During the first six months of 2017, China’s online retail sales of goods and services recorded a 33.4% year-on-year growth amounting to RMB 3.1 trillion ($470 billion).
Alibaba and Boston Consulting Group have published a series of articles entitled “The New Retail: Lessons from China for the West” which explores how differently China’s digital marketplace has evolved from the Western ones and what is driving their success.
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Here the 5 key insights:
1. Personalized discovery
Chinese consumers log into their favorite shopping platform to see the hottest new trends and receive real-time customized recommendations.
Although online merchants in the West offer suggestions based on searches and buying history, China’s largest e-commerce company Alibaba goes deeper than that.
It gathers social interaction and location data boosted by with data analytics and AI. A good example is what Alibaba has created for Chinese Valentine’s Day. It has published the maps of where singles live in Chinese cities and where people go on dates.
2. Seamless sales
Thanks to platform integrations, shoppers in China discover brands and products through an increasingly diverse set of channels.
Gaming, news, social media, and the ever popular live streaming phenomenon in which internet celebrities (网红, wǎnghóng in Chinese) market themselves and products are all connected to e-commerce websites.
3. Content is king
Experimentation is the force driving the shopping boom and some of these experiments are highly technologically advanced.
Alibaba is experimenting with virtual reality with Buy+ events which transport shoppers into virtual malls. Some other companies choose to partner up with key opinion leaders (KOLs) like celebrities or experts and market through WeChat.
4. C2B innovation
Unlike the classical Business-to-Consumer (B2C) relationship which goes only one way, Consumer-to-Business (C2B) innovation allows customers to add value to the company by harnessing their insights.
China’s is currently leading the way in this new approach. By using data insight and following trends, social media, and events, Chinese companies can give shoppers exactly what they want at the right time.
This allows more experimentation: if the product fails, it can be withdrawn fast, and if it works, it can scale up. The entire process of creating and launching a product takes only a few weeks instead of a few months.
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5. Agility, flexibility, and speed
New companies, less burdened by physical retail operations and bureaucracy, used agile decision making to develop a vibrant and highly competitive market. This has also been transferred to agile product development.
Fast fashion has made manufacturers more flexible than ever, offering smaller volumes and frequent changes to production lines.
Finally, access to speedy distribution through e-commerce platforms has solved a big headache for many companies.