Global brands can’t wait to enter the Chinese market. Given the growth in Chinese market share globally over the past 10 years, it makes perfect sense. Ten years ago, the Chinese market accounted for 1% of global eCommerce activity. Now, it makes up 42%. While the West often dominates sales in offline markets, the strength of China’s eCommerce market seems poised to leave the West even further behind. Jack Ma, founder of the eCommerce giant Alibaba, drove the point home when he said, “In the US eCommerce is dessert, but in China it’s the main course.”
For global brands, however, it’s not enough to just enter the market. Despite China’s share of global eCommerce activity, it doesn’t map exactly to the ways eCommerce happens elsewhere around the globe. There are big differences between West and East, including different trends, different customer expectations, and different ways of interacting with brands. To build a successful strategy for the Chinese market, companies first need to understand what makes Chinese eCommerce distinctive, and to tailor their strategies accordingly.
Delivery and Logistics Infrastructure: China has four times the population density of the United States. In 2016, there were 2.03 million couriers in China, in contrast to 720,000 in the United States. To serve its populations, the Chinese government has invested in logistics infrastructure that has turned into highly efficient and inexpensive express and “last mile” delivery systems to support eCommerce purchasing and fulfillment.
Highly Customizable Shopping Experiences: Different privacy protections in China mean Chinese eCommerce can leverage data gathering and machine learning to understand individual customer purchasing patterns at a deeper level. As a result, Chinese eCommerce platforms have more data available to make highly customized product suggestions to customers. In contrast to Western recommendation engines, which can seem generic or tied to products, not individuals, the Chinese shopping experience is designed to anticipate and meet a customer’s every need.
Purchasing through Messaging Apps: Because standalone eCommerce stores can be expensive to set up, many brands open online stores inside popular messaging and social apps, such as WeChat. Chinese customers love to shop directly in the same apps they use for socializing, playing games, booking tickets and ordering food. With shopping available alongside a range of other programs and services, people’s favorite platforms become their one-stop shops, complete with mobile payment functionality. In fact, many of the newest social media platforms in China are integrating fast to become eCommerce marketplaces.
Comprehensive Product Information: Chinese eCommerce platforms don’t hold back when it comes to providing customers with all the necessary product information. Most product descriptions include at least one video, numerous pictures, a list of key selling points, and the fullest possible information about manufacture, materials, product certifications, suggested uses, and brand history.
Customer Service: Customer service is paramount in Chinese eCommerce and customers demand a personalized experience when they seek product information from brands. Since the customer journey tends to begin with social and friend suggestions, followed by customer recommendations and reviews, a final conversion through mobile payment relies on having a genuine shopping assistant service at the moment of sale. Bargaining for prices can even form part of the purchasing experience. This eCommerce approach is quite different from that in the West, where customers expect self-serve, automated experiences and only call customer service if there’s a problem.
China’s eCommerce market surpassed that in the US for the first time in 2014 and has grown steadily ever since. With China currently the foremost trendsetter in eCommerce, foreign brands have a huge opportunity to introduce Chinese consumers to Western products they’re not yet familiar with. However, to really succeed on the Chinese eCommerce market, Western brands need to localize their strategies by understanding local culture and taking Chinese eCommerce customer expectations and preferences into account.
China is far more than a manufacturing country these days. It is a complex and dynamic place where innovation happens at breakneck speed. And eCommerce is just one more location where life happens in digital China.