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Should you look to China to see the future of e-commerce?

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Should you look to China to see the future of e-commerce?

The future of e-commerce is said to lie in China. Not only is the country a model for a post-lockdown global economy, but it’s also a potential cross border e-commerce market. Explore the reasons why e-commerce is huge in China and how businesses and retailers around the globe should look to the Chinese economy.

China is currently the leading market for e-commerce business, generating US$2.3 trillion in 2020. Along with other emerging e-commerce markets like South Korea, India and Argentina, it continues to be a key consideration if you’re an online retailer looking to sell internationally. Being the most populous country with a large number of online buyers and sellers, China’s e-commerce market will only continue to grow as it becomes increasingly affluent and the country’s rural towns start to modernise.

What drives China’s e-commerce growth?

1. Effect of the pandemic

The COVID-19 pandemic has transformed consumer habits and the retail industry. Mass lockdowns over the last two years have swayed consumers away from buying at physical stores, driving them instead to e-commerce to purchase value-for-money consumer and household necessities.

2. Rising middle class

The rising middle class of China has been a gold mine for both local and international e-commerce companies. For Chinese consumers, price is no longer the only factor when making purchasing decisions. They are increasingly demanding higher quality products. Value and choice has become important considerations for a large portion of Chinese customers, who now have higher purchasing power and are well informed about global prices through social media.

3. Increasing internet usage and digitalisation

Over 90% of e-commerce sales in China are carried out on mobile phones. With a high penetration of mobile internet and plans to improve internet penetration in the lower tier cities of China, the future of e-commerce in China looks bright. In 2017, 90% of the nearly 1.5 billion Alibaba Singles Day transactions were completed on mobile devices.

Cross border e-commerce in China

Cross border e-commerce is where products or services are sold to consumers overseas through online shopping platforms – the digital equivalent of foreign trade. Many experts believe that cross border e-commerce in China will continue to spur foreign trade. Instead of establishing a physical presence in China, Australian firms can explore the option of cross-border e-commerce to sell products here instead. How can you start selling your products to Chinese customers online?

1. Online e-commerce platforms in China

First, familiarise yourself with the many e-commerce platforms available in China. The global juggernaut, Alibaba Group runs several e-commerce platforms, including Alibaba.com (B2B), Taobao (C2C), and TMall (B2C). Australian exporters can also consider other alternatives, such as JD.com, which allows Chinese consumers to buy overseas products through its cross-border service, JD Worldwide. Other platforms such as Suning, Gome, Vipshop, Yihaodian, Dangdang, and JuMei, make up the remaining e-commerce market share for online portals that Australian exporters can look into. Select the ones that best fit your target consumer market as well as your marketing strategy.

2. Social commerce

Establishing your brand on social networking platforms is an essential business strategy for building brand awareness and taking advantage of the cross border e-commerce market size in China. Consumers here turn to social networking sites for live streaming and reviews of products. Key Opinion Leaders (KOL) are crucial in marketing products to target audiences. The total number of livestream broadcasts on key e-commerce platforms in China exceeded 24 million in 2020.

With a proper social media marketing strategy and an e-commerce site that is optimised for mobile usage, Australian firms can drive traffic to their online store and ensure successful conversions. To entice Chinese consumers to purchase on their mobile phones, ensure you have a mobile-friendly website with content written in the local dialect.

Partner with DHL Express for your e-commerce journey in China

E-commerce is here to stay and keeping abreast with the latest trends will ensure your business stays competitive and agile. As you venture into China, choose a credible and committed logistics partner, like DHL Express, to ensure your e-commerce growth strategy is supported by time-sensitive delivery services, cost-effective logistics and knowledge. We are your comprehensive solutions provider that will help you ride the cross-border e-commerce wave and successfully navigate China.

Learn more about DHL Express’ services. Start by opening an account with us today.

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