Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
E-commerce platforms are doing very well in China, but that does not mean they can easily gain consumer’s trust, says marketing expert Ashley Dudarenokon Marketing-Interactive. A few tips: the platform should be easy to use, and the quality of the products should be impeccable, she adds.
Marketing-Interactive:
Although buyers need to spend time and effort to learn more about the products, unless there is a seamlessness in the buying process and education process, customers might turn to competitor channels. “This could seriously affect consumer purchase confidence, especially for mid- and high-end users located in first- and second-tier cities who pursue high quality products,” Ashley Galina Dudarenok, founder of ChoZan and Alarice.
Currently, large e-commerce marketplaces have created dedicated storefronts for their clients to ensure authenticity of products. However, for smaller marketplaces, the inability to verify the authenticity of products is still common. As such, building trust becomes harder.
“At present, more and more platforms emphasis genuine products and are regulating product certification to guarantee product quality. For example, Pingduoduo creates its own factories to ensure the source and quality of products. Consumers shopping on the Pingduoduo platform can enjoy the genuine products and quality assurance provided by merchants. If consumers purchase counterfeit brand products, they can claim ten times compensation,” Dudarenok added.
This company is a very savvy operator in terms of acquiring users through social media platforms. They were early to Pinterest. They were early to TikTok. They were actually the most talked about brand on TikTok globally the last year. But to be honest, price is a bigger driver. This platform, Shein, the prices on there, it makes Amazon look positively expensive. I don’t know if you have any personal experience of this, but if you talk to anyone on there, the prices are significantly lower than you would expect. And that’s really attractive to their target customer base…
Their model is actually quite innovative. And it’s difficult for their competitors to copy because the thing about fashion is, fashion is very volatile, especially fast fashion. And so if you’re able to operate faster than your competitors in terms of assessing and identifying new trends and getting those garments spinning up, SKUs that are doing well, faster than other people, then you are able to reduce markdowns. And you are able to lower your costs and increase– reach more customers.
That’s what Zara’s done, essentially. From the 1990s, they basically invented fast fashion and created their system, which works for a store network. In the last, say, decade, we’ve seen a new breed of DTC platforms. Brands like Fashion Nova and, in the UK, Boohoo and Asos– which are already publicly listed companies– are doing quite well. Shein, we can view as just taking this up another level. They are faster than the ultra fast item in real-time retail.
In terms of the– they’re taking the data that they’re seeing on their app in, say, America and using that and connecting that directly to the Chinese factory floor. In terms of when people start putting items in a basket in America, they know, OK, we’re going to sell more of this. And they immediately run that through to the factory floor and start ordering more and ordering materials. And the algorithms automate everything. So it’s really quite an innovation that they’ve managed to achieve…
The reason why they’re able to get that price is because the supply chain is unbelievably efficient. They don’t technically own the factories, but they’re so closely linked up with their supply chain management software, that it’s almost– it works effectively as they did, if they did. They’ve been criticized for a variety of things, as you rightly pointed out. There is questions over the sustainability of fast fashion and the environmental impacts. I think those are things that we do need to look at.
But in this context of the target consumer that they’re reaching, obviously, there are people concerned about these things. But it seems that, at least for the people who are buying on Shein, they’re less concerned about the environmental impacts and more concerned about their immediate needs to stay on top of the fashion trends within their social circle.
There’s also been complaints about suspicions of them using things like child labor. I think that those are a little bit hard to believe, given where they’re based in Guangzhou being one of the highest GDPs in China. And so, yes, we do need to look at these issues. But overall, I think these are wider questions about the fast fashion industry that could be applied to many, many companies.
The main difference with the rest of the world is that in China social media and e-commerce merged into platforms, says China marketing guru Ashley Dudarenok. When you want to dive into China, you have to pick your platform and realize they are different from what you are used to, she adds. Most likely you have to pick one of them.
The economy of fans, of idols, celebrities, and influencers, works in China very different from elsewhere in the world, explains marketing guru Ashley Dudarenok on her Vlog. Very big in China among Gen-Z, she says.
China’s biggest change over the past two years has been the development of its retail ecosystem, says marketing veteran Ashley Dudarenok at her vlog. Not only by thinking it out, but by implementing a change that has affected retail profoundly.
E-commerce firm Pinduoduo is closing in on market leader Alibaba, show recent post-corona figures, says marketing expert Arnold Ma in Kr-Asia. Ma believes that the key to Pinduoduo’s growth is its continuing focus on its D2C (direct to consumer) model across manufacturing, agriculture, independent sellers, and new brands.
Kr-Asia:
The number of Pinduoduo’s active annual buyers in the year ended September 30 reached 731.3 million, an increase of 36% YoY, and closing the gap with rival Alibaba, which boasted 757 million annual active consumers in the same period.
General merchandise volume (GMV) in the twelve-month period ended September 30 2020 reached nearly RMB 1.5 trillion, up 73% YoY. In addition, the Shanghai-based firm recorded a net loss of RMB 784.7 million during the third quarter, narrowing from a loss of RMB 2.3 billion in the same quarter of 2019.
“Great to see such a positive quarter from Pinduoduo post-pandemic in China,” noted Arnold Ma, founder of Qumin, a digital marketing agency based in London and Shanghai, echoing Wu’s comments.
Ma believes that the key to Pinduoduo’s growth is its continuing focus on its D2C (direct to consumer) model across manufacturing, agriculture, independent sellers, and new brands. DuoDuo Maicai is a dedicated C2M function for farmers to directly reach consumers, which the company launched in October.
Pinduoduo’s strong performance is evidenced by the average annual spending per user increasing from RMB 1,857 (USD 280.84) in the second quarter to RMB 1,993 (USD 301.41) in the third quarter, despite the net addition of 48 million active buyers.
China’s food shipping was already far ahead of competitors in the US, but making a profit is still not possible, says marketing veteran Ashley Dudarenok to 90xtra, although the restaurants are griping about the percentages the shippers ask. And the COVID-19 crisis did not improve relations between retailers and shippers.
90xtra:
Ashley Dudarenok, co-writer of “New Retail Born in China Going Global,” notes how most Chinese shipping workers use maneuverable and mild e-bikes, though their Western counterparts generate cars extensive distances and incur steep labor, parking, and refueling costs. She also says Ele.me motorists are pressured by rigid evaluate systems, which penalize them RMB 200 Chinese renminbi (RMB) per weak assessment and RMB 1200 for every complaint. Another incentive: Meituan’s Supply Time Coverage alternative that charges end users simply RMB 1 ($.14), and refunds portions of service fees for any late orders…
Dudarenok, in the meantime, details out that “franchisees, HR businesses, and other third get-togethers involved in the system are in the middle. The agent on your own can even account for 25 % of Meituan’s supply profit.” Her conclusion: “Meituan’s deliveries are not sufficient to make finishes meet. It has been at a reduction for 5 many years, and it has only been successful in 2019.”
Those figures did not increase all through the pandemic, even with some restaurateurs grousing about substantial expenses. In its place, Meituan’s 1st quarter earnings announcement in depth a 12 months-in excess of-year revenue drop from RMB 19.2 billion to RMB 16.8 billion, citing offer and demand from customers difficulties (having said that, Dudarenok factors out “after the resumption of function in March and April, the volume of supply orders… has returned to practically 80 percent of the orders in advance of the outbreak” very first started).
Livestreaming e-commerce took off like crazy in China in 2020, partly because of the coronavirus pandemic. Marketing guru Ashley Dudarenok opens the discussion on where this trend is leading to at Technode. "Various livestreaming platforms are maturing, becoming more mainstream and the epidemic has led to the growth of online work, entertainment, and consumption," she writes.
Ashley Dudarenok:
In 2020, livestreaming has shown unprecedented vitality. Various livestreaming platforms are maturing, becoming more mainstream and the epidemic has led to the growth of online work, entertainment, and consumption.
Livestreaming e-commerce is growing every day. There’s a current trend for sales livestreams by top brass at big companies. Luo Yonghao, one of China’s most famous tech entrepreneurs, has entered the fray with sales during his first livestream in April 2020 exceeding RMB 110 million (about $15 million). Dong Mingzhu, president of China’s largest household appliance maker, Gree Electric, sold more than RMB 300 million of products on Kuaishou and more than RMB 700 million products on JD.com doing livestreams.
Brick and mortar shopping malls, along with other sectors, are being rescued by livestreaming e-commerce and everyone is trying to be the next Li Jiaqi or Viya.
During the epidemic, with 5G developing, livestreaming has shown even more possibilities. 5G capabilities have made a big difference, as signals are more stable and pictures are clearer. In addition to retail, livestreaming has really stood out in education, entertainment, and tourism....
iResearch predicts that by the end of 2020, China will have 524 million online livestreaming users. This means 40% of Chinese people and 62% of the country’s internet users will be livestreamers. The total scale of China’s live streaming e-commerce industry reached RMB 433.8 billion in 2019 and is expected to double by the end of 2020.
Given that in 2019, livestreaming e-commerce only accounted for 4.1% of the online retail market and it accounted for 1.1% of overall e-commerce, it still has plenty of room for growth.
During the epidemic, more and more industries turned to livestreaming e-commerce and it moved beyond the standard products. People were even selling houses. On April 24, Evergrande Group, one of China’s biggest real estate companies, had over 3.8 million viewers for its livestream and it racked up 7.12 million likes. During the broadcast, 38 discounted apartments sold out in one second.
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Pinduoduo has been challenging e-commerce giants Alibaba and JD during the corona crisis. Marketing analyst Ashley Dudarenok looks if Pinduoduo can keep up in the e-commerce wars in China, for Bloomberg.
China is going to be the most expensive and complicated market in the world, says marketing expert Ashley Dudarenok to Rethink Industries. How the new normal looks like in retail after the coronavirus crisis.
China's e-commerce players JD, Alibaba and Pinduoduo tried to build leverage during the coronavirus crisis, explains marketing guru Ashley Dudarenok at Bloomberg. And how are they profiting now the demand for Chinese products in the rest of the world is down?
Prisoners have to learn how to deal with a changing society before they leave prison. In China, it is obvious they have to learn how to deal with e-commerce, says business analyst Shaun Rein in Inkstone news.
Inkstone news:
The news is a reminder of China’s hyper-connectivity, where most people have grown used to buying, selling and ordering everything and anything online. It’s a skill that inmates would need once they serve their time and transition to the outside world.
“If you don’t know how to shop online, you’re going to have a lot of problems once you depart prison,” said Shaun Rein, the founder of China Market Research Group in Shanghai.
While digital shopping is complementary to bricks and mortar stores in the West, it’s quite the opposite in China: businesses prioritize digital growth over physical store expansion, Rein said. Over the last decade, Chinese businesses have expanded massively online.
In 2005, China accounted for 0.6% of global e-commerce activity. By 2017, it accounted for 42%. In the US, digital transactions had shrunk from 35% to 24% in the same 12-year time span, according to the McKinsey Global Institute.
Fighting Alibaba on e-commerce is a tough struggle, but Tencent's WeChat is clearly delivering on improving its shopping environment, even when it does not beat Alibaba, says Tencent watcher Matthew Brennan to TechNode.
TechNode:
[T]he latest update seems to fit with Tencent’s aim to make mini-programs easy to use. It’s “very much in line with what they said they would do,” says Matthew Brennan, co-founder of China Channel.
“The whole mini-program initiative is about helping startups, helping more businesses,” Brennan told TechNode. That applies to e-commerce as well. Just a few years ago, WeChat “wasn’t a very natural environment” for online shoppers, said Brennan. Now the whole in-app retail experience has become much smoother thanks to pushes from Tencent.
Brennan doesn’t see the company’s e-commerce initiative as a direct competitor to Alibaba. Instead, like the “runaway hit” platform Pinduoduo, WeChat is finding new models “to let social e-commerce flourish.”
And fast-growing mini-programs, launched in January 2017, happen to be a convenient tool for alternative means for growth. As of the second quarter of 2018, Tencent reported that WeChat hosted over 1 million mini-programs on its platform, a 72% jump from the same period in 2017. Total users reached 600 million, with close to one half accessing them four to six times a day.
Alibaba has invested more than $4 billion in Southeast Asian e-commerce group Lazada and other leading tech players in recent years. In June, the company posted that it had bought a stake in Turkey’s local leader Trendyol, while Amazon is still fumbling with the launch of a Turkish service. In India, Alibaba recently invested in digital payments platform Paytm, granting in exchange access to its cloud infrastructure.
Alibaba’s experience building China’s e-commerce market effectively from scratch makes it uniquely suited to entering these markets, according to Ashley Dudarenok, a Chinese digital marketing consultant who is herself a Russian national.
“They are aware that there is not much infrastructure in markets like India and Turkey, and they know exactly how to deal with this sort of aspirational consumer base,” says Dudarenok. “Along with countries in Southeast Asia, Russia is one such market.”
It may be still be poor by Western standards, but Russia has the largest population in Europe and an emerging middle class that offers significant growth potential. As elsewhere, Alibaba is planting its seeds early, ready to reap the rewards when the consumer market matures.
A: Traditional retail is still the biggest retail channel in China, but this is changing rapidly. When we talk about e-commerce and offline retail, what is happening is that people don’t want to migrate either to one or the other, but instead radiate into the middle ground – the ‘new retail’ experience. That shift happens one the one hand because of the tastes of the consumer, but also the competitive drive from Alibaba and Tencent.
How big is e-commerce itself? It’s big, but I’d say more important is mobile commerce. Last year, mobile commerce overtook e-commerce in terms of number of purchases made in China, but both are still smaller than offline channels. The key is that new retail is going to merge the online and offline into one ecosystem. We will not see offline stores disappear, certainly not. Instead we are about to see the evolution of these brick-and-mortar stores into the ‘new retail’ experience. I don’t believe employees are going to disappear from grocery stores or coffee shops, for instance, as people all seem to imagine when they picture the future of Chinese retail, they’re just going to be doing different jobs. They won’t be changing the price tags but entertaining us in the store in some way.
Lots of people still misunderstand e-commerce and think it is omnichannel, with a company present across the spectrum, from mobiles to websites to stores. In reality, new retail is all about putting the consumers at the top and creating a huge data pool around their shopping trends – where, how, and what do they buy. From this, retailers both online and offline, distributors, suppliers etc. plug in and communicate with each other to optimally serve that individual. That’s the uniqueness of this experience.
So we shouldn’t ask how big is e-commerce now, but how big will it be in three years.
CER: You make the distinction between e-commerce and mobile commerce. Are they not just variations of the same thing?
A: In China there is a huge difference. E-commerce is the traditional desktop ordering platforms such as Taobao. Mobile commerce is accessible by apps that often do not have a popular desktop version, like WeChat or some live-streaming platforms. This ability to use a phone to quickly complete the entire transaction is the main idea, and it is a huge business in China.
CER: Why do you think online retail and mobile payments are so much more popular in China than in other parts of the world?
A: There are many factors, the first probably being privacy. Westerners are very paranoid about privacy, but the Chinese just have a completely different approach to personal information. Just having a WeChat account, for example, basically requires uploading a passport – imagine how many users would flee Facebook if they started asking for such details. I think Western consumers tend to think beyond just convenience and are sceptical of how retailers might abuse any information provided. In China, there is less fear of being harassed or spammed, but instead giving out more info may just lead to better service. Take WeChat again: they do not allow many types of advertising or spamming etc., and really do focus on quality of service for the user over quantity of payments generated. Its users are at the centre of things, and users themselves know that if they give WeChat their bank info and other data, when they step out of their house later they will get a notification about a discount on their favourite coffee at a Starbucks they are about to walk past.
A second is the integration of technology and society. The technology in the West just isn’t there. But in China the speed at which people adopt new ideas is rapid. Grandmas and grandpas are using mobile payment and shopping apps to guide their daily lives, but in Europe and the US people of that generation would most likely need their sons and daughters’ help. This extends to companies too, which expand and develop so fast here. There is that saying: ‘perfect is not fast enough.’ Trial and error will push forward progress much faster than a perhaps more mature approach of Western companies to achieve perfection before moving on to the next stage. This cautiousness and adherence to procedure is exactly why many foreign retail brands are suffering in China – they just can’t keep up with the locals.
CER: Let’s focus on the companies themselves then. How are foreign retail brands competing with the homegrown players?
A: It depends on the market segment. International B2B (business-to-business) firms just don’t have a clue what to do in China. FMCG brands are also losing market share year on year.
Luxury brands, on the other hand, have retained their prestige for historical reasons, it has nothing to do with their adoption of technology. They are certainly going through a digital transformation right now, but they can afford to go a bit slower for this reason. They don’t have to worry about local firms beating them in terms of quality or image. Furthermore, luxury brands’ core Chinese consumer base is around the 35+ age group, which still has an affinity for traditional retail practices.
But make no mistake, they want in on China and know a special approach is needed. A common strategy for a luxury group is to pick a single brand and digitalise it for the Chinese market, and if it works apply it to the other brands.
CER: Lastly, what effects do you think there will be on businesses from Beijing’s increasing oversight of industries like mobile payments and peer-to-peer lending?
A: Beijing is getting concerned with the amount of money flowing around in blockchain, cryptocurrencies and individual lending, but let’s remember China’s general policy: if it’s not forbidden, it’s allowed. So in the short term, until there are acute changes in policy, companies will keep doing what they’re doing.
There will be more regulation in the long term, however, and an adjustment period will be necessary for retail companies. But I think once this is over it will be good for the industry. Are some brands going to be hit? Yes. But once the playbook is laid out, once firms know what they can and can’t do, companies can start setting up a solid, long-term infrastructure.
But China offers more than just a proven model. It also provides an enormous market for e-commerce businesses around the world. According to the General Administration of China Customs (GACC) cross-border e-commerce turnover increased 80.6 percent from a year earlier to 90.24 billion yuan last year with imports skyrocketing 116.4 percent to 56.59 billion yuan. With rising incomes, urbanization and increasing outbound travel, demand for a greater variety of products and services from around the world will only continue to increase in China.
However, realizing these opportunities will take much effort. For example, cross-border e-commerce transactions are typically smaller than traditional import-export deals. According to the GACC, Chinese customs handled 660 million manifests for e-commerce trade in the past year, 8.4 times as much as for conventional imports and exports. On Nov. 11, China's Singles' Day online shopping festival, Chinese customs processed a total of 16.2 million orders, about 187 orders per second. Thus, customs agencies around the world must be ready for a much higher volume of transactions to process.
The First Global Cross-Border E-Commerce Conference, co-hosted by the World Customs Organization and GACC, set an important milestone for what will likely be one of the most powerful trade, economic development and poverty alleviation opportunities in the history of mankind.
A decade ago, in China cash was king. But in less than another decade, the same country could be the first fully cashless society, says business analyst Ben Cavender to AFP. Cavender estimates China's mobile payment market is already 40-50 times larger than the United States.
AFP:
China was the first country in the world to use paper money but centuries later the soaring popularity of mobile payment has some analysts forecasting it could be the first to stop.
The gross merchandise value of third party mobile payment rose more than 200 percent to 38 trillion yuan (about $5.6 trillion) in 2016 from a year earlier, according to China-based iResearch.
The growth of the cash-free system has been supported by China's rapidly expanding e-commerce market as Chinese shoppers increasingly shun bricks and mortar stores.
"I think it's really very possible that China becomes the first or one of the first cashless societies in the next decade," said Ben Cavender, a director at China Market Research Group.
Cavender estimates China's mobile payment market is already 40-50 times larger than the United States.
Alipay, started by e-commerce giant Alibaba and now owned by its affiliate Ant Financial, and WeChat Pay, which is built into Tencent's popular messaging service, have hundreds of millions of users between them and are China's dominant payment platforms.
In Beijing it is hard to find a product or a service that cannot be purchased with a mobile.
Europe and America are getting the message: they are behind China in e-commerce. China veteran William Bao Bean tells an European audience at Medialaan in Brussels it is not about technology, but about the speed of adoption of the users.
