E-commerce in China: 3 things you need to know

This is a 2-minute update about what’s going on in the fastest growing e-commerce market in the world. Your trendspotter this time is Tom Xiong, a serial entrepreneur based in Shanghai.

Tom Xiong moved to China in 2014, and besides running is his own e-commerce businesses, he co-hosts the Swedish podcast Den Digitala Draken (“The Digital Dragon”) and is often hired to speak about the latest development of e-commerce in China.

We asked him to share three trends we all need to know about.

Here’s his report.

1. The new, faster e-commerce

“Asian e-commerce businesses that sell globally are now taking much greater advantage of the fact that they are so close to production. In contrast to most western online webstores, they can ship products pretty much straight from the factory to the customer. Brands now sell online to a global market, with warehouses just one hour from the airport and their factories only another hour away. Imagine how fast they can react to market trends and fulfil on-demand orders. Sometimes when we see Chinese e-commerce players getting through to western consumers with their cheap and often low-quality products we tend to underestimate them. What they are proving is that they can operate on a huge scale with low-margin products thanks to an extremely efficient supply chain. So just think about what will happen when these businesses start selling higher quality products. Don’t be fooled into thinking such a reality is a long way off – remember where iPhones are manufactured.”

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2. The extreme power of mobile social e-commerce

“How fast can you go from nothing to becoming a billion-dollar company by leveraging mobile ecosystems? In China it doesn’t need to take that long. Pinduoduo is a company that started three years ago. After its first two years in business, it had sold 21 billion dollars worth of products. In western countries, most companies are either good on social but suck at driving sales or the opposite. Here we are seeing a new generation of brands  successfully combining those two elements by gamifying and socialising the shopping experience.”

3. The next chapter of acquiring customers is being written

“How do you inspire customers to come to you after having bought one of your products in a big marketplace like Amazon? Here in China, Alibaba dominates e-commerce business and, just as is the case with Amazon, it’s both a challenge and an opportunity for brands. Once the customer has bought a pair of Nike shoes in the marketplace, and thereby started a customer journey, what’s next? How do you make the customer a part of your own eco-system? The marketplace always has better prices and delivery options, so customers go there first, but with added content, apps, products and services you can entice customers over to your own channels. That’s what many brands are experimenting with here now.”

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