Home to the world’s largest ecommerce market, two of the world’s largest online retailers (JD.com and Alibaba) and more than 900 million internet users, marketing and selling in China is a tantalising prospect for any western ecommerce company.
But the ecommerce landscape in China, while it has its similarities to the west, is also a distinctive one, with a different set of consumer expectations, different trends, and different interactions with brands. Understanding these differences is the first step towards building a successful strategy for the Chinese market.
Ecommerce in China is also increasingly looking like the future of ecommerce in the west, with western tech giants like Facebook eyeing the strategies used by China’s major technology powers and seeking to replicate them at home – so familiarising yourself with Chinese ecommerce also means staying one step ahead of the curve.
On Day Two of Econsultancy Live 2020, Colin Lewis, CMO at OpenJaw Technologies and author of Econsultancy’s Ecommerce Best Practice Guide, gave a “whistle-stop tour” of China’s ecommerce landscape, its key hallmarks, and the trends that are beginning to make their way over to the west.
Land of the online marketplaces
China is home to some of the highest-grossing online marketplaces in the world, and a huge proportion of ecommerce transactions in China take place on these platforms. According to Digital Commerce 360’s Top 100 Online Marketplaces ranking, of the top five global ecommerce marketplaces by gross merchandise value (GMV) from third-party merchants, three are based in China: Taobao, Tmall and JD.com, ranking at #1, #2 and #4 respectively. The other two, Amazon (#3) and Ebay (#5) are based in the United States.
Other notable ecommerce marketplaces in China include Pinduoduo, a social commerce platform that has rapidly become an influential force in Chinese ecommerce and overtaken JD.com to become the second-most valuable online retailer in China, and Vipshop, which specialises in online discount sales.
“It’s not really about the individual brand going direct to the consumer,” Lewis explained. Rather, the ecommerce experience is channelled through the medium of these marketplaces, chiefly Taobao and Tmall, which are both owned by Alibaba.
Mobile, mobile, mobile
This is probably the most well-known fact about internet habits in China, so much so that it hardly bears repeating, but no list of hallmarks of Chinese ecommerce would be complete without it – particularly because it underpins so many of the other trends.
“Everything is done on the mobile channel – no laptops, no computers. That’s the key thing to understand – everything is done on an app,” said Lewis.
The role of community input and word of mouth
To highlight the differences between the typical customer journey of a shopper in China versus that of a western consumer, Lewis illustrated the steps that a Chinese consumer might take if they were an expectant mother buying baby milk formula on Taobao.
This is a journey that could span as much as 12 months; as Lewis pointed out, baby milk formula is a “very big topic” in China and one that a consumer would put a lot of research and consideration into before purchasing. Notably, every step along the customer journey is marked by some kind of social proof or community input, from mother-and-baby apps and recommendations from friends and family at the beginning of the journey to questions on community boards and customer reviews as the customer gets closer to making a purchase.
Lewis also highlighted that customers expect to “deal directly with the brand or even the factory” when it comes to having their questions about the product answered. “Once they click on a button in the app to engage with somebody, you can’t use artificial intelligence or a robot – you’ve got to engage on a messaging app live with a human being, who answers particular questions. And while [the consumer is] doing that, they may run off to get feedback from other people who’ve purchased that exact milk formula as well.”
Speed of response is also critical with this interaction, with consumers expecting a response from a customer service representative “within one or two seconds”.
High consumer expectations
While the whole ecommerce journey might be drawn out over several months or even a year, speed and convenience are at the heart of Chinese consumers’ expectations, particularly those consumers living in urban areas. Lewis noted that Chinese consumers will expect same-day delivery of their product, as well as a free gift. In order to stand out, brands need to have “amazing copy, incredible visuals … [The purchasing process is] super-fast, with very high expectations.”
Chinese ecommerce apps also strive to offer the most convenient experience possible with everything available to the consumer in one place. Taobao, Tmall and JD.com all have ‘mini programs’, a type of lightweight ‘app within an app’ first pioneered by WeChat, and later mimicked by most of China’s other major platforms.
The net result of this is that Chinese consumers don’t need to leave the main ecommerce app in order to access messaging apps, forums or social networks, offering another level of convenience while facilitating their research into the product they will eventually buy.
11.11 (Singles’ Day) shopping festival
A major focal point of Chinese ecommerce are the shopping festivals, the biggest and most ostentatious of which is 11.11, or Singles’ Day. Originally (as the name suggests) an informal event to celebrate China’s singletons and first observed in 1993, Alibaba piggybacked on the event in 2009 and launched an online shopping festival in a bid to encourage merchants to embrace selling on Tmall, which was just over a year old at the time.
Fast-forward to 2020, and Singles’ Day has become a shopping festival with global clout, bigger than Amazon Prime Day or even Black Friday, with each successive event smashing the records of the last. In 2020, Singles’ Day saw more than 800 million participating customers, with 583,000 orders placed per second at the event’s peak; Cainiao Network, Alibaba’s logistics company, processed a total of 2.32 billion delivery orders.
More than 470 brands surpassed 100 million RMB (US $14.9 million) GMV during the event, including a number of western brands – Adidas, Apple, Estée Lauder, L’Oréal, Lancôme, and Nike.
Live commerce and Key Opinion Leaders (KOLs)
Much of China’s influencer culture centres on livestreaming, or what is known as live commerce: the marriage of livestreaming and ecommerce. Essentially, Chinese influencers (known as Key Opinion Leaders, or KOLs) will host livestreams and use them to demonstrate and answer questions about products in real-time.
“Basically, think of QVC, or the Shopping Channel,” said Lewis, “but hosted by individuals. This fusion of ecommerce and livestreaming is really growing exponentially – right across all the individual ecommerce platforms.” Taobao and Tmall both have their own native livestreaming services, as do JD.com, Pinduoduo, Mogu (a fashion-centric social commerce site and an early pioneer of live commerce), Xiaohongshu (a luxury-focused social commerce platform) and many others.
Coverage of live commerce in China tends to focus on the most influential and prolific livestreaming celebrities, such as Li Jiaqi, also known as the ‘Lipstick King’, or Viya, who in the lead-up to Singles Day 2019 partnered with Kim Kardashian on a joint livestream, selling 15,000 bottles of perfume in the space of a few minutes.
However, as in the west, China’s influencer landscape is made up of different tiers of Key Opinion Leaders, from small and micro-KOLs with anything from a few thousand to 20,000 followers, to mega-influencers (or wangzi) with millions or tens of millions of followers.
Live commerce is also a rapidly growing trend in China’s rural regions, with farmers taking to livestreaming platforms to showcase and sell fresh produce and livestock. Ecommerce platforms such as Taobao and Pinduoduo have invested in programmes to support and train rural farmers in developing a livestreaming business, particularly during the Covid-19 pandemic when many farmers’ livelihoods were at risk.
How are these trends impacting the west?
As mentioned earlier on, many western brands and organisations are already taking part in trends like Singles’ Day or entering into partnerships with China’s ecommerce giants. Lewis cited the example of the Louvre, which in October launched a flagship store on Tmall in collaboration with Alifish, Alibaba’s online licensing platform. Alifish worked to identify the most influential artworks in the museum, and in collaboration with major Chinese and international brands, developed items like eyeshadow compacts and satchels inspired by those works that Chinese consumers could buy on Tmall.
The British Museum entered into a similar partnership with Alibaba in July that saw it host a livestreamed virtual tour on Taobao and Fliggy, Alibaba’s travel platform, with cultural products available for sale.
Moreover, trends from Chinese ecommerce are beginning to make their way over to the west: most notably, the live commerce trend. Lewis noted that Amazon now offers both livestreaming and video, while ‘live shopping’ has just been rolled out across Instagram and Facebook. As part of an event to celebrate the debut of live shopping, Facebook partnered with women’s fashion brand Anne Klein to produce a four-part series of live shopping events, hosted by the founder’s granddaughter, Jesse Gre Rubenstein.
Western social networks are also becoming increasingly shoppable – another distinctly Chinese trend. In China, social platforms frequently offer ecommerce features and vice versa, and now in the west, Facebook, Instagram, Pinterest, YouTube and TikTok have all begun to integrate ecommerce functionality into their platforms, largely via partnerships with Shopify.
Lewis also pointed out that the Chinese concept of the ‘super app’, in which individual apps play host to a wide variety of other services and features (via the ‘mini programs’ mentioned earlier) under one roof, is making its way to the west.
Facebook is increasingly mimicking this setup, not only with its launch of live shopping, but also by integrating messaging functionality within Facebook Shops in order to allow consumers to message a brand directly with questions or ask for support during the purchase process. Sound familiar?
“What I would encourage you to do is do your own research,” Lewis concluded at the end of his presentation. “Find out what’s happening in China – and use it as inspiration for your own future ecommerce strategies.”