China is a country that encompasses both tradition and change.  This last weekend (23rd June) saw the celebrations of Duānwǔ Jié meaning Double Fifth, also known as the Dragon Boat Festival. The people take time to celebrate traditional activities with family members. From high above China’s first woman in space sent her best wishes to her country and family from the recently launched Shenzhou-9 space mission. Meanwhile another Chinese team on the Jiaolong submarine achieved the deepest manned submersible dive on the Mariana Trench at a depth of 7015m. Again China is showing the world that it continues to push technology boundaries and this momentum also continues in the world of Ecommerce.

Traditional shopping habits are changing fast.  Figures recently released from the China Internet Network Information Center showed that 194 million Chinese people made an online purchase by the end of 2011, with the average customer shopping online over 18 times a year. In revenue terms this equated to 783 billion yuan ($123 Billion USD).  Currently 420 million Chinese users are online with the majority on broadband services in major tier one cities, such as Shanghai, representing a major opportunity for ecommerce.

At the current progress in 2013 China is anticipated to overtake the USA for the number one position as the world biggest ecommerce market.

So where are the Chinese spending their money online? According to China IntelliConsulting Corp, clothing categories leads the way with almost 80% of online shoppers buying clothes online and it is rising year-on-year. Next in popularity is electronics with 45% of all online consumers buying these products, up +2.5% year-on-year.  Cosmetic products sees the fastest year-on-year online growth with trusted overseas brands leveraging platforms like tmall.com stalls as well as their own sites.

How are the retailers selling online? From a platform point of view the market has been dominated by the large ecommerce portal players such as Alibaba which provides turnkey sales outlets to a large audience, similar to an Ebay store model in the Europe/USA. This isn’t always the perfect solution as a brand often prefers to have greater control of the online offering and a more tailored user experience.

At other levels China has always had an abundance of local development capabilities at low costs, but the level of maturity and understanding of ecommerce  varies dramatically, meaning retailers can miss basic opportunities such as cross selling and upselling.

We see international retailers moving to China and local businesses are looking to maintain strong branding and improve user experiences to differentiate them in this large market.

Equally customers are expecting a more refined service that works across channels, i.e. mobile, tablet, PC as well as through online marketplaces such as tmall, Amazon China and Alibaba.  The Chinese culture encourages bargaining, so is brutally price conscious,but consumers recognise value in buying from quality brands, which goes some way to explaining why the luxury end of the market is booming.

To take advantage of this growth, time to market and flexibility are key. Today’s technology offerings from ecommerce platform providers Sceneric implements such as hybris (www.hybris.com) offer mature, proven, feature rich platforms giving retailers a long term platform compatible with the requirements of an APAC market, e.g. multi language, multi-currency and highly extensible.

Where will this lead the market in 2012? Well the predications are everywhere, but from on the ground in China we are seeing no halt to the local appetite and its only just getting started.  Mobile remains a key channel arguably as critical as the PC user base.  As international brands expand further into China they need ecommerce capabilities tailored to the local market and its channel outlets.  Education still remains a challenge both for the consumer and retailer as many commodity services for Western ecommerce, e.g. SOE, email marketing haven’t established the same adoption and maturity yet, but will do in time.  As the consumer trust levels in product quality, delivery standards and payment security improve this will further accelerate the growth and it is perfectly feasible to see online ecommerce usage surpass any western market.

“China represents a huge and viable ecommerce market with outstanding growth figures, especially for premium retailers where demand from the Chinese middle class online shopper is significant. However the market is still maturing and requires a significant amount of local knowledge and strong local partners to help make ecommerce work here. Sceneric’s APAC operations combine our global delivery capabilities with local market expertise to help our clients businesses get online the right way.”

Malcolm Wild, Managing Director, Sceneric  Hong Kong

Sources:

• China IntelliConsulting Corp
• China Daily
• China Internet Network Information Center (http://www.cnnic.net.cn)
• U-co.com
• tmall.com
• Sceneric.com

About Sceneric

Sceneric is an ecommerce solutions provider that works closely with its customers to help them achieve leadership positions in their markets. We bring a combination of in depth industry knowledge, technical excellence and delivery expertise to support the operational objectives of our customers.

Founded in 2006, with offices in Europe and Asia-Pacific, Sceneric works with industry leaders across Retail and Finance sectors and is proud to name clients as Legal & General, B&Q, LOVEFiLM, Molton Brown, Stanley Gibbons, Simplyhealth, Friends Provident, HL-Hybris, Mouchel, mgmadvantage, Zurich amongst many others.

With average conversion improvements of 40%, Social Commerce is real and there are 2 key aspects; Recommendations and the power of groups.  Recommendations is something that’s 2/3 years old on the web – it’s basically where a product shows customer reviews from real people.  Our partners at Bazaarvoice are leaders in this respect and have some interesting statistics – 85% of people will trust a customer review over the site content and having reviews increases a conversion by up to 70% (on a reviewed site, 0 reviews leads to a –30% downturn, 1-5 reviews 20% increase – even if they’re negative, 5-15 reviews 40%…).

The power of groups is all about automatically twittering / facebook status updates during the path to purchase, with the real power being that a friends list contains groups of people who are demographically similar.   For example, a customer buy’s a Plasma TVs and his Twitter account is updated:  “Jim bought a new 46” flat screen”.  Human beings are status driven animals, and posts like this will compel friends think about buying buy a 50″ flat screen.  Our partners at ATG support this automatically with version 9.0, and Bazaarvoice support this with their SocialVoice product again with measurable impact on business.

SKU based retail (clothing, electronics etc.) is taking a lead in social commerce but other industries will catch-up and as always the first to implement will benefit from being the first to market.  For instance, recommendations are becoming common for direct to consumer financial services products such as credit cards, but is not common in insurance.  The first health, general and life insurance companies to implement recommendations should see a big increase in direct to consumer sales.  Again, social network updates will also impact this market, if a friend broadcasts that they received 12 months for the price of 10 on home insurance with Provider X, it’s likely to impact sales in a positive fashion.

The next step is to embed the path to purchase into the social network.  With the ease of use of the Facebook and OpenSocial APIs this is a fairly trivial task and one which could lead to a revolution in internet commerce.

Sceneric consultants are experts at optimising our clients platforms to ensure the hardware is properly utilised.  Our consultants have deployed applications on clustered IBM Websphere, Weblogic, Oracle iAS and JBoss servers, and have created Coldfusion Enterprise clusters on JRun 4.0 leading to significant performance and stability gains.

The key thing to remember is that Java runs within a virtual machine which has limits ordinarily significantly smaller than the avialable hardware.   Without explicit tuning expertise applied, the applications running within the virutal machine will not be performing to their optimum potential.

• ATG’s ability to rapidly develop a new online store, and to maximise conversions with personalisation software is still market leading
• With the advent of Web 2.0, the personalization, user profiling, content management, data exposure and integration functionality made me realise that ATG has been a leader in this area, providing Web 2.0 functionality in the early days of the web

In the early naughties it was often difficult to explain the capabilities of ATG to users – with Web 2.0 ideas becoming prevalent it’s now much easier to explain them leading me to think that ATG was indeed ahead of it’s time.

The 2nd level of integration is the ability to share event data between the sites.  Imagine you have a web site that tracks steps in a financial process, or your progress in a sports league.  By integrating this with Facebook the event notifications appear in the Facebook status notifications, building your brand and attracting new visitors to your site.

As social networking becomes the standard web application, it’s important not to lose business to competitors who understand the value of recommendation marketing.