Around 45 percent of people now spend more than 3 hours on their cellphones on a daily basis. This is significantly higher than the average time that people spend on TV, which is only 1.36 hours. It is also important to acknowledge that while the influence of smartphones continues to expand, the role of other media sources is diminishing. Last year, more than 60 percent of the Chinese population reduced their use of television, magazines, newspapers and radio. The rise of smartphones has brought along the attempts of many to invest in mobile advertisement. Yet, many enterprises investing in this type of publicity have failed to gain a positive response from mobile users. Why is this? It’s mainly because on smartphones consumer’s time and space is severely compressed. Examples of advertisements aimed to capture consumer’s time can be mostly seen on TV, where publicity in the form of commercials is mostly mandatory. Publicity oriented to attain consumer’s space is more evident through pop-up ads or in newspapers ads, which are not really mandatory, yet attempt to get a consumer’s attention by occupying space. Yet, in smartphones there is very limited space to implement either of these types of ads. For instance, the overwhelming majority of users use smartphones to chat. In fact, chatting counts for 40 percent of all activity done in smartphones. This sort of activity requires very brief and fragmented interaction between of a user with his smartphones, thus not leaving enough time for advertising aiming to conquer consumer’s time. Similarly, it is hard to take advantage of a users space due to the relatively small size of a smartphone’s screen. Regardless of the complications brought by the size of the screen, according to a survey advertising aiming to seize the space on ones smartphones is weak, this is because the activities done on these devices require users to dedicate them significant attention, which is not the case in TVs or in newspapers.
E-Commerce Expands to Chinese Towns
As impressive as it might sound, residents in small-towns in China are starting to spend more on online shopping than their compatriots in urban areas. According to a report released by Taobao in late July, people living in townships spend around 5,628 Yuan annually on online shopping. This is 1,000 Yuan more than people in the cities do. Even when it comes to nonessentials, people living in towns seem to be spending more than city residents. For instance, small-town shoppers spent 765 Yuan on average per person on Estee Lauder cosmetics, more than the 652 Yuan by people in first and second tier cities. So why would people in small towns be spending more than people in cities? It could be mainly because in small towns there are not many retail stores, thus in certain occasions people can only purchase goods online, in conjunction with this another large contributor is the growing income and global outlook of Chinese consumers therefore adding to the ever increasing demand for more international and luxurious products. Moreover, according to a report released by McKinsey Global back in March, 57 Yuan out of every 100 Yuan spent on online shopping come from third and fourth-tier cities.
Express Delivery Business Grows Thanks to Online Shopping
The express delivery industry is expanding rapidly! In fact for over 28 consecutive months the industry has been expanding by more than 50 percent. Something that would be virtually impossible without online shopping. During the first half of 2013, express business revenue totaled 62.98 billion yuan, signifying an increase of 34.5% from last year. Express delivery can thank online shopping for this as it has accounted for more than half of this expansion, this is due to the fact that in the first half of 2013, online shipping increased 36 percent and while 70 percent of the net online purchases required express delivery.
Source: Tech Sina