Coresight Research expects 2020 to be a year full of innovation and expansion in China’s e-commerce market and lists top 10 trends that will dominate the segment. Major players will adopt new initiatives and technologies and look to expand into lower-tier cities.
Below are the 10 trends that will shape China’s e-commerce landscape in 2020.
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Livestreaming will become an even more important sales medium: Livestreaming became a bigger influence on consumer shopping behaviour in 2019, and it will continue to play an increasingly important role in China’s e-commerce market in 2020. During Singles’ Day 2019, Taobao’s top livestreaming host, Viya, held an eight-hour livestreaming session that engaged a total of 43.15 million buyers. Over 100,000 brands used livestreaming on Taobao Live as a sales method during Singles’ Day 2019. In total, on November 11, 2019, GMV reached ¥20 billion ($2.85 billion), accounting for around 7.5% of Alibaba’s overall ¥268.4 billion in sales.
A shift from KOL (Key Opinion Leader) marketing to KOC (Key Opinion Consumer) marketing: One reason that KOCs are gaining popularity is that consumers are becoming increasingly aware that KOLs are being sponsored by brands to make product recommendations, so they tend to believe that the information presented by them is less credible and authentic. On the other hand, KOCs are themselves everyday consumers who offer impartial product reviews.
Short-video apps will continue to embrace e-commerce: The short-video industry is thriving in China, where the number of users exceeds 820 million, as of June 2019. This total reflects an increase of 32% year over year, according to business intelligence provider QuestMobile. Short-video apps such as Kwai and TikTok are used by an average of 7.2 out of 10 mobile Internet users in China. The amount of time spent on these platforms has increased by 8.6% year over year from June 2018, totaling more than 22 hours per month, according to QuestMobile. In 2020, more brands may seize the opportunities offered by short-video apps that are building out e-commerce features.
Re-commerce will become the new hit: The re-commerce market will reach ¥1.25 trillion (around $178 billion) in 2020, according to data firm MobData. This equates to almost 46% of the total sharing economy market in China in 2020 (¥2.7 trillion as estimated by the Sharing Economy Work Committee of the China Internet Association). The shift to re-commerce is being driven by growing customer demand for product variety, sustainability and affordability
Group buying will continue to grow as major e-commerce platforms launch their own group-buying functions: JD.com started its group-buying mini programme on WeChat in June 2018 and launched its group-buying app Jingxi in April 2019. Alibaba launched its flash-sale and group-buying platform Juhuasuan in 2010. Alibaba’s Alipay launched a function named Pingou in March 2018, which is another addition to Juhuasuan. These players performed well during the Singles’ Day shopping festival in 2019 – JD.com reported that 40% of its new customers came from Jingxi.
Mini programmes will supplement shopping platforms for brands: As mini-programmes are light in capacity, it is good for brands to invest there for marketing, customer engagement and e-commerce. WeChat, the pioneer of mini-programmes, reported it had 700 million users as of July 2019, and they used mini-programmes 42.6 times per month. It is also a good way to reach out to consumers in lower-tier cities, who usually do not want to download apps due to cheap data plans. Furthermore, with mini-programmes being able to support augmented reality (AR), brands will enable users to relate to the product and makes it easier to select the right product.
Parcel delivery will continue to get faster: New technology will power the further acceleration of deliveries in China. Brands and retailers can leverage tools such as smart routing, which uses machine learning algorithms to optimise delivery routes, to increase efficiency in deliveries. Alibaba’s logistics arm Cainiao aims to digitalise and accelerate the entire delivery process by helping logistics firms to deploy Internet of Things (IoT) solutions on a large scale. Cainiao plans to connect 100 million smart devices to its IoT technologies between 2020 and 2022, including its warehouses, delivery robots and algorithm-backed management systems.
China’s data-based consumer-to-manufacturer (C2M) model will drive e-commerce forward: During the 2019 Singles’ Day, users on Tmall snapped up 170 million C2M products. The C2M market in China reached ¥17.5 billion ($2.5 billion) in 2018 and is expected to reach ¥42 billion ($6 billion) in 2022, with a CAGR of 24.4%, according to Chinese research company iResearch. This equates to around 0.4% of total e-commerce sales in China in 2018 and 0.6% in 2022 (as estimated by Statista). Brands can use the C2M model to better address consumer demand, as well as to improve efficiency throughout their supply chains.
Vertical e-commerce sites will gain traction: With consumers becoming increasingly sophisticated about their buying options, Coresight Research expects vertical e-commerce sites to gain traction, as they offer not only product knowledge but also a community where like-minded customers can interact. Brands can work with these platforms to effectively target their products to the appropriate consumer base, such as Babytree for parent-and-baby products.
A changing landscape of cross-border e-commerce: China’s cross-border e-commerce market is projected to reach $164 billion in 2020, according to Statista. This will equate to almost 20% of total e-commerce sales in the country this year ($832 billion as estimated by Statista). For instance, Alibaba acquired China’s then-largest cross-border e-commerce platform Kaola in September 2019 and will integrate it into Tmall. Alibaba will then account for over 50% of China’s cross-border e-commerce market.
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