Although Alibaba lost 26% of its brand value in the past year, the Chinese e-commerce giant was still acknowledged to be the world’s second most valuable retail brand with a brand value of US$49.30 billion, according to WPP’s new 2016/2017 BrandZ Top 25 Most Valuable global Retail Brands ranking.
Alibaba is unique among the world’s biggest retail brands in that it generates its profits not from margin on transactions but primarily from advertising around e-commerce. The business operates as a series of concentric circles, with online products that serve not just to connect buyers and sellers but, increasingly, provide a broader range of consumer and business services, the report said.
Amazon’s efforts to expand its dominance across consumer categories continued to build in 2016. The online behemoth boasts a brand value of US$99 billion, representing a 59% change in brand value compared with the same period a year ago. It is the quickest riser among all retail brands. Its value bested marquee names like Alibaba, Home Depot, Walmart, Ikea and Costco by a wide margin.
Alibaba, Amazon and eBay occupied three berths in the top 10 ranking.
“These three (digital-first) brands – Amazon, Alibaba and eBay – together account for 40% of the total brand value of the top 25 global retail brands. We are seeing that it’s difficult to overstate the significance of what this says about the way the world is being transformed,” said David Roth, CEO, The Store WPP, EMEA and Asia, who lead global BrandZ practices.
The brand value of JD.com jumped by 37% over the year and made it the 11th most valuable retail brand in the world. With 30 million online visitors a day and 40 million products and services available, it has become one of the fastest-growing retail brands not just in China and the region but the world.
Overall, as consumers rethink not just the things they buy but the lives they lead, so too have retail brands been re-evaluating the role they play in those lives, and the way in which they do it. What BrandZ™ data on brand value shows, however, is that many retailers are weathering the storm. The value of retail brands rose 7% between 2015 and 2016, the report said.
Focus on China – The world’s e-commerce hotspot
About half of all e-commerce in China happens on mobile devices, compared with just over a fifth in the US and around a third in the UK. The implication for brands is clear: consumers are on smartphones at least two hours a day, according to GroupM, and mobile is the place to engage them. Internet users in China totalled 668 million in June 2015, and 549 million of those users, almost 90%, accessed the Internet on a mobile device. In other words, the number of Internet users in China is more than twice the population of the United States and almost equal to the population of Europe, and most of those Internet users are walking around with smartphones. These numbers alone would appeal to any brand marketer, but there is more: the total number of Internet users still represents less than half of China’s population of over 1.3 billion people. And penetration is lower in rural China. A big brand opportunity is about to become bigger.
Consumers seek not only price, but also quality, and are willing to pay a premium, if justified, according to Kantar Worldpanel. In the big cities especially, spending has shifted from necessities to products and services related to transportation, communication, culture, education, and entertainment. Other factors, including government initiatives, have also impacted on development of the retail category. Internet growth, a government priority, and the availability of affordable smartphones, has facilitated the rapid expansion of e-commerce throughout China, even to rural areas.
Source: Kantar Retail, Kantar Millward Brown, WPP