China Insights

Where next? China’s emerging e-commerce trends

Chris Bonsi

Kantar TNS

Retail 13.09.2016 / 11:20

a basket of e-commerce 2 col

With the emerging of two important new channels – social and video - the linking of brand experiences with immediate opportunities to buy will continue to define, and redefine, e-commerce in China.

China is e-Commerce’s greatest success story to date. In the five years to the end of 2015, the amount spent online has more than quadrupled in size to nearly half a trillion dollars, driving it past the United States (US$300 billion) as the largest e-commerce market on earth.

E-commerce in China has been a hugely disruptive force across a range of categories – and it’s not finished yet. As the e-commerce ecosystem expands to include new types of platforms, it produces new shopping trends and new brand opportunities.

With the emerging of two important new channels – social and video - the linking of brand experiences with immediate opportunities to buy will continue to define, and redefine, e-commerce in China.

On the one hand, this increases the potential for disruption through solely digital-based marketing by challenger brands. However, the potential for creating richer brand experiences might also tilt the balance back in favour of premium brands that align their products with aspirational experiences.

The development of social and video commerce takes place in the context of a wider trend re-shaping the e-commerce environment in China: the convergence of different functionalities within three rival ecosystems: Baidu, Alibaba and Tencent, or BAT as they are collectively known.

Recently acquired by Alibaba, Youku is a Youtube-style platform with a crucial difference. Software identifies the fashion brands, cosmetics, skincare and hair products worn by any actor, actress or model, not to mention the technology they use or the cars that they drive. With a simple click, users can open up the relevant TMALL store and buy the product for themselves. It’s a savvy response to the power of product placement in China (demand for South Korean skincare products exploded recently due to the popularity of Korean dramas among Chinese consumers). And it provides a natural extension of TMALL’s role linking brand environments with ‘buy now’ opportunities.

WeChat, China’s largest social network, is flexing its own muscles as an online shopping platform through a partnership with, with 10 million WeChat stores established in the last year alone. The concept of social commerce aligns well with Chinese consumers’ hunger for peer-to-peer reviews, and need for assurance that a product offers genuine quality and value. It also presents a potential opportunity for brands to establish emotive appeal that balances TMALL’s natural focus around price and value. Buying cosmetics in the L’Oréal WeChat store, for example, is a form of social expression through brand choice, with purchases automatically shared across a shopper’s WeChat contacts.

These technology giants are actively seeking to extend from their core businesses around search (Baidu), e-commerce (Alibaba) and social messaging (Tencent, through its dominant WeChat network), as they compete for share of consumer time. They know that consumers dislike having to switch between platforms, download different apps and remember different passwords, in order to conduct the different aspects of their connected lives, increasingly from a smartphone screen.

Bundling new services within familiar, trusted apps is therefore a critical strategy for securing share of time. It has driven Alibaba into the entertainment space through Youku, but it is also drawing both Baidu and Tencent into a role as e-commerce players. The three platforms will increasingly compete on their ability to meet consumer needs around price, value, speed, convenience, assortment and user experience. Marketers looking to build brands in the e-commerce space must build an understanding of the particular user experiences that each of the BAT players delivers – and form partnerships with them, in order to leverage those experiences successfully.

How robust is the model? E-commerce and economic slowdown

The prospect of a continuing economic slowdown in China is dominating much brand planning in the market – and will undoubtedly influence e-commerce development over the next few years.

However, it seems highly unlikely that tighter domestic budgets will hold back online sales growth. Given online shopping’s assurance of value, it may well hand e-commerce an even greater share of consumer spending. And if marketing budgets do come under pressure, it seems likely that online shopping platforms will emerge as an ever-more important brand building opportunity. E-commerce’s hugely disruptive influence on the brand environment in China is far from a passing phase, and as new platforms emerge its impact could become more profound still.

Source: Kantar TNS

Editor's notes

* This article is based on part of Kantar TNS' report "How China rewrote the eCommerce rules"; 

* To reach the author, request the full report, or to know more information, data and analysis of brand and e-commerce consultancy, please contact us.

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