eCommerce Overview of China

Reading Time : 15 Minutes 

How Does malaysia compare to china in e-commerce?

Doing E-Commerce in Malaysia is already hard and super time consuming to get things right. What if one day, you were sent to the imperial land of e-commerce success, only to realize things could actually get MUCH harder? Welcome to how Alibaba handles their entire E-Commerce ecosystem.

Digital Behaviour of Malaysians vs The Chinese

It was a mind-blowing session with the ever knowledgeable Ms Sophie Li, where she shared some facts on Malaysia VS China generally in the e-commerce space. 

Digital Behaviour of Malaysians and Chinese

From this two pictures, we can see that Malaysians generally has a higher digital engagement rate towards e-commerce shopping, has higher per capita GDP, spends longer hours on an internet device, and are generally younger in total. With this, we can kinda hypothesize that Malaysia has a good amount of potential to grow in the sector of e-commerce. 

What would the average purchases of a typical Malaysian be then on e-commerce platforms? 

Malaysia VS China Average Annual Spending Per Capita

A staggering 71 USD only as compared to China’s 858 USD. That is about 10x more purchases being made by an average Chinese compared to a Malaysian! 

How is this so you might ask?  We can understand more through the coined term, E-commerce evolvement. Hopefully this would give a better understanding on the eCommerce Overview of China.

E-Commerce Evolvement 1 : Who is Buying What?

Movement of customer segments

This is a very interesting chart prepared by Ms Sophie which dictates how growing markets of e-commerce will take a shift based on this. 

CORE TO NON-CORE : It means core e-commerce customers would start out to buy non-core items initially. Example, a young digital savvy adult will buy a certain book he cannot find in his local bookstore. A rare book being not a core product in everyday lives has to be sourced through e-commerce.

CORE TO CORE : Core customers starting to buy core daily items would then show a certain sense of maturity in e-commerce purchases within the market. For example, a young digital savvy adult is buying his daily sundries and groceries from e-commerce stores already as he feels more convenient having everything sent to him instead. Malaysia seems to be around this phase currently. 

NON-CORE TO NON-CORE : This is where it gets tricky for a country’s e-commerce growth, where non-core customers will first be encouraged to buy non-core products via e-commerce. Example, my grandmother wants to buy a golden necklace in which the design she wants cannot be obtained in the nearby jewelry shop. Promoting the demand of non-core customers to accept and spend money on the concept of e-commerce shall be emphasized here to reach the next phase.

The problem in this phase that most countries face, would be the security issue. Many elderly or matured adults are still not comfortable with linking their bank account details or credit card online in fear of fraud and scam. In China however, all of them were encouraged to link their accounts via AliPay or WeChat Pay, thus having certain bio-metrics or password authentication feature every single time a transaction is made. This, with added discounts and promo of items, psychologically affected the elder generation to highly accept the concept of cashless payment and online shopping. 

NON-CORE TO CORE: If your market reaches this level of acceptance where your non-core customers have converted to conduct purchases of core products, then congratulations! Your country has now entered a very matured e-commerce stage. This is what most countries strive to achieve and time is needed to make it happen!

E-Commerce Evolvement 2 : from GMV to LTV

From GMV to LTV

Many local players are still chasing the Gross Merchandise Value (GMV) game, whereas many players in China have already started to focus on Lifetime Value (LTV) of their consumers. How do you ensure that your marketing and branding initiatives can convert a higher return rate for your current customers in the future? Competition will always rise up, but pushing strategies to enable brand stickiness will be the key strategy that will win customer loyalty at the end of the day.

E-Commerce Evolvement 3 : Brand/Customer Relationship

Brand Customer Relationship

We were then shown a crazy campaign where they had to sell a very famous shoe brand through the angle of “Brand speaks for customers”. This campaign  garnered crazy amount of hype back in china and made their boots sale off the charts during 11.11 shopping festival!

At the end of the day, this is purely branding + marketing 101. Angle your content towards how you can allow your brand to speak to your customers, rather than in your face advertising that always gives no new value towards your target audience.

E-Commerce Evolvement 4 : Data Driven Decisions

Data Driven Ecommerce

Many business owners that I have met of late that are on e-commerce usually only care about sales and GMV. When the numbers doesn’t add up, they will complain most of the time that digital just doesn’t work. This typical scenario stems up from the lack of understanding of their own e-commerce data. 

Start by tracking various touch points of your customers throughout your e-commerce website or lazada/shopee website. See which pages user visits the most, which banners user would interact the most, what item SKU’s has the highest click rate, if the click-rate is high why aren’t they buying?

These numbers are very important for you as an e-commerce business owner to make more accurate decisions. In China, almost EVERY single seller out there is already data driven which highly optimizes and enhances their capabilities of doing business online. 

E-Commerce Evolvement 5 : Commercial & Festival

Commercialize Festivals

11.11 and 12.12 has been such a huge shopping programme that people all over the world has already taken it like a festival! Alibaba’s core strategy is to  hype up a certain activity, give out the feeling and vibes that this is something worth celebrating for. As when people are actually happy and joyous, that is where they too will usually spend the most.

A recent visit to a local food producer facility in China too shares the same strategy. They have also created their World Snack Day to entice people to buy more snacks to celebrate, well, World Snack Day! 

Afterthoughts

There were certainly way more slides that Ms Sophie Li has shared. These slides will be released to us participants during the end of the program which I will upload over here when possible.

However I felt that the topics I wrote above on the eCommerce Overview of China are some of the key points that I feel would be important to share for fellow e-commerce entrepreneurs in the industry!

Check out what happened during the other days in my trip! 

• Read Pre-Day 1 : (A Day Using China’s Tech Ecosystem)
• Read Day 1 :  (Hot Pot Anyone?)
• Read Day 2, Part 1/3 : (Tao Bao Village, A Thriving Rural eCommerce)
• Read Day 2, Part 2/3 : (eCommerce Overview of Malaysia vs China)
• Read Day 2, Part 3/3 : (Building an eCommerce Team)
• Special Intermission : (The 996 Work Culture in China)
• Read Day 3, (The 50 Billion RMB  Muji for Snacks in China)
• Read Day 4, Part 1/2 : (A Glimpse of an E-Wallet Future in Malaysia)
• Read Day 4, Part 2/2 : (Ant Forest, Gamification of Environmental Awareness)

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