16th May 2017

Why eCommerce is booming in China and what the West can learn

Why eCommerce is booming in China and what the West can learn

China is a massive economy. With an ample population, a growing interest in consumerism and digitally savvy citizens, it is no surprise eCommerce has taken off there. What might surprise people is the fact that China’s eCommerce market stands at $376 billion, exceeding the US market. And China is growing at twice the rate of the US. The reasons is a difference in digital spending habits between the West and China, which is influenced both by culture and user behaviour.

In the West, consumers like to shop for items online similarly to how they do so in reality- by window shopping. They like to browse and sift through a series of price comparisons.It is not uncommon for consumers in the West to have several tabs open on their computers at one time as they search for a single item, looking at branded retailers, department stores and discount sites like eBay and Amazon, until they find the right deal. In contrast, the Chinese favour the likes of Alibaba and AliExpress, huge online market places where everything can be bought on the one site. On sites like these, consumers can contact sellers and leave messages for suppliers. They get more information about their items in these transparent digital spaces and can develop relationships with the vendors and buy more for less in one sitting. The Western consumer, however, likes to choose carefully a select few items, based on brand trust and prior knowledge. The result of this is higher spend in the Chinese case.

Convenience is a huge reason for why Chinese sites are racking up higher sales than their Western competitors. Not only can everything be found and purchased under one roof in the East, the payment methods offered are also much less arduous. The payment solutions from trusted companies like AliPay(affiliated with Alibaba) and WeChat enable consumers to log into sites and buy items without the use of credit cards. These seamless payment solutions are also available in physical stores. Many businesses use AliPay, hammering home again the message of how reliable and trustworthy it is.  Essentially what you have is a national payment system embedded within the country’s largest eCommerce site, making online shopping even more convenient and dissolving even more worries about fraud.

Chinese heavyweight Alibaba is also expanding globally, which is something western sites such as Amazon have failed to really do. Alibaba has branched out in Russia, Eastern Europe and Singapore. It’s a case of global expansion seemingly being easier from East to West than vice versa. This is down to the fact that Alibaba has very carefully decided to serve isolated rural communities to whom online shopping was previously off limits. Alibaba is delivering in areas Western companies don’t bother to serve. It is also recruiting Russian retailers to offer their goods on AliExpress, both to the Russian market and to the Chinese one.

China has been quick to tap into the consumer thirst for convenience and transparency and has served both by adopting the latest cutting edge technologies such as the payment systems offered by AliPay and WePay. Western eCommerce sites are starting to show a reluctance about change. What’s been working for them has been working for a long time and they see their blueprints for success as the only plans worth sticking to. Being overtaken in sales by the East shows that they will have to adapt and progress in order to survive.

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