Content posted from James Baillie (LinkedIN)
Here are my top 10 thoughts on what will happen to e-commerce in China in 2017.
1 . Tmall and JD will continue to dominate – these 2 are not going to be shifted from the top of the tree. Not rocket science I hear you say but what we will see though is more main brands drop off these two platforms because they are not making enough profit.
2. The rise of the ,com .cn – Chinese consumers still shop marketplace first but we will start to see more global brands and retailers invest in their own .com .cn website and use a budget to grow these sales channels. Not a bad idea when it can be 25% of the cost of running a Tmall program for a year and brands can control the consumer experience.
3. The further rise of the niche marketplace – Obviously I have a sweet spot for these boys but they do a tremendous job for brands. Individually they are small but combined they can account for a consumer network of 200 million. There will always be Tmall and JD but niche marketplaces are here to stay and most dont have any hard costs to enter your brand on – a perfect storm to enter and grow in China online.
4. Distributors will decrease – Most brands now see the value that China ecommerce can have for their brand and they are winding down their distribution agreements where they can. Brands are starting to take control of their online channels.
5. More western multibrand retailers entering China – Years ago it was challenging for a multi brand retailer to enter China because brands didn’t give approval, but now brands are more relaxed in allowing global retailers sell their brand in China.
6. VR/AR technology will become the next big thing to link online to offline.
7. 2017 will be the rise of the new guy – New brands with no awareness have a great opportunity to enter online in China and get traction. With the middle class growing rapidly, they are searching for good quality imported products.
8. Brands will localise – More western .com websites will localise with payment gateways and be in Chinese language. More than 125 million Chinese will purchase from an international website in 2017. It will be up to logistics companies to solve for the delivery as many do not have a good solution into China yet.
9. Luxury online sales will generally increase but the bigger commercial brands sales will decrease – Chinese are looking for new luxury brands, better prices and more selection. Gucci, Prada and friends are in for a tougher fight in 2017.
10. Finally one to watch – Amazon China. Its a sleeping giant, once they solve their cross border process out and enable international brands to sell easily without stocking product in China, this could be huge in 2017.