As during the SARS outbreak, now that we’re going through the coronavirus outbreak, there is a restriction for Chinese people to go to public spaces. Schools, factories, offices, and stores are closed. The ever-busy and crowded Chinese cities are now ghost towns. But at times of crisis there are also opportunities. With people not being able to go for groceries, online shopping is the only alternative. Back in 2003 this led to the birth of e-commerce in China.
In 2003 e-commerce was just starting to emerge in China and most e-commerce websites were B2B, mainly with the purpose to connect US brands with Chinese buyers on platforms such as JD and Alibaba. Many countries around the world issued travel warnings for businessmen traveling to China, so they had to turn to online businesses to source Chinese goods. Starting in March 2003, Alibaba’s B2B e-commerce business added 4,000 new members and 9,000 listings each day, a 3-5x increase over the pre-SARS rate. As a result Alibaba’s business grew by 50% that year. That was the year when Alibaba also launched Taobao. At that time eBay was the number one e-commerce marketplace and Taobao managed to surpass it – in only two years it became the number one C2C platform in China.
17 years later, we are, unfortunately, witnessing a new virus outbreak in China. The different is that today e-commerce and delivery infrastructure in China are way much more developed and established. Due to the restrictions about going to public places and travelling, a lot of business have been suffering (restaurants, entertainment venues, travel agencies, etc.). People are even scared to go to supermarkets and buy food which could turn out to be a source of infection if it hadn’t been treated carefully. Which means they turn to online suppliers of FMCG and OTC goods with a proven origin, and most often than not imported. This has already been visible in a surge of orders online since the coronavirus outbreak started a few weeks ago. Chinese consumers also make sure to stock more provisions of fear that supplies may not be enough which is another reason for higher numbers of online shopping.
Overall, sales of FMCG goods grew by 5.3% in China in 2019 according to Kantar Worldpanel latest report. The growth of sales in supermarkets and convenience stores slowed down due to spending moving to online channels instead. Whereas, e-commerce saw 36.2% annual growth in FMCG spending.
If you would like to explore more about the opportunities in China and cross-border e-commerce, feel free to contact us at info@brand.house