Imagine you’re in Times Square surrounded by flashing lights, street performers, live music, noisy traffic, potential pickpockets and countless other distractions. Now imagine you’re online surrounded by the same energetic chaos. Welcome to China’s digital marketplace, it’s an overwhelming space where products change every minute and the experience couldn’t be more different the simple streamlined experience of the west.
China has more e-Commerce than any other country in the world today. According to China’s National Bureau of Statistics, Chinese consumers spent $750 Billion in 2016, more than the US and UK combined.
The differences in the online marketplaces in China and the rest of the world provide a glimpse into the future of shopping.
China leaped frog-ed the West in e-Commerce, in the late 90s when Amazon rolled out, China skipped the PC completely and went straight to smartphones. This may explain why larger screen smartphones took hold in China well before they did in Western markets. Online purchases made with mobile phones will account for 74% of total e-Commerce in China by 2020, compared to just 46% in the US.
It’s not about how many people are using it, but what types of services they’ll be buying. In the US only five categories of products are commonplace, things like groceries, book, and clothing. In China, we’ve got 15 categories from snacks to financial services.
Chinese Shopping trends
With its rapid rate of innovation and integration of social media platforms, there are a few characteristics of Chinese consumers, that differ in the two online cultures.
Shopping isn’t a chore, it’s an enjoyable pastime
In China, shopping is not a transaction and buying online isn’t viewed as time-saving, it’s about entertainment, discovery and social engagement with friends, celebrities and internet influencers. On average a Chinese consumer will spend 30min a day on Alibaba’s Taobao, the countries leading e-Commerce marketplace. This is three times longer than an American will spend on Amazon.
Chinese Consumers are more brand conscious
A typical Chinese teenager can recall 20 cosmetics brands while your average teen in the West can only think of 14. China’s youth is also the most spend friendly in the world: 42% feel the need to buy more things compared to 36% in the US or UK.
Intense brand competition drives innovation
Everyone is iterating their offers and service models to stay ahead of the competition. Industries that are the most innovative are cosmetics, dairy, and confectionery. Online merchants are not afraid to fail and are not attached to schedules of product launches.
Most of their decisions to iterate and innovate concepts are based on data, analytics and consumer insight to create a more tailored consumer-driven experience.
Shopping is fun
We might have said it before, but we can’t stress it enough. Many consumers don’t enter into an online platforming knowing what they want to buy, they end up from there a news site, game, video or social network.
Taobao and WeChat, two of the top five apps in China, have evolved into Super Apps. Taobao started off as an e-Commerce site and now offers social and entertainment features. WeChat was a messaging platform where you can now make purchases.
Alibaba vs Amazon
Taking a deep dive into the market leaders Amazon & Alibaba are enormously successful and are both consistently expanding into new ventures. However, their business models are very different.
Amazon carries its own inventory, has optimized warehouses and distribution networks and is exclusively focused on the consumer. Most shoppers come looking for a specific item. The selection is enormous, with user reviews, easy payment, and fast delivery. Amazon has expanded into tablets, smart home products, food delivery, a video streaming service and even original content.
By contrast, Alibaba doesn’t carry anything, it’s a virtual mall connecting buyers and sellers. It’s got a rating system, and we’ve got a tutorial on how to buy things there if you’re curious.
Alibaba offers tools and services to help brands and small businesses navigate the world of e-Commerce and connect directly to consumers through games, news, video, live streams, talk shows, celebrity events and online communities.
Consumers go to the site to be entertained and explore new trends, shopping is a secondary activity or a bi-product of the environment.
Two Different Approaches to Data
Amazon uses data primarily to refine its products and services based on buying patterns. The company shares data with merchants to help them list the right products at he right prices and to manage their inventory.
Alibaba provides broad data on consumer behavior specifically to enable merchants to improve their marketing ROI and increase conversion rates on their digital store fronts. For example, the data might reveal that a merchant’s highest value customer typically visits after work so a campaign will have a greater impact in the evening.
Since Alibaba has created an ecosystem as consumers move through their various sites Alibaba collects data on their shopping habits, digital media consumption, social networks, logistical needs, payment and credit history and their interests to better understand their behaviors and needs. They use a “Unified ID” to link consumer data across different sites. Alibaba has 500 million monthly active users and they have identified 8000 different customer descriptors so that merchants can home in on their target customer with extraordinary precision. This increases the effectiveness of their consumer engagement efforts.
Alibaba uses the data to provide a truly personalized experience when it comes to entertainment and shopping. Amazon might offer product suggestions based on your searches or buying history, Alibaba is able to suggest new brands, promotions or content that consumers didn’t even know existed. And those suggestions tend to be spot on.
To learn more about Ailbaba we suggest you visit our article about using Taobao, it will give you a better look at how people interact with the platform.