E-commerce in China: An in-depth analysis

China, world’s largest e-retail market, enjoys massive growth. According to research conducted by Daxue Consulting, e-tailing accounted for 11 percent of total retail sales of consumer goods in 2015 and is estimated to reach 15-18 percent by 2020. E-commerce in China is expected to obtain CAGR of about 30 percent in the next years. Hu Yuwan, project manager at Daxue Consulting, explains: “Traditional offline channels are losing market share to e-commerce. However, big e-commerce platforms in China are now looking for ties with offline distributors to maximize mutual benefits which can be seen at the example of JD.com and Walmart, who formed a strategic alliance. Thus, both channels, on- as well as offline are important in China.” 71 percent of Chinese consumers use Online to Offline (O2O) services, according to research by Daxue Consulting.

Daxue’s client joins the e-tailing trend in China

Daxue Consulting’s client, a European trading company, sought to step into the shoes of e-commerce in China. Therefore, the firm approached Daxue Consulting to assist with an in-depth online environment analysis, comprising competitors, distribution, and advertising channels, as well as to provide an overview of current demand and supply and trading specificities on the Chinese market.

Which aspects did the research team take into consideration to meet the client’s requirements?

As a first step, Daxue Consulting executed an extensive desk research. It helped the team not only to gain a general overview of the market but also obtain data about its size, sales volume, as well as it supported the following analyses:

• Competitor Analysis: Daxue’s consultants identified key competitors and analyzed through their official websites as well as through different online platforms various aspects concerning supply and online strategies such as website sections, product segmentation, pricing, delivery costs, or promotion, for example.
• Client Analysis: The research team additionally carried out a Baidu Analysis, Big Data through which Daxue Consulting could acquire insightful knowledge concerning demographic and geographic distribution. By conducting additional research on online information platforms, and exercising social listening, the consultants identified potential customer segments, as well as trends, the general perception towards the client’s products, needs and wants, as well as questions associated with the product.
• Distribution Analysis: Daxue Consulting also performed a comprehensive analysis on various distribution channels comprising B2B as well as B2C. The research team benchmarked the online strategies of key competitors’ channels, which included, for instance, JD.com, Tmall, or Taobao, China’s largest online platforms.
• In-depth Marketing Channel Analysis: Daxue’s consultants identified channels which are becoming more and more popular and important concerning online advertisements and e-commerce in China, such as WeChat, or Weibo, which are social apps having additional features. The research team analyzed posts and promotional activities, how competitors describe and offer new products, latest news, or events. Evelyn Chen, project leader at Daxue Consulting, adds: “We also analyzed the social media effect of particular campaigns on sales through the access to official stores we have, as well as people’s opinion on marketing strategies.”
• Partnership screening & Business Plan: The research team assessed the costs of entering specific channels, what to consider and how to enter those, as well as calculating the client’s ROI. “We also discussed the possibility of working with TPs, trading partners, who operate and run your business of e-commerce in China which is for some companies a good way to work and sell in China,” says Chen.

Finally, Daxue Consulting conducted in-depth interviews with competitors to particularize their distribution strategy and client base, and to gain first-hand insights into market trends, regulations, drivers of success and failure doing e-commerce in China, or also most popular product segments.

Daxue Consulting delivered a detailed report about the potential and risks of e-commerce in China

It comprised a general overview of the market size and trends, as well as the analysis of online offers involving products, pricing, and distribution strategies of competitors. Furthermore, it included the identification of the client’s key selling point, which is important due to the intensity of rivalry online, and the identification of potential customer segments. Also, the research team provided the client with a clear strategic business plan. It included recommendations on which online distribution channels to focus, and which marketing channels to use, and the team provided the client with comprehensive information about costs, return on investment, as well as risks and threats which may arise when doing e-commerce in China.

Read more about e-commerce in China:

Chinese Retail Market: Chinese Consumer Embraces O2O Services

O2O Food Delivery Market in China: Transforming From a Price War to Service Differentiation

UX Research in China

Market Research China

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