New Retail is replacing traditional retail. Pioneered by Alibaba, the blending of online and offline commerce is introducing experience in the equation, thus changing the whole game
A recent report released by eMarketer has made it clear: China’s $1.94 trillion e-commerce market is the largest in the world. It is three times larger than the US one, contributing to 54.7% of the $3.5 trillion global e-commerce market expected in 2019.
These are stunning figures, which are driven by innovation and China’s growing purchasing power. But there is a concept that is changing the whole game in the Middle Kingdom and that is now ready to inspire innovations in retail across the globe. It is the New Retail, the blending of online and offline commerce to drive higher levels of engagement between brands and consumers.
In the western world, it is called omnichannel strategy. However, the New Retail concept goes far beyond the multi-channel approach, introducing the customer’s experience in the equation.
The New Retail model was introduced by Alibaba’s founder three years ago. In October 2016, Jack Ma wrote a letter to the shareholders stating that “in the future, e-commerce alone will become a mature business and will fade away being replaced by the concept of New Retail, which is positioned at the convergence of four forces: online, offline, logistics platforms, and big data.”
At that time, Ma’s message came as a surprise. During Alibaba’s highest growth momentum, the president of one of the world’s largest e-commerce companies was saying that the only way to give online retail a future was to introduce a model completely different from the current.
For Jack Ma, the future of retail is not a question of channels, but of experiences. New Retail, therefore, consists of offering a new shopping experience, which blends online and offline commerce. This way, the entire customer journey is completely redesigned.
For years, in-store sales and digital commerce were managed separately by companies, each with its own databases, customer relationships, loyalty program, transactions, and logistics. Therefore, three years ago, the challenge was to create contact points between the online and the offline world.
New Retail is a phrase coined by global icon, Jack Ma. Ma started advocating for the concept in 2016, which he outlined as “the integration of online, offline, logistics and data across a single value chain.”
To implement the New Retail model, Alibaba acquired the supermarket chain Hema. Here, consumers can buy online via the mobile app and pick up the purchase in the store or have it sent home in half an hour if they live within a 3km radius from the point of sale. However, the Hema app is also central to the traditional in-store experience. Customers can use their mobile to scan the products and receive the related info or add the groceries to a virtual cart in order to receive them home.
On one hand, online and offline experiences become one for the consumer, who chooses and alternates them according to the time available, the mood or the arrangements for the day. On the other hand, Hema supermarkets double their role and act as both physical stores and logistics platforms.
The results of the first two years of the Hema experiment are extraordinary. Hema customers buy more than 50 times a year on average and online orders represent 50% of transactions, with peaks of 70% in the big cities. In the last three years, Alibaba’s Hema opened over 100 stores in China, driving the trend that is revolutionizing the entire retail industry.
Following Jack Ma’s innovation, in January 2018, China’s second e-commerce giant JD.com opened its grocery store chain called 7Fresh. Just like Hema supermarkets, 7Fresh provides fresh produce and 30-minutes delivery service. In addition, these stores also host robotic smart carts that guide and follow customers through the aisles.
The one-dimensional purchasing tunnel as it existed a few years ago is no longer relevant. With the New Retail model, Chinese consumers will no longer think in terms of separate purchasing channels but use all of them at the same time for various purposes such as product research, delivery or customer service.
Accordingly, brands also have more ways to interact with targeted consumers and thus ensure deeper brand engagement. This next-generation retail, in fact, provides customers with a personalized and interactive experience, leveraging new technologies and data science.
China is a mobile-driven society, therefore, digital commerce is already well established. Chinese consumers use their smartphones for almost everything, including payment. Thanks to the New Retail model, customers now can try on clothes virtually or pay via facial recognition without even going to a physical store or a checkout counter.
For example, during Alibaba’s Singles Day in 2018, the company partnered with brands to bring pop-up stores to its consumers, where artificial reality mirrors and smart speakers were connected to personal shopping accounts on retail websites Tmall and Taobao.
China’s increasing digitalization, the emergence of data science, and the consumers’ need for immediacy and traceable quality are the key factors in the success of New Retail.
However, this system is essentially based on personal data collection. Through the collection of consumers’ data, New Retail makes stores omniscient. With big data, brands can use artificial intelligence to customize product catalogs and experiences according to consumers’ demands, thus increasing both engagement and loyalty.
New Retail also turned shopping into an immediate purchasing experience. It means that while watching a showcase of products, the customer can directly choose to have one on the shopping cart. It was the “See Now, Buy Now” fashion show that has allowed consumers to immediately buy the clothes they were seeing during the show for the first time. Alibaba tested this technique during the annual Global Shopping Festival event in 2016, but it is now implementing immediate shopping in stores as well.
Nevertheless, in addition to speed, Chinese consumers also ask for quality today. Healthier products, higher food safety, and more precise tracking are now part of consumers’ demand. Therefore, New Retail stores have introduced product tracking. For example, at Hema, customers can scan a QR code to watch short reports on the origins of items, including, pictures of the distributor’s operating permits and food safety certificates.
Moreover, given that retail is consumer-centric, in-store technology has now become part of the strategy to attract customers and help them make purchasing decisions quickly. New Retail in China has made static stores obsolete. The in-store experience is lively now and leverages “sensory marketing” to influence the behavior of customers.
China’s mobile-driven society and mobile payments are two crucial factors in the spread of New Retail across the country. Chinese consumers rely on apps for both online shopping and payments at physical stores. About 81% of smartphone users in the Middle Kingdom will use mobile payments this year, compared to just 27% in the US.
Therefore, we could say that the New Retail is built on China’s digital-first approach to commerce because it largely leapfrogged the brick-and-mortar expansion seen in the West and went quickly to online. In the West, instead, an omnichannel strategy is still trying to introduce digital services into the brick-and-mortar infrastructure to deliver to consumers the shopping efficiencies proper of the online world.
Here is what differentiates Alibaba’s model from the others tried so far: integration. Integrating data is a crucial evolution to understand everything about the consumer buying process. This means being an open book so that the system could know what the consumer needs before he actually needs it.
New Retail thus puts the customer at the center of the retail process. Given that China is home to over 600 million online shoppers, Alibaba’s system is, therefore, targeting an estimated $2 trillion market. No wonder why it is influencing retail across the entire globe.
China has been leading the world in innovation for the E-commerce industry. One area that we’ve seen Chinese e-commerce take the lead in is the creation of Chinese E-Commerce Festivals. Single’s Day (Double 11), Chinese New Year, and 6.18 are just a few of the major shopping holidays that consistently break records for E-commerce sales in China.
Most of these holidays were created by the major E-commerce platforms to offer discounts and drive sales during these periods. The largest shopping holidays were created by Alibaba and JD.com, showcasing how powerful these companies truly are. While the West has similar holidays like Black Friday & Cyber Monday, these pale in comparison to the scale of the Chinese E-Commerce Festivals.
In this blog we’ll take a look at the largest Chinese E-Commerce Festival, Single’s Day (Double 11), to help businesses obtain a greater understanding of this holiday and make the preparations necessary to take advantage of it.
What is Single’s Day (Double 11)?
Single’s Day is the largest Chinese E-commerce Holiday by far. The event was started by a group of university students in the early 1990s at Nanjing University. With many Chinese university students unable to find romantic partners during their studies, the holiday was created to celebrate being single.
The date, Double 11 (11/11) was chosen as the number “1” looks like a person who is single or alone. The holiday quickly spread from Nanjing University to various locations around Mainland China. With the rise of social media, the holiday became even more well-known across the country.
Nanjing University, the rumored birthplace of Single’s Day
While businesses had begun celebrating the holiday with discounts and promotions to cater to these single consumers, the holiday’s significance changed significantly with the launch of Alibaba’s Single’s Day E-Commerce Festival in 2009.
While the initial event only included 27 brands on the Alibaba platform, T-Mall, the discounts and promotions soon spread to Alibaba’s other platforms like Taobao. Brands on Alibaba’s platforms often offer discounts of up to 80% during this period, giving singles a reason to splurge and treat themselves.
The first Double 11 shopping festival generated a measly USD 7.5 million in sales, but by 2017 sales had eclipsed both Cyber Monday and Black Friday combined with sales reaching USD $25.3 billion. While growth has finally started to slow for the holiday due to increased competition, the shopping holiday remains the largest worldwide in terms of total sales.
Why Has Single’s Day Been So Successful?
While new Chinese e-commerce holidays have appeared throughout the years a survey by Nielsen China revealed that 81% of respondents said Single’s Day is still the one they’d most like to participate in. For every company selling their products into China through E-commerce Double 11 should be an important part of your yearly marketing strategy and be featured prominently in your calendar.
Many attribute the reason for the success of Double 11 due to its inherently selfish nature. Double 11 is a celebration of being single and treating yourself, encouraging shoppers to buy things for themselves rather than for others as is custom with more traditional holidays like Chinese New Year.
Alibaba’s focused on the holiday in its early days by launching the slogan: “ Even if you don’t have a boyfriend or girlfriend, you can at least shop like crazy.” (就算没有男女朋友，至少我们可以疯狂购物).
However, there were a lot of factors that contributed to the astounding success of Double 11 including Alibaba’s logistics network and its investment in promotional activities.
The Evolution of Cainiao: Alibaba’s Logistics Arm
The rapid growth of Double 11 required Alibaba to develop a strong logistics network to handle the massive scale of the holiday. Alibaba’s logistics arm, known as Cainiao, has done a tremendous job in keeping pace with the holiday and ensuring that deliveries go out on time despite the massive amount of orders.
In 2015 alone, the number of orders processed through Alibaba’s platforms reached 467 million, representing a 65% increase in order volume over 2014. To cope with this large growth Cainiao utilized technology to forecast order volume, handle warehousing, and make the necessary preparations to handle this increased volume.
Through this experience, Cainiao has become one of the most efficient logistics providers in the world. Even with the number of orders increasing massively each year, Cainiao has continued to improve in terms of speed and efficiency. In 2018, the total number of Double 11 orders exceeded 1 billion, with the logistics provider completing deliveries for the first 100 million packages within just 2.6 days as compared to 9 days in 2013!
Cainiao also was able to offer same day/next-day delivery to customers living in China’s larger cities. One of the first orders placed on Double 11 in 2017 was fulfilled just 12 minutes after the launch of the Chinese E-Commerce festival.
Promoting Single’s Day: Galas, Movies, and Advertising
Alibaba realized they were onto something when they launched the Single’s Day shopping festival in 2009 and invested in a range of different marketing strategies to drive growth for the event.
After running the event twice, Alibaba began to take the focus off the original holiday Single’s Day and began promoting the idea of Double 11 as the ultimate shopping holiday, rather than a day to celebrate singleness.
While the event had seen tremendous growth due to marketing efforts and more brands joining on the holiday, Alibaba recognized that the event could be even bigger. In 2014 Alibaba finally went public raising an unprecedented 25 billion USD in the world’s largest IPO. With a now overflowing war chest, the company began to invest heavily in marketing for Double 11.
In 2015, Alibaba launched its first Double 11 Gala event broadcast live on national TV. During the gala, Alibaba invited celebrities from all over the world to participate in games, events, and challenges meant to entertain and further drive sales online. Due to the success in viewership for the first event, it has been repeated each year since 2015.
Daniel Craig was one of the many celebrities invited to attend the first Singles Day Gala
While the event is primarily for entertainment purposes, the guests, celebrities, and hosts always remind the audience to go online to check out the deals available for purchase.
This has made the event more than just a shopping festival and made it seem like a real holiday. In many ways, it is similar to the Spring Festival Gala, a star-studded event hosted during the Chinese New Year period, further strengthening the festival’s connection to true Chinese holidays.
Marketing for Single’s day has gotten a bit outlandish at times as well, such as in 2017 when the company released a 24-minute Kung Fu Movie on Double 11 featuring Alibaba CEO Jack Ma and Kung Fu Star Jet Li. You can check out the subtitled version of the trailer below if you want to see Jack Ma showing off his kung fu moves.
Alibaba’s Last Year in Review: More Records Shattered During Single’s Day 2018
Finally, onto the most mind-blowing part of Double 11, the sales.
Alibaba had an absolutely incredible year in 2018, with sales reaching USD $30.7 billion throughout the course of the event, representing growth of 27% compared to the previous year. The first double 11 generated a mere USD 7.5 million dollars in sales. If we look at the growth from 2009 to 2018 this represents an approximately 40,000% increase in sales over the course of the 10 year period.
These numbers completely blow other shopping holidays out of the water. Black Friday and Cyber Monday combined weren’t even able to reach USD $15 billion in sales in 2018. This means that Alibaba alone had more than double the total sales on Black Friday and Cyber Monday. If we count the sales of other Chinese E-commerce platforms alongside Alibaba these two events look rather minuscule in comparison.
However, It’s not just the amount that’s amazing, but also the speed. Sales on T-Mall had reached 10 billion RMB just 2 minutes after the launch of the Chinese E-Commerce Festival.
In terms of deliveries, Alibaba received over 1 billion orders, representing a significant increase over the previous year when orders just barely broke 800 million.
Over 180,000 brands participated in the event in 2018 with 237 of them exceeding RMB 100 million in sales during the event. These 237 brands included some of the more popular international brands in China, like Apple, Dyson, Nestle, Nike, and Adidas.
While overall growth in sales has slowed down to 24%, the growth in sales of imported products was much greater reaching over 63% according to Syntun. Many newer brands to the market had spectacular years with brands like MartiDerm, Moony, and Schiff achieving positions among the top-sellers in China. According to Alibaba, over 40% of its customers made a purchase from an international brand during the 2018 double 11 event!
Other Chinese E-Commerce Platforms Cashing in on Double 11
While Double 11 was started by Alibaba, other Chinese E-Commerce platforms have been cashing in on the holiday as well. JD.com, VIP.com, Pinduoduo, and Suning, were some of the larger players participating in the event as well. Although Alibaba trademarked the name “Double 11” in 2014, preventing other platforms from using it in their advertising, plenty of other platforms try to get in on the action for this shopping extravaganza.
Spending on E-commerce during the 24-hour event reached a total of nearly USD $45 billion. As stated, before Alibaba captured the lion’s share of this spending but other players are beginning to take a larger slice as they also invest in promotions during the period.
JD.com was the closest competitor to Alibaba in 2018, with the total transaction volume on JD.com reaching RMB 159.8 billion (USD ~$23 Billion). Unlike Alibaba’s single day sales promotions, JD.com’s discounts are spread over an 11 day period. Although JD.com was only able to capture 17% of market share on Single’s day itself it’s total sales volumes from the event were truly impressive!
Nearly all of the E-commerce platforms recorded strong gains. Netease’s Kaola reported that its sales multiplied 2.4 times in 2018 while Pinduoduo saw its orders triple year on year.
This just goes to show that even if your brand isn’t on T-Mall you can still cash in on the Double 11 craze!
How To Get The Most Out of Alibaba’s Single’s Day
No matter what platform you’re selling on in China you’ll definitely want to take advantage of the Double 11 extravaganza.
Other than the traditional channels available to brands such as paid advertising and KOL promotion there are some extra steps you should take to ensure that you get the most out of the Chinese E-Commerce Festival.
We’re going to break this part down into two sections, Preparation and Promotion, to help brands at various stages take advantage of this holiday.
Preparation Strategies for Alibaba’s Single’s Day
Preparation for Single’s Day Tip #1. Reputation Management
Chinese consumers tend to do quite a lot of research before making a purchase online. In the months leading up to Double 11, you should ensure that your company has a positive brand image to foster trust among users.
A negative reputation on the Chinese internet can severely hinder your sales potential, so take the steps necessary to improve your ratings, reviews, and mentions across search, social media, and in the news. While a negative reputation is something that brands should try to fix immediately, brands with no reputation at all should also get to work on building social proof and building their brand to help Chinese customers make their decisions.
Simply putting out a few press releases or working with a few trustworthy KOLs can put your brand in a positive light and prevent any negative information from putting a damper on your sales. If there’s no information about your brand on the Chinese internet shooting off a press release or two can at least ensure that there’s some information about your brand in Baidu search results.
While this kind of marketing might not be the most exciting as it’s unlikely to directly drive sales on its own, it’s an important step to making sure that there are no barriers to purchasing for your target audience.
Preparation for Single’s Day Tip #2. Perfect Your Product Descriptions
If you’re familiar with Chinese E-Commerce you already likely know that product descriptions in China are incredibly long.
Chinese consumers are by nature very distrustful and typically spend long periods of time in the consideration stage of the buyer journey. Chinese consumers want to be sure they are getting value for their money and are not buying something that doesn’t live up to its promises.
It’s due to this reason that most brands create extremely detailed and thorough product descriptions on E-commerce marketplaces to ensure that the answer to every question a potential customer might have is readily available. Having it available at the point of purchase also results in an increased chance of conversion.
Even for something as simple as shoes, product descriptions on T-mall can be absolutely huge.
While you might think your product descriptions are adequate, make sure you check out your competition to ensure you’re not lagging behind. It seems in the world of Chinese E-commerce that there’s seriously no such thing as TOO much detail when it comes to product descriptions.
Preparation for Single’s Day Tip #3. Scout Out the Competition
This is probably the most crucial step for preparing for the Double 11 Festival. There were over 180,000 brands that participated in the festivities in 2018, so it’s very likely you’ll face some serious competition.
Don’t just do a cursory glance at the competition, analyze each and every aspect of their business and products to determine where your advantages and disadvantages lie.
Are the competitors’ product descriptions more compelling? Are popular KOLs recommending their products? What is their pricing strategy? What social media platforms are they leveraging?
All these are good questions to look into prior to the start of the event and honestly just for doing business in general. This might seem like common sense, but you’d be surprised how many companies don’t take the time to do an in-depth check on their rivals.
You can even just check on T-Mall to see some top-level information on how well your competitors’ products are selling, customer feedback, and more!
Once the countdown to the event gets started it’s a good idea to check out the promotions they start running in the lead-up to the event. Closely monitoring your competitor’s activities can give you the information you need to adjust and counter their strategies to ensure you stay on top!
How to Promote Your Brand and Drive Sales During Single’s Day
Single’s Day Promotion Tip #1. Show Off Those Discounts!
This is one of the most common strategies for promoting your deals during the Double 11 festival. Most brands begin showing off their deals for the holiday nearly a month in advance to build excitement and get customers thinking about purchasing. A survey by Nielsen China showed that this is the most enticing method of promotion for Chinese consumers.
While this tactic has been around for decades, it’s still one of the best ways to show the potential savings a user can receive if they purchase during the Double 11 holiday. Brands both big and small take advantage of this tactic to create urgency and show users how much the product normally sells for.
Showing the before and after price can be done in a number of different ways. Many brands choose to use digital advertisements to showcase their discounts while others simply keep it on their product descriptions. Depending on the price sensitivity of your target audience this can be an incredibly effective method for boosting sales during the Double 11 holiday.
Another reason this simple method is so effective is the tendency of Chinese consumers to make impulse purchases during the holiday. While Chinese are traditionally research-driven in their purchasing behavior, large discounts encourage users to make impulse decisions for trial purchases.
Single’s Day Promotion Tip #2. Offering Discounts in Exchange for Pre-Orders
Another method that’s become incredibly popular in recent years is a focus on pre-ordering. As mentioned previously, brands often begin displaying their discounts and promotions for the Double 11 holiday nearly a month in advance. For 2018, pre-orders on T-Mall became available on October 20th, giving users nearly 3 weeks to pre-order their desired items.
Since brands are already releasing this information quite early, it makes sense that they would begin to accept pre-orders. To further encourage this behavior many brands now provide additional discounts to customers who choose to pre-order before the arrival of Double 11.
If users deposit RMB 100 towards the purchase of this computer before the start of Double 11, they can receive RMB 300 off during the shopping festival. Users can also win a free gift!
This not only helps brands to lock in sales early, but it also helps them to forecast their sales volume and make preparations accordingly. According to Nielsen China, offering discounts in exchange for pre-orders is the 2nd most popular method for promotion during the Double 11 holiday.
One brand that took advantage of this strategy was L’Oreal. L’Oreal allowed users to deposit money in advance and receive coupons with greater value during the Double 11 event. For example, users who deposited 50 RMB were given 70 RMB to spend during the Double 11 event. Customers who had deposited money into this scheme were also given a chance to win free gifts through lucky draws, further encouraging users to deposit money in advance.
Single’s Day Promotion Tip #3. Coupons, Coupons, and More Coupons
Coupons are incredibly popular across all Chinese e-commerce channels; however, this is taken to an extreme during the Double 11 holiday. Nearly every brand issues coupons for use during the period, however, a few have been trying new tactics with some success in recent years.
One of the more recent trends in terms of coupons for the Double 11 holiday is brands not simply issuing coupons for free but selling them for later use. Many brands sell these coupons for an absurdly cheap price (e.g. RMB 0.5), as once users have taken the steps to purchase a coupon, they are more likely to actually use it and make a purchase.
Through selling coupons for use during Double 11, brands can make more accurate predictions and forecasts for their sales volume during the holiday allowing them to prepare and ensure that they have adequate stock to meet consumer demand.
Whether you offer coupons for free or sell them for small amounts, brands have recognized that this is an effective method for driving sales during Double 11. This is something that will likely continue to be used by brands during Single’s Day for years to come.
Single’s Day Promotion Tip #4. Leverage Social Media
In China’s fragmented internet market social media is king. Brands all across China leverage social media to build awareness, drive sales, and promote their offerings. However, many brands go into overdrive during the Double 11 season to drive traffic to their e-commerce stores.
Chinese E-Commerce platforms themselves even advertise their offerings through China’s social media platforms. For example, T-Mall ran a massive campaign leveraging WeChat and Weibo in 2018 to boost their red packet campaign in 2018. Through this campaign, Alibaba rewarded users with money for logging into Alibaba apps and visiting chosen brand stores.
There are many ways brands can leverage social media to drive traffic and boost sales during the Double 11 holiday. Brands can choose to collaborate with KOLs (Key Opinion Leaders) to gain greater exposure and build trust among consumers or work directly with platforms to access paid advertising.
The ultimate goal of using social media is to find your target customers where they are. Brands should promote their offerings across various social media platforms and forums to reach out to their target audience in a way that shows they understand their audience.
Single’s Day Promotion Tip #5. Release New or Exclusive Products
While this might be something more exclusive to larger brands, releasing exclusive products for the Double 11 holiday has proven to be incredibly effective for many different brands.
Dyson saw great success with this strategy last year with the release of its Airwrap hair-curler which launched exclusively on T-Mall during Double 11 2018. By advertising the product on social media and limiting purchasing exclusively to T-mall the brand was able to sell over 1,500 unites within just 3 minutes of the product launch.
Budweiser’s Special Edition Cans Released Exclusively for Double 11
Budweiser, the American beer brand, also launched exclusive packaging for the event. It was able to sell all 30,000 special edition packs that day! Both of these cases show how releasing exclusive or new products can result in a drastic spike in sales.
Conclusion
Double 11 is definitely a holiday that both shoppers and sellers need to pay attention to. However, taking advantage of the largest Chinese E-Commerce festival isn’t easy. Competition is fierce, and brands need to take the necessary steps to ensure that they are able to fully take advantage of it.
This guide should offer most brands a good place to start, but brands should conduct adequate research into their industry and competition to determine the best means of promotion during this period. We hope this guide helped and best of luck to all our readers for the Double 11 shopping festival in 2019!
A different target audience, an evolving market, and e-commerce platforms aimed at entertaining instead of selling: from the Western point of view, e-commerce in China represents a big challenge but also the greatest opportunity
Since 2015, China is the first country in the world for online sales. A leadership confirmed in 2017 when the big Asian country’s turnover accounted for one-third of the global online sales. But the Dragon’s e-commerce industry seems to be just at the beginning of its rising.
According to a report released at the China International Big Data Industry Expo 2019 in Guiyang last May, China’s e-commerce trade volume reached $4.58 trillion in 2018. With over 50 billion packages delivered last year, Chinese cross-border e-commerce is a booming phenomenon.
China’s $1.94 trillion e-commerce market is the largest in the world, and more than three times that of the number two US market, according to a recently released eMarketer report.
E-commerce in China, therefore, is a growing sensation and an increasing number of countries from all over the world are now striving to reach this successful market. The potential is enormous and it is constantly evolving.
But these figures are possible because the Middle Kingdom is nothing like the Western world has ever experienced. Within a population of 1.4 billion, the country’s netizens account for 900 million people and 98% of them is accessing the internet through their smartphones.
Contrary to the Western world, China’s mobile-driven society has totally leapfrogged the computer era. And millennials and Generation Z – those born between 1995 and 2002 – are leading online sales. But they are not alone. Although Gen Zers account for 15% of their household’s spending compared with 4% in the US, new customers are starting to enter the online shopping world in the PRC.
In recent years what was considered girls’ favorite hobby seems to have experienced a complete change towards new male consumers. Opposed to the traditionally predominant “she-conomy”, the emerging “he-conomy” – male consumer consumption – is recently rising opening new windows of opportunity for brands and the industry.
The expansion of the middle class and the development of online consumer finance are some of the important factors that led to the rise of the “he-conomy.” As a result, advertisement campaigns like that of the baby products marketplace Mia.comare showing the Chinese companies’ growing interest in breaking gender stereotypes as well as the need to address to new audiences like that of the elderly, which is about to exceed 255 million people by 2020.
“The future of the Chinese digital economy is not to give a Shanghai resident the life of a Parisian, ” said Pinduoduo’s founder. “The future is to provide handkerchiefs and fresh fruits to those living in the province”.
Nevertheless, the new trend in Chinese e-commerce is the focus in lower-tier cities. Being home to 73% of China’s population, these lower-tier cities, which include prefecture and county-level urban enclaves, already produce 59% of the country’s GDP. So that now even Chinese graduates prefer to look for opportunities in lower-tier cities instead of first-tier ones.
“While investors perceive larger cities as offering the most important consumer base, we believe that lower-tier cities will be bigger, wealthier and more eager to spend, and could contribute two-thirds of incremental growth in national private consumption toward 2030,” says Robin Xing, Morgan Stanley’s Chief China Economist.
Here, companies like Colin Huang’s Pinduoduo leverage the absence of direct competition with e-commerce giants but their success lies in the fact that the e-commerce industry in lower-tier areas has more room to grow compared to the saturated markets of Tier 1 and Tier 2 cities.
The emergence of a brand-new middle class in China with a higher income together with the rising of unexpected audiences led to a whole new market for the luxury industry.
Beauty products are still the most favorite items bought online in the PRC, especially those from South Korea, and the last Single Day sales witnessed a renewed interest in food and drinks categories. But when it comes to luxury consumption, Chinese consumers have been ranking first for three years now, accounting for one-third of the global spending. Therefore, although luxury brands were used to rely on offline sales rather than online ones, the digital world has become the one and most effective channel to talk to Chinese Millennials and Generation Z.
As a result, the Chinese large luxury market is currently witnessing the migration of customers from offline to online, especially in smaller cities, where high-end stores are rare and unaffordable. Moreover, if in the past luxury buyers used to travel to buy high-end products, today, an increasing percentage of consumers is buying directly from mainland China through its multiple luxury e-commerce platforms such as Secoo and Tmall Luxury Pavilion.
But in addition to an evolving target, a new interest towards lower-tier cities, and a continuous seek for the best product online, even if it means spending much more money than in the past, what makes the Chinese e-commerce market truly different is the e-commerce itself.
“On the Chinese mainland, you have big players like Alibaba and Tencent whose services are so intertwined in your daily life, where you depend on their ecosystem for services like ordering food, making payments and for e-commerce and entertainment. So it seems almost natural to blend all of this together,” said Tiffany Wan, general manager of VS Media.
E-commerce here should not even be called digital commerce anymore. Through Alibaba, Jack Ma combined the online world with the offline experience in what is now called New Retail. People in China now can do their grocery shopping at the Hema supermarket and complete the transaction online. Pop-up stores in Beijing now open just to assist the online store and not the other way around.
Moreover, shopping online in the PRC has become an act of entertain. A brand-new social-commerce has risen in the Middle Kingdom where social networks host e-commerce features and vice versa. Through online shopping, Chinese netizens engage with other people with the same interests while the platforms provide all the entertainment is needed.
Live-streaming is the last popular trend in the Dragon’s e-commerce. According to statistics, today, more than 100 million viewers watch a live online video event every month while nearly 32% of users now buy products through live-streaming videos. Behavior that goes hand in hand with the growing demand for better quality and transparency.
Thanks to the social-commerce even recycle has become fun for China’s young generation. Second-hand shopping is quickly becoming a first-choice experience in China. And as the number of users on Chinese second-hand trading platforms is rising, even the Dragon’s tech giants now bet on recommerce.
PRC leads the world in e-commerce. Today, more than 40% of whole online transactions take place in China. One decade ago, the Dragon’s e-commerce transactions only count for 1%. Chinese consumers are becoming more aware of international brands, which results in the increasing demand for overseas products on cross-border e-commerce platforms.
And while local Chinese tech giants such as Alibaba, Tencent, and JD.com dominate the rapidly growing e-commerce ecosystem, the number of e-commerce platforms that international brands can leverage in China is growing. But the Dragon is doing a lot abroad as well, it is exporting an e-commerce culture followed by its idea of “cashless society.”
E-commerce in China is, therefore, an evolving experience. It is vast and it is changing day after day, shifting from an act of purchase to an entertaining experience, from a firm decision to something as easy as watching a live-stream online. It is nothing like the Western market even though it is actually influencing the global approach to online shopping.
Chinese platforms are now getting popular beyond national borders and are increasingly popular among foreign brands, which might find in the Chinese market one of the biggest challenges but even the greatest opportunity.
ECommerce Nest 
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