What does group purchase mean
5 ecommerce trends from China
In terms of tendencies and trends in e-commerce, China has become one of the most important and innovative countries over the years. Anyone looking to Asia is looking to the future of the industry. Many developments there also inspire players, retailers and brands in Europe. High time to take a close look at 5 innovative 2020 e-commerce trends from China.
1 / From KOLs to KOCs
Key opinion consumers (KOCs) are average consumers who create product reviews and make recommendations. These KOCs usually do not have a large number of followers in China; often only a few hundred. This emerging trend towards "normal consumers" as a marketing branch is for brands and retailers an alternative to the common influencer marketing (with KOLs (Key Opinion Leaders)) that has slowly seemed to have reached its zenith.
KOCs are also growing in popularity as consumers become increasingly aware that KOLs are sponsored directly by brands to provide product recommendations. The credibility and authenticity of some influencers suffers as a result.
Reviews and opinions from KOCs can have a powerful impact on customers. It is therefore an advantage for brands to include them in a broader marketing strategy. KOCs can help bolster a brand's image and drive sales by influencing consumer purchasing decisions. Brands need to find suitable KOCs in the future, which is not easy as they usually don't have many followers.
KOCs are especially popular with younger Chinese (millennials).
2 / More group purchases
Ecommerce platforms will allow even more group purchases in China in 2020. Such group purchases are Products or services available at significantly lower prices if they are purchased by several consumers at the same time. This shopping model is particularly attractive to e-shoppers from poorer Chinese cities, as they have only a limited budget.
Pinduoduo, JD.com (via Jingxi) and Alibaba (via Juhuasuan) have specialized in these group offers, so the success of Pinduoduo, for example, is largely due to this group purchase model.
These actors did well during the 2019 Singles ’Day Shopping Festival: Juhuasuan reported that 576 products received more than 10 million orders in the first two hours, and JD.com announced that 40% of its new customers came from Jingxi.
The group buying model will work well in 2020 for brands looking to expand into China's “lower” cities. Group buying also provides retailers with a good opportunity to empty inventory.
3 / The year of recommerce
Recommerce has long been a common business in Europe, but selling second-hand goods online has been a taboo in China up to now. But that will change in 2020.
The Chinese recommerce market will be worth over 1 billion RMB (around $ 143 million) in 2020. In 2017 it was 500 million RMB. The leading second-hand apps in China include Xianyu and Zhuan Zhuan, which had around 24.4 million and 11.4 million active users, respectively, in March 2019. A 2019 study also shows that Chinese interest in this type of shopping has increased: 51% of Chinese people living in cities are willing to rent or buy used productsto help the environment.
The trend towards recommerce can slowly affect the number of newly sold goods. Brands should therefore find ways to develop or acquire business models for resale, as the trend clearly points to a further increase in the second-hand market.
According to survey data from the Sootoo Institute, 50% of recommerce platform users in China are under 24 years old, while 34% are between 25 and 30 years old. Over 60% of the total of 200 million users of the Alibaba Group's recommerce platform, Xianyu, the largest of these platforms in China, were born after 1990.
4 / More C2M
5 / Reinforced O2O
Chinese consumer demand for omnichannel options has led online retailers and brands to grow beyond an “e-commerce-only” strategy by opening physical stores. This Concept of New Retail was introduced in 2016, but will take on new dimensions in 2020.
Online-to-Offline (O2O) is one of the most important aspects of New Retail. One of the best illustrations for this is online retailer JD.com. The latter is at the end of 2019 a 50,000 m2 e-space store opened in Chongqing with over 1,500 brands and 200,000 products in areas such as electronics, furniture, household appliances, etc. On the opening day, 30,000 customers visited the store and bought products worth 10 million RMB (1.43 million US dollars).
The articles in this superstore were each provided with a price tag and a QR code. Customers could scan this code and then order the product online using JD.com's WeChat applet. These signs are electronic, which means that prices can be updated remotely. This makes it possible to keep up with online price changes on JD.com's e-commerce platform. Such an omnichannel model is particularly important for purchases of large-scale products such as washing machines or furniture. Chinese consumers - especially those in the lower classes - can extensively test these large and expensive products before ordering them online.
In the future one will see more and more such O2O and omnichannel attempts.
Sources: jingdaily.com, cifnews.com, sump.com, marketing-interactive.com, aimgroup.com, warc.com, mintel.com, alizila.com, chinadaily.com, nutraingredients-asia.com, jqknews.com, azoyagroup.com, coresight.com
Adrian Gmelch is enthusiastic about tech and e-commerce. He initially looked after large tech companies at an international PR agency in Paris before working for Lengow for international public relations.
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