Can China earn its place as the world's largest e-commerce market?

著者：Serge Hoffmann, Bruno Lannes and Jessica Dai

Forbes.com

Can China earn its place as the world's largest e-commerce market?

著者：Serge Hoffmann, Bruno Lannes and Jessica Dai

First published on 2月 16, 2012
min read


China holds the potential to become the biggest market for virtually everything and e-commerce is no exception. E-commerce is surging, opening up opportunities for companies if they pay close attention to the quickly evolving marketplace. In 2010, China’s e-commerce sales totaled RMB 460 billion, with projections it will triple to RMB 1.5 trillion in the next three years. By then, China may overtake the US as the world’s largest e-commerce market—with online sales growing to represent 7 % of all retail sales. Consumer-to-consumer (C2C) online marketplaces such as Taobao.com lead with an 80 % market share compared with just 20 % of business-to-consumer (B2C) sites. But explosive B2C growth is underway, fueling the expansion of China’s entire e-commerce industry. Many big traditional retail names are gearing up to seize the opportunity, including Wal-Mart, which is opening up its China e-commerce headquarters in Shanghai. Meanwhile, Taobao is using its 370 million user base to feed traffic to Tmall, its entry in the B2C market. In 2010 alone, it quadrupled sales, serving as a major profit generator for Taobao. To better understand what the changing habits of China’s online consumers will mean for both traditional retailers and online-only companies, Bain & Company developed an overall picture of the e-commerce market in China, including a survey of nearly 600 shoppers in six cities. The survey revealed two noteworthy trends. While price remains the primary motivator for shopping online, convenience and variety now are major considerations for a surprising segment of shoppers. Online consumers have started to diverge, with a significant number evolving from “price sensitive” to “experience sensitive.” Second, China’s e-commerce ecosystem—including sourcing, payment and delivery—has developed to the point where retailers can quickly build and grow their own e-commerce sites. By leveraging their brick-and-mortar stores and other offline resources, these retailers will create a threat to online-only players. For both traditional and online players alike, four factors are expected to give e-commerce a further boost: more secure payment methods, more reliable delivery services, government regulations that standardize e-commerce and increasing numbers of customers who now are becoming comfortable shopping online. Attracting shoppers: Who’s buying online…and why? Our online shopper survey provides insights into how companies can attract more online shoppers and build a loyal customer base. For example, as consumers become less price sensitive, retailers will need to deliver superior customer service and find ways to cultivate customer loyalty. Survey participants decide where to shop online largely based on search engine results and word-of-mouth recommendations. Apparel and groceries are the most frequently shopped categories but respondents say electronics and home appliances deliver the best value. Our survey identified four distinct segments of shoppers with different characteristics and behaviors. Winners will be those that understand these emerging shopper segments and create strategies to serve their needs. The Digital Leaders group (typically young working mothers) has the highest income, makes the most online purchases and is willing to spend more for quality, convenience and service. The typical Value Seeker—about 23 years old, single, female, with a mid-to-low income—makes frequent online purchases and is influenced by word of mouth and price. The Old School segment—usually single males about 29 years old, finds online shopping complicated. The Bare Minimum segment includes students and the lowest online spenders. They may evolve into more active online shoppers as income and needs change. Implications for online players As China’s e-commerce boom redefines the retail landscape, successful strategic paths differ for traditional retailers and online pure plays. Traditional players: Omnichannel is a must. With online platforms expected to outgrow traditional channels by over 400%, bricks-and-mortar players can use e-commerce to win and retain their most critical customers—everyone from loyal heavy users to online opinion leaders. They make the most of their offline advantages to provide a better value proposition than their offline counterparts. For example, Wal-Mart allows customers to pick up products ordered online at a nearby store. Growing an online presence while maintaining a traditional retail operation comes with its own challenges, including brand image consistency and price and assortment optimization. Pure online players: Scale up fast and build a repeatable and sustainable success formula. The pure online e-commerce business model still is unproven. Interviews with pure-play executives show that many companies aren’t profitable yet as they burn through cash to win market share. We expect rapid consolidation of the pure-play market. Winners will enhance customer retention with initiatives such as member rewards programs. They’ll improve customer acquisition efficiency through better segmentation and more effective recruitment. Winners also will optimize operations to secure profits. And they’ll seek strategic partnerships with traditional players and leverage existing capabilities and platforms by expanding into business adjacencies. As China’s community of online shoppers grows, so will the traditional and online players that make smart and strategic moves. That means developing insights into who’s buying online—and tailoring your proposition to your best customers, making the most of the evolving ecosystem and considering category dynamics when developing strategy. Winners will act on this opportunity with Internet speed. Serge Hoffmann is a Bain & Company partner in Hong Kong. Bruno Lannes is a Bain & Company partner in Shanghai. Jessica Dai is a Bain & Company manager in Shanghai. They are all members of Bain’s Consumer Products and Retail practice in China.

China holds the potential to become the biggest market for virtually everything and e-commerce is no exception. E-commerce is surging, opening up opportunities for companies if they pay close attention to the quickly evolving marketplace. In 2010, China’s e-commerce sales totaled RMB 460 billion, with projections it will triple to RMB 1.5 trillion in the next three years. By then, China may overtake the US as the world’s largest e-commerce market—with online sales growing to represent 7 % of all retail sales.

Consumer-to-consumer (C2C) online marketplaces such as Taobao.com lead with an 80 % market share compared with just 20 % of business-to-consumer (B2C) sites. But explosive B2C growth is underway, fueling the expansion of China’s entire e-commerce industry. Many big traditional retail names are gearing up to seize the opportunity, including Wal-Mart, which is opening up its China e-commerce headquarters in Shanghai. Meanwhile, Taobao is using its 370 million user base to feed traffic to Tmall, its entry in the B2C market. In 2010 alone, it quadrupled sales, serving as a major profit generator for Taobao.

To better understand what the changing habits of China’s online consumers will mean for both traditional retailers and online-only companies, Bain & Company developed an overall picture of the e-commerce market in China, including a survey of nearly 600 shoppers in six cities. The survey revealed two noteworthy trends. While price remains the primary motivator for shopping online, convenience and variety now are major considerations for a surprising segment of shoppers. Online consumers have started to diverge, with a significant number evolving from “price sensitive” to “experience sensitive.”

Second, China’s e-commerce ecosystem—including sourcing, payment and delivery—has developed to the point where retailers can quickly build and grow their own e-commerce sites. By leveraging their brick-and-mortar stores and other offline resources, these retailers will create a threat to online-only players. For both traditional and online players alike, four factors are expected to give e-commerce a further boost: more secure payment methods, more reliable delivery services, government regulations that standardize e-commerce and increasing numbers of customers who now are becoming comfortable shopping online.

Attracting shoppers: Who’s buying online…and why?

Our online shopper survey provides insights into how companies can attract more online shoppers and build a loyal customer base. For example, as consumers become less price sensitive, retailers will need to deliver superior customer service and find ways to cultivate customer loyalty. Survey participants decide where to shop online largely based on search engine results and word-of-mouth recommendations. Apparel and groceries are the most frequently shopped categories but respondents say electronics and home appliances deliver the best value.

Our survey identified four distinct segments of shoppers with different characteristics and behaviors. Winners will be those that understand these emerging shopper segments and create strategies to serve their needs.

The Digital Leaders group (typically young working mothers) has the highest income, makes the most online purchases and is willing to spend more for quality, convenience and service.

The typical Value Seeker—about 23 years old, single, female, with a mid-to-low income—makes frequent online purchases and is influenced by word of mouth and price.

The Old School segment—usually single males about 29 years old, finds online shopping complicated.

The Bare Minimum segment includes students and the lowest online spenders. They may evolve into more active online shoppers as income and needs change.

Implications for online players

As China’s e-commerce boom redefines the retail landscape, successful strategic paths differ for traditional retailers and online pure plays.

Traditional players: Omnichannel is a must. With online platforms expected to outgrow traditional channels by over 400%, bricks-and-mortar players can use e-commerce to win and retain their most critical customers—everyone from loyal heavy users to online opinion leaders. They make the most of their offline advantages to provide a better value proposition than their offline counterparts. For example, Wal-Mart allows customers to pick up products ordered online at a nearby store. Growing an online presence while maintaining a traditional retail operation comes with its own challenges, including brand image consistency and price and assortment optimization.

Pure online players: Scale up fast and build a repeatable and sustainable success formula. The pure online e-commerce business model still is unproven. Interviews with pure-play executives show that many companies aren’t profitable yet as they burn through cash to win market share. We expect rapid consolidation of the pure-play market. Winners will enhance customer retention with initiatives such as member rewards programs. They’ll improve customer acquisition efficiency through better segmentation and more effective recruitment. Winners also will optimize operations to secure profits. And they’ll seek strategic partnerships with traditional players and leverage existing capabilities and platforms by expanding into business adjacencies.

As China’s community of online shoppers grows, so will the traditional and online players that make smart and strategic moves. That means developing insights into who’s buying online—and tailoring your proposition to your best customers, making the most of the evolving ecosystem and considering category dynamics when developing strategy. Winners will act on this opportunity with Internet speed.

Serge Hoffmann is a Bain & Company partner in Hong Kong. Bruno Lannes is a Bain & Company partner in Shanghai. Jessica Dai is a Bain & Company manager in Shanghai. They are all members of Bain’s Consumer Products and Retail practice in China.