E-Commerce in China?
Go / No-Go Decisions and Choosing the Right Platform
Making the decision to join China's growing e-commerce market can be a daunting tasks. Brands have to consider consumer reactions, the impact on brand image and timeline for return on investment.
This week we will be looking at some key criteria we think brands should consider before taking the plunge:
1.) Consider your target consumer
The first criteria brands should consider when entering China's e-commerce market is their consumer. Brand's should ask themselves; are my consumers e-commerce savvy? What are their goals when they go to e-commerce platforms (is it to buy, shop around, or compare prices to buy offline)? And does my brand/products fit into their e-commerce behavior?
2.) Understand your goals and objectives
Although increased revenue for brands and purchasing channels for consumers are key, they are not the only reasons to join the ranks on e-commerce. Entering e-commerce platforms can provide you with opportunities to expose your brand to new consumers, allow current consumers to compare your brand and products to your competitors, and allow consumers to check prices.
3.) Identify a viable platform
In China there are three distinct types of e-commerce platform options for brands to consider. The first is official e-commerce through .CN or .COM websites, overseas shipping can be expensive, but self operated e-commerce allows brands lots of flexibility. The second is vertical platforms that specialize in one or few categories. These platforms tend to favor flash sales and after season products. The last are the big e-commerce market places (i.e. TMall and JD), these have the greatest numbers of consumers and have the largest coverage in China.
4.) Determine the appropriate partnership model
There are a variety of different partnership models brands can explore in China. These range from consignment, to whole sale, to direct shipping upon receiving an order. Different platforms offer different options and each has advantages and disadvantages that should be evaluated against your goals and objectives.
Tmall: China's No. 1 B2C Platform
1) Key Facts about TMALL
• Average daily traffic 10MM
• 400 MM registered users, 50K stores and 70K brands
• Consumers between ages of 25-35 account for 60% of the total users
• Apparel is a major category on the platform
• Hosts the most influential promotional events such as Double 11 and 6.25
JD.com: China's No.2 E-Commerce Platform
1) Key Facts about JD
• Ranked 2nd in China’s ecommerce market with a 22.8% market share (TMALL 58.6%)
• Rated 3rd after TMALL and .CN in consumer focus groups by offline consumers
• Originally known for consumer electronics, but now has over 12 categories
• Good reputation in terms of product quality and brand authenticity
• Self-operated logistics service: on time delivery and cash on delivery
• Higher conversion rate and higher per customer transaction than TMALL
• Cooperate with QQ and WeChat to generate traffic
MEI.com: Top-rated Luxury Vertical Platform in China
1) Key Facts about MEI
• Average per customer transaction: 1,000 RMB+
• Brands typically discount at 50-75%
• Brands: 2,400+ with over 90% international premier brands
• Free shipping for orders over 688 RMB
• 100% authentic goods
• Styles recommended by China fashion buyers
Shangpin: A Trusted “light luxury” E-commerce Platform
1) Key Facts of Shangpin
• 3MM registered users, covering over 400 major cities in China
• Total sales over 800MM RMB in 2014
• Partners with over 600 international brands
• Products management
• Warehouse and SKU management
• Photography and styling
• Call center, online customer service and payments
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