With a total sales value estimated to USD 800 billion in 2017, China’s ecommerce market is the world’s number one.
“China is one of the most lucrative markets for global consumer brands to tap, but it’s also one of the toughest. With more internet users than any other country, China is the world’s largest and fastest-growing ecommerce market – driven by the rapid pace of mobile adoption,” says Angela Liu, director of strategy & insight for China, at Profitero, one of the world’s leading ecommerce analytics companies.
“Huge opportunities await brands prepared to win over Chinese consumers, adapt to local market nuances, and put strategies in place which effectively adjust to a dynamic - and mobile-centric - ecommerce environment,” she adds.
Tmall & JD.com dominate the market
E-commerce is therefore an effective way to gain market share in China. But it is a very concentrated sector, dominated by two major platforms: Alibaba’s Tmall and JD.com. Together, these e-tailers capture 83% of China’s ecommerce sales.
Strict rules and regulations in place on Tmall and JD are intended to prevent fraud and fake product distribution. As a consequence, both platforms enjoy a high level of confidence from Chinese consumers bruised by the experience by bad experiences with fake products bought on the sites that pioneered the ecommerce sector in the country.
Furthermore, according to Profitero, consumer-generated ratings and reviews carry extraordinary weight in China and have become an integral part of purchase decisions and about 80% of Chinese shoppers leave reviews online. “For brand marketers, this high level of ratings and review activity, and the importance of sentiment analysis over star ratings, is all the more critical when doing business in China,” explains Profitero in a white paper “China Mobile Commerce - How to Expand Reach and Effectiveness in the World’s Biggest eCommerce Market”.
A challenge for western brands
With its particularities compared to Europe and North America, the Chinese ecommerce is a real challenge for western brands, however, many of them are successfully competing with local and Asian brands. This is particularly true in the make-up remover category, where products from French brand Bioderma and US brand Maybelline account for three of the top four best-selling products on China’s biggest online retail site Tmall.
However, in the toothpaste category, only one western brand - Colgate - has a product among the five best-sellers.