What UK retailers can learn from Chinese e-commerce
China is at the frontier of a digitised retail future which is more dynamic, innovative and consumer-centric than ever before.
China is at the frontier of a digitised retail future which is more dynamic, innovative and consumer-centric than ever before. Having experienced solid growth, their e-commerce market was projected to be $1 trillion dollars in 2020, with 700 million Chinese customers shopping online. This is in comparison to North America at $749bn, and Western Europe at $498bn in 2020.
In this blog we showcase 3 key trends that the Chinese have used to maintain high growth, customer loyalty and a competitive edge. It aims to provide valuable insight for the UK as they plan for a rapidly growing digitised retail future.
1. The ‘New Digital Mall’
The popularity of the physical ‘American mall’ in the twentieth decade has been replaced in China with a ‘digital mall’ where using a ‘Super-App’, a ‘cornucopia of services’, consumers are able to access all their needs in one place without having to leave the comfort of their homes. The infamous ‘Super-App’, WeChat, blends digital payments, group deals, social media, gaming, instant messaging, short-form videos and live-streaming celebrities. With the whole customer journey occuring in one place it speaks of the level of efficiency it provides and highlights why Chinese consumers love and regularly use it.
It is key for UK retailers to acknowledge this trend, with shopping centres having been closed for a year due to Covid-19 consumers now have higher expectations of an efficient online experience. Additionally, with brick-and-mortar stores reopening, companies need to consider how to replicate a digital shopping centre to ensure their e-commerce stays strong and engaging. By looking at technology solutions and embracing a ‘blending of services’, UK businesses can ensure good customer retention, growth and loyalty as a result of providing a richer and more efficient customer experience.
2. The evolution and significance of the livestream format
The blending of e-commerce and live-streaming, known as ‘live commerce’ is a huge and fast evolving trend in China that centres around the use of a virtual live platform to promote products and engage consumers. Whilst the popularity and growth of live-streaming accelerated when the big companies started using Key opinion leaders (KOLS) to help sell their products (i.e. Kim Kardashian on Chinese ‘Singles day’ 2019 did a joint livestream with Alibaba and helped sell 15,000 bottles of perfume in the space of only a few minutes) the trend is becoming increasingly more common for all sizes of business in China. For example, it is estimated that in 2021 the livestreaming e-commerce market in China will total the equivalent of $305 billion, representing 384% growth from 2019 (according to KPMG and Alibaba’s research unit AliResearch).
As a result of the coronavirus pandemic, live-streaming as a marketing venture has become more popular in the West than before. For example, Facebook partnered with women’s fashion brand Anne Klein to produce a four-part series of live shopping events. With this emerging trend gaining more traction it is important for UK retailers to capitalise on this useful marketing venture early, which keeps customers engaged and exposes products to wider audiences at a lower cost. In China, live-streaming is becoming the expectation for many customers when they venture on their customer journey and it will be valuable for UK retailers to remain innovative and be ahead of this.
3. The community at the centre of delivery innovation
The community has always been a valued and integral part of Chinese culture, and companies have now capitalised on this to help innovate their delivery process. Named ‘Community buying’ this location-based approach of selling in bulk to people living in proximity, offers value products to consumers at a discounted price and removes the need for shoppers to visit brick-and-mortar stores. Unlike the Wowcher and GroupOn model, which delivers discounted products straight to an individual's door, these products are shipped to a specific local collection point where a designated ‘Community Leader’ will receive them and distribute accordingly. A valuable way to ensure company influence within the community, the ‘Community Leader’ also takes on a lot of control in the marketing, promotion and client service (on WeChat) in this model.
With the combination of an effective distribution channel where multiple orders are delivered together, and the influencing power of a ‘Community Leader’ it is significant for both business and consumer. By using this model businesses are able to reduce their costs in delivery, customer service and marketing, and customers are able to have discounted prices and firsthand support from a community member.
These Chinese trends are starting to gain more and more traction in the West as companies start acknowledging China’s high growth, performance and role in this digitised retail future. To remain innovative and financially sustainable it is therefore crucial that UK retailers similarly acknowledge, learn and consequently act on these trends to ensure a competitive edge.