Forbes.com

Making the Most of China's E-Commerce Boom

Online sales in the world’s largest digital marketplace are growing at an annual rate of 25%.

著者：Serge Hoffmann, Bruno Lannes and Jessica Dai

First published on 1月 21, 2015
min read


This article originally appeared on Forbes.com. In the world of digital retailing, all eyes are on China. Even as overall retail sales growth slows, along with the rest of China’s economy, B2C online sales in the world’s largest digital marketplace are growing at an annual rate of 25%. Based on Bain & Company analysis, B2C online retail in China will grow three times faster than overall retail, and by 2018 half of total online sales will come from Tier-3 cities and below. Penetration continues to increase for online shopping’s core categories, such as consumer electronics, which registered a 20% penetration rate. But new categories are gaining ground, too. In groceries, one of the fastest-growing categories, penetration is now 3%. All of this is supported by a population that eagerly embraces online and mobile commerce and a leading-edge, cost-effective infrastructure for payments and delivery. For example, thanks to heavy investment by logistics players, a retailer now can deliver merchandise to the majority of Tier 1–3 cities within two days and to the rest of the country within four days. As this infrastructure evolves, so do China’s consumers. To understand how customer behavior is changing, we partnered with digital consumer data technology company AdMaster. Among the most important trends to emerge: Consumers are quickly making the leap to mobile retail. China has already become the world’s largest online marketplace; this year it may lead the world in mobile commerce sales. Our analysis found that fully 80% of Chinese consumers who bought online last year made at least one purchase from a smartphone; 20% are weekly mobile shoppers. That’s why companies like Suning and Walmart have invested to offer mobile apps that make it easy for customers to browse and purchase from their phones. Another important finding: Price remains the primary consideration in categories like books and consumer electronics, according to observations made by Kung Fu Data, an e-commerce data analytics firm. But in categories such as apparel and cosmetics, stores offering assurance in quality and authenticity can capture more sales, even with higher prices. Also, as in the physical world, digital shoppers in China are not easily convinced to buy. More than half of all customers consult online sources before purchasing, regardless of whether they buy online or in a physical store. And nearly 80% of customers surveyed gave reviews following a purchase online last year, either in the form of scores or written comments. China’s online shoppers have relatively little regard for scored ratings, we learned, but are highly influenced by written comments posted by other consumers. The more online reviews a product receives, the higher the sales. And customers value other customers’ opinions over official company messages.Social media now has become a critical customer engagement channel. Retailers and brands are discovering that winning in this environment requires a broad view of consumer engagement and consumer data. Simply put, it’s more than just the transaction. The digital journey begins when a customer goes online to discover and research products. It continues when the customer decides to purchase and makes the transaction. It wraps up when customers go back online to share their experience. As China’s e-commerce market evolves, the most successful retailers and brands will be those that invest to engage with customers at all three stages of this journey. They’ll design marketing innovations that redefine the Discover and Research stage, omnichannel distribution approaches that better enable the Decide and Transact stage, and customer relationship management (CRM) solutions that spur repeat purchases and customer advocacy, in what we call the Review and Advocate stage. In the course of our work we’ve identified companies that are making big strides or important experiments in at least one step of the journey, disrupting a current business model with digital innovations that make the most of customer data. To gain an edge with Discovery and Research, Coca-Cola invested in a system that allowed customers to order bottles of Coke with personalized labels on grocery site Yihaodian and other authorized online stores as part of a 2013 promotion. After ordering, customers could share pictures of their personalized bottles with friends via Sina Weibo and other social platforms, and Coca-Cola tracked the social network traffic for marketing potential. The effort yielded significant results: At the peak of activity, customers logged in to order 900 personalized labels within a single five-minute period. The program also increased Coca-Cola’s active Weibo fans, from 5,000 to 150,000. And most important, more than 98% of surveyed users responded positively to the campaign. Winners maximize their ability to reach customers for Decide and Transact with a highly coordinated omnichannel strategy, offering products through physical stores and online sites. The best companies create a seamless customer experience through harmonized pricing and assortment. For example, casual-wear seller Uniqlo delivers a consistent experience to both online and offline shoppers, selling the same SKUs at the same price point and, for the most part, with the same promotional activity. In this way, it benefits from both channels while avoiding the cannibalization that occurs when a lower-priced channel steals traffic from a higher-priced channel. To close the loop with the Review and Advocate step, leading retailers and brands encourage feedback, particularly written reviews. Some, like Taobao, invite customers to write detailed reviews. Others are breaking new ground with social CRM, designing interactive digital platforms that strengthen customer loyalty by better targeting products and services, and thereby promoting repeat purchases. Pediatric nutrition and baby care products provider Biostime utilizes its membership program data. Purchase data and customer information are immediately gathered and circulated throughout the system and then used to provide incentives to customers at every stage of the customer journey. Based on the data it collects, Biostime develops a personalized marketing plan for each customer. It may send an alert for repurchase three days before a customer is expected to finish a particular product, for instance. The payoff of this effort: Biostime achieved 50% annual growth in 2013, far above the category average, with the bulk of that growth coming from repeat customers. As Biostime has learned, the most successful companies will not only serve customers throughout the online shopping journey, but will also use what they learn at each stage to continually innovate and disrupt their digital business models. The dynamic world of Chinese e-commerce is no place for the risk-averse. In our view, it’s more important for a company to establish itself as a player with a working prototype that can be improved over time than to sit on the sidelines and wait for the perfect solution. The best companies will rely on partners with the skills to help them quickly get in the game; most traditional brands and retailers lack the required capabilities within their own organizations. They’ll also take a “software release” approach to their offering, starting out small, if necessary, but with the ability to continually update with new releases. In such a dynamic market, companies that stand still will inevitably find themselves falling behind. Written by Serge Hoffmann, a partner in Bain & Company’s Hong Kong office; Bruno Lannes, a partner; and Jessica Dai, a principal in Bain’s Shanghai office.

This article originally appeared on Forbes.com.

In the world of digital retailing, all eyes are on China. Even as overall retail sales growth slows, along with the rest of China’s economy, B2C online sales in the world’s largest digital marketplace are growing at an annual rate of 25%. Based on Bain & Company analysis, B2C online retail in China will grow three times faster than overall retail, and by 2018 half of total online sales will come from Tier-3 cities and below. Penetration continues to increase for online shopping’s core categories, such as consumer electronics, which registered a 20% penetration rate. But new categories are gaining ground, too. In groceries, one of the fastest-growing categories, penetration is now 3%.

All of this is supported by a population that eagerly embraces online and mobile commerce and a leading-edge, cost-effective infrastructure for payments and delivery. For example, thanks to heavy investment by logistics players, a retailer now can deliver merchandise to the majority of Tier 1–3 cities within two days and to the rest of the country within four days.

As this infrastructure evolves, so do China’s consumers. To understand how customer behavior is changing, we partnered with digital consumer data technology company AdMaster. Among the most important trends to emerge: Consumers are quickly making the leap to mobile retail. China has already become the world’s largest online marketplace; this year it may lead the world in mobile commerce sales. Our analysis found that fully 80% of Chinese consumers who bought online last year made at least one purchase from a smartphone; 20% are weekly mobile shoppers. That’s why companies like Suning and Walmart have invested to offer mobile apps that make it easy for customers to browse and purchase from their phones.

Another important finding: Price remains the primary consideration in categories like books and consumer electronics, according to observations made by Kung Fu Data, an e-commerce data analytics firm. But in categories such as apparel and cosmetics, stores offering assurance in quality and authenticity can capture more sales, even with higher prices. Also, as in the physical world, digital shoppers in China are not easily convinced to buy. More than half of all customers consult online sources before purchasing, regardless of whether they buy online or in a physical store. And nearly 80% of customers surveyed gave reviews following a purchase online last year, either in the form of scores or written comments. China’s online shoppers have relatively little regard for scored ratings, we learned, but are highly influenced by written comments posted by other consumers. The more online reviews a product receives, the higher the sales. And customers value other customers’ opinions over official company messages.Social media now has become a critical customer engagement channel.

Retailers and brands are discovering that winning in this environment requires a broad view of consumer engagement and consumer data. Simply put, it’s more than just the transaction. The digital journey begins when a customer goes online to discover and research products. It continues when the customer decides to purchase and makes the transaction. It wraps up when customers go back online to share their experience. As China’s e-commerce market evolves, the most successful retailers and brands will be those that invest to engage with customers at all three stages of this journey. They’ll design marketing innovations that redefine the Discover and Research stage, omnichannel distribution approaches that better enable the Decide and Transact stage, and customer relationship management (CRM) solutions that spur repeat purchases and customer advocacy, in what we call the Review and Advocate stage.

In the course of our work we’ve identified companies that are making big strides or important experiments in at least one step of the journey, disrupting a current business model with digital innovations that make the most of customer data.

To gain an edge with Discovery and Research, Coca-Cola invested in a system that allowed customers to order bottles of Coke with personalized labels on grocery site Yihaodian and other authorized online stores as part of a 2013 promotion. After ordering, customers could share pictures of their personalized bottles with friends via Sina Weibo and other social platforms, and Coca-Cola tracked the social network traffic for marketing potential. The effort yielded significant results: At the peak of activity, customers logged in to order 900 personalized labels within a single five-minute period. The program also increased Coca-Cola’s active Weibo fans, from 5,000 to 150,000. And most important, more than 98% of surveyed users responded positively to the campaign.

Winners maximize their ability to reach customers for Decide and Transact with a highly coordinated omnichannel strategy, offering products through physical stores and online sites. The best companies create a seamless customer experience through harmonized pricing and assortment. For example, casual-wear seller Uniqlo delivers a consistent experience to both online and offline shoppers, selling the same SKUs at the same price point and, for the most part, with the same promotional activity. In this way, it benefits from both channels while avoiding the cannibalization that occurs when a lower-priced channel steals traffic from a higher-priced channel.

To close the loop with the Review and Advocate step, leading retailers and brands encourage feedback, particularly written reviews. Some, like Taobao, invite customers to write detailed reviews. Others are breaking new ground with social CRM, designing interactive digital platforms that strengthen customer loyalty by better targeting products and services, and thereby promoting repeat purchases. Pediatric nutrition and baby care products provider Biostime utilizes its membership program data. Purchase data and customer information are immediately gathered and circulated throughout the system and then used to provide incentives to customers at every stage of the customer journey. Based on the data it collects, Biostime develops a personalized marketing plan for each customer. It may send an alert for repurchase three days before a customer is expected to finish a particular product, for instance. The payoff of this effort: Biostime achieved 50% annual growth in 2013, far above the category average, with the bulk of that growth coming from repeat customers.

As Biostime has learned, the most successful companies will not only serve customers throughout the online shopping journey, but will also use what they learn at each stage to continually innovate and disrupt their digital business models. The dynamic world of Chinese e-commerce is no place for the risk-averse. In our view, it’s more important for a company to establish itself as a player with a working prototype that can be improved over time than to sit on the sidelines and wait for the perfect solution. The best companies will rely on partners with the skills to help them quickly get in the game; most traditional brands and retailers lack the required capabilities within their own organizations. They’ll also take a “software release” approach to their offering, starting out small, if necessary, but with the ability to continually update with new releases.

In such a dynamic market, companies that stand still will inevitably find themselves falling behind.

Written by Serge Hoffmann, a partner in Bain & Company’s Hong Kong office; Bruno Lannes, a partner; and Jessica Dai, a principal in Bain’s Shanghai office.