The coronavirus outbreak in January 2020 definitely posed new challenges to e-commerce in China. A lot of business had to adapt to a new reality where people couldn’t get to their physical stores and to a new reality where increase in online shopping led to bigger competition and where marketing had to adjust as well to the new trends in consumer behavior. This means that 2020 will definitely be a year of innovation and expansion in China’s e-commerce market.
Let’s look at five e-commerce trends you shouldn’t miss out in 2020:
- E-commerce will expand even more into rural China and lower-tier cities
Consumers in China’s less-developed areas are driving the next wave of consumption growth in the country. Over the past few years, consumers buying FMCG goods online in lower-tier cities have grown significantly. And only in the first half of 2019, rural China has gained three million additional internet users and has grown to a total of 225 million, around 26 percent of China’s total internet population. With the growing online population in Tier 2 and 3 cities as well as the countryside, a lot of online marketplaces have already started expanding into this niche, but the potential is huge and yet to be unleashed.
- Deliveries will get even faster and will reach new rural regions
Currently rural China lacks infrastructure and logistics support due to the lower population density in rural areas. This, however, has already been noticed and Alibaba was the first to start developing a wider delivery network. Since consumers’ behavior has been changing rapidly and Chinese online shoppers want faster deliveries to their doors. This has become even more obvious and urgent during the coronavirus outbreak. Which has led all online retailers start working on a faster delivery solution for their customers, not only in tier-1 and tier-2 cities, but throughout the whole country.
- Group buying will continue to grow and become an important e-commerce drive
E-commerce platforms will increasingly embrace group buying in 2020, which offers products and services at significantly reduced prices if consumers buy in large quantities. This shopping model is attractive for shoppers with a limited budget, especially those in lower-tier cities, as they can join together to take advantage of the lower prices. Players who already started tapping into this, reported great numbers from Single’s Day in 2019. Group buying is definitely a strategy to start exploring the lower-tier cities and rural areas as price is extremely important for consumers in these regions. It is a also a good strategy for brands who are in need of clearing inventory.
- O2O takes e-commerce offline
As strange as it may sound, O2O will take e-commerce offline. Chinese consumers in bigger cities are so used to online shopping that they need a new omnichannel experience to be fully satisfied. And since customer is king, brands have to respond to that by creating such experience. The so-called O2O concept (online-to-offline) meets the demand of the “Internet generation” and the requirements for fast delivery or experiencing the products. The idea is that marketplaces have the so-called E-store which are physical stores, displaying their online sold merchandise, where consumers can have more tangible taste of the products, then order them online and have them delivered extremely fast. With enhanced infrastructure and technology, Chinese consumers expect to buy their groceries anytime and from anywhere.
- The cross-border e-commerce landscape will become more consolidated
In September 2019 Alibaba acquired the tenth-largest cross-border e-commerce platform in China – Kaola, and will integrate it into Tmall, which set up the stage for the expected consolidation of all cross-border e-commerce platforms. According to CEO Daniel Zhang, Alibaba’s acquisition of Kaola will further elevate the company’s import service. China’s cross-border e-commerce market is projected to reach $164 billion in 2020. This will be almost 20% of total e-commerce sales in the country this year (estimated $832 billion). Foreign brands can look to running a shop according to their desired business model.
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