China has long been considered a soothsayer for ecommerce trends and technology. In 2015, China surpassed the US to become the largest ecommerce market in the world. According to Forrester research China now accounts for 83% of all online retail sales in the Asia Pacific region. Retail e-commerce spend in China for 2019 was said to increase 27.3% to $1.935 trillion – making up 36.6% of total retail sales, according to digital data and research company eMarketer. Sheer population numbers coupled with the rise in disposable incomes and efficient telecommunications infrastructure have also given China the status of having the most mobile users in the world, fast-tracking consumer adoption of cross-channel shopping. Ecommerce giants like JD.com, Wish and the Alibaba have catapulted in this environment having been built with tech at their core, setting the bar for sophisticated and personalised online experiences much earlier than the west.
Given the chronological path of the coronavirus, brands and vendors alike have been looking to China to help us anticipate what’s next in this very unpredictable ecommerce environment. In a recent conversation with analysts at Forrester Research, we learnt that overall retail sales were in decline by 20% in January and early February at the height of the crisis, but across all categories it maintained a 3% growth. Grocery, as in other markets we observe, being an obvious significant contributor to this growth. Brands have also been significantly vocal in the crisis offering pledges of financial support to communities via brand ambassadors which has provided them opportunities to remain visible. In addition, with government support, many retailers have been able to offer significant purchase discounts to keep sales at a comfortable level.
The quarantine also meant that brands have needed to offer enhanced online experiences and opportunities to engage with consumers. This resulted in a significant increase in brands live-streaming events. For example, the country’s largest B2C website Tmall hosted live streaming events to promote certain categories like cosmetics, which we are learning has been a popular category during the quarantines in China and Europe alike. Human customer service interaction is also being translated online with stores using live associates to promote products via live video streams and WeChat. This is not a new trend, and one we heard is gaining momentum during the recent NRF 2020, but clearly it has been accelerated by the current situation and poised to be normalised in China as a result.
Given China’s reputation for being sophisticated, early adopters of new technology and online experiences, can we learn anything from the impact of global lockdowns on online behaviour? Probably-the virus has certainly created some basic shared experiences globally.
It’s obvious that with the reality of offline store closures, as in China, brands across Europe are already having to expand online touch points and sales channels. Small to mid-tier brands have been in the position to be more agile in responding to focusing on scaling up for ecommerce. We really like the agility of food brands like UK’s Leon which swiftly switched their business model and launched a new ecommerce site to allow catering companies and suppliers to sell ingredients as well as ready-made meals direct to consumer in the wake of shortfalls in supermarket supplies. A number of small to mid-tier businesses experiencing short-term surges of growth like pet-supplies, electronics and toys are also optimising to scale for ecommerce demand.
China’s experience has also shown that many brands may need to accelerate their marketplace strategy. According to Forrester, during the height of the quarantine, and with more appetite for homeware and furniture purchases, IKEA opened a flagship store on Tmall and collected 870.000 followers within 5 days. Retail brands in China have long had a leaning towards marketplaces given the influence of ecommerce, and perhaps the early days of this trend in Europe will be accelerated by extended lockdowns, as brands look for new touchpoints to influence and engage with shoppers.
The third lesson from China is the impact the pandemic is having on the demographic of shoppers. Where we understand from Forrester that online grocery shopping was the bastion of younger Chinese shoppers, with older shoppers preferring traditional instore shopping, the quarantine has now forced older shoppers to learn, trust and explore ecommerce options. With large ageing populations in Europe living away from their families, brands would do well to optimise the experience for this demographic we certainly see the value of online shopping for more immobilised elderly shoppers grow in the months ahead.
Finally, we don’t need the current fluctuations in online traffic to tell us that while sales might be down in certain categories and up in others, people have time to browse online while they plan for the return to normalcy. This is where brands need to engage, re-engage and tell their brand stories well. This is the time to re-think strategies and show off new experiences online with content and personalised experiences, keeping engagement high with shoppers until a broader appetite for shopping returns and the supply chain is stabilised.
This is what we have learnt from China, where investment in technology is on the rise, in order to deliver enhanced experiences that will give retailers and brands new ways to engage well beyond the pandemic.