E-commerce, how to effectively enter the Chinese market

23/05/2019

 

 

The Chinese e-commerce market is certainly the most lively in the world and, by 2020, its domain will double

 

 

There is no doubt. China is the number one e-commerce market in the world and, as such, more and more retailers are trying to become part of it. According to Chinese estimates, by 2018, sales were around € 871 billion, or 40% of the total e-commerce market. By 2020, however, the market should be wider than that of the United States, Japan, the United Kingdom, Germany and France combined.

However, this result is the fruit of enormous efforts made over the past few years. Just think of the success that the Alibaba Group achieved in 2016. In fact, 11 November 2016 was the largest shopping event in the world. In addition, over $ 14 billion was spent online this year, with over 657 million orders from around the world.

 

The potential for European retailers

 

China’s enormous potential is obviously attracting retailers around the world, especially European retailers. Chinese buying behavior, on the other hand, is becoming increasingly international, with 40% of consumers now shopping on foreign sites.

China, being the largest e-commerce market with around 500 million online shoppers and $ 654 billion in revenue since 2015, is obviously in the spotlight. China is twice as large as the European e-commerce market and accounts for 40% of global market spending. China has undeniably become the new gold mine for online retailers, and it is now common for them to include China in their global strategy.

This data is also due to the change in purchasing habits. Suffice it to say that 74% of the population uses a smartphone and buys more and more on mobile devices. So much so that today the smartphone represents over 50% of e-commerce sales. One of the biggest purchasing platforms is in fact a social media app, WeChat, where users can make purchases directly from the app.

 

The differences between the Chinese and European markets

 

Buying behavior is one of the biggest differences between Chinese and European e-commerce. In China, online shoppers spend more time comparing products (+ 20% more time before buying) and product pages are much more detailed, with longer descriptions and more photos.

Buyers’ expectations are also different. When it comes to price positioning, there is strong competition, so you need to know how to play with promotions, gifts and free delivery. As for delivery times, Chinese buyers are used to receiving orders within 24 hours.

In terms of social media, everything changes. In fact, in China, there are no Facebook, Twitter and Youtube. Everything goes, therefore, for WeChat, the main application for content management. The markets are also completely different. In Europe, many countries prefer markets like Amazon and eBay, but in China, Alibaba and JD.com occupy the top places.

Alibaba represents 80% of e-commerce in China with its Taobao and Tmall (Taobao Mall) platforms. Taobao allows customers to buy and sell goods and services between them. The Tmall market, on the other hand, is reserved for global trade and currently has over 70,000 national and international online retailers. To encourage foreign retailers to distribute their product catalog on the Chinese market, in 2014, Tmall opened Tmall Global to meet the growing interest of the Chinese in quality European products.

With nearly 170 million active users, JD.com (JingDong) has more than 100,000 stores on its market. Like Alibaba, JingDong launched its international cross-border market JD WorldWide in 2015 to help online retailers develop their business in China and compete with its main rival, Alibaba.

 

The main challenges: how to deal with them

 

Despite such an important market, with interesting scenarios, when it comes to selling in China, there are many challenges to consider. For anyone who wants to embark on this challenge, it will all depend on the ability to adapt. A flexible strategy must, therefore, be chosen to adapt to everyday life and to savor the purchasing behavior of Chinese buyers, to better meet their expectations.

Selling products on marketplaces like Tmall Global or JD Worldwide is a good compromise for a first experience in the Chinese market. This will provide better knowledge of the regulations, including the local market and purchasing habits, language, logistics, customer service, preferred payment methods and e-commerce events such as Singles Day.

The key to breaking down these barriers is to establish solid local partnerships with people you can trust and work with an intermediary who knows the market and speaks the language

 

 

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