E-Commerce In China: 10 Retail Trends Emerging For 2020 In Wake Of Coronavirus Pandemic

E-commerce in China is expected to gain in importance to retailers as consumer buying habits developed during the two-month shutdown prompted by the coronavirus pandemic persist through 2020, Coresight Research reported Tuesday

Coresight identified 10 trends that will change the retail landscape: livestreaming, a shift from key opinion leader marketing to consumer-driven marketing, short-video apps that tailor pitches, “recommerce,” group buying, mini programs that supplement shopping platforms, quicker delivery, consumer consumption analysis, vertical e-commerce sites and growth in cross-border e-commerce.

The report said livestreaming and short videos will grow in importance as retailers look for alternative shopping channels and expand vertical e-commerce sites. Alibaba’s acquisition of Kaola is expected to solidify its dominance of cross-border sales.

Livestreaming, which is similar to TV shopping, presents a wide array of products curated to fan tastes, resulting in high conversion rates.

“Taobao claimed that it had and 65% conversion rate across livestreaming in 2018,” the report said, adding prize draws are used to attract viewers while limited quantities and time constraints create urgency.

Chinese financial services firm Everbright Securities estimates the livestreaming e-commerce market was 440 billion yuan (about $63 billion) in 2019. PWC India estimates it will growth to 25% of all retail sales this year.

The shift to the importance of consumers over opinion leaders is due to growing awareness that celebrities often are sponsored by the brands they recommend.

“The rising popularity of KOCs [key opinion consumers] is also partly due to the fact shoppers want to seek advice from everyday consumers,” the report said.

Short videos, typically lasting 10 to 20 seconds are growing in popularity, encouraging users to seek personalized content. Use of the format has grown 32% since last June when the number of users topped 820 million, or 72% of mobile internet users with the average time spent on such apps increasing to 22 hours a month.

“In 2020, we expect more brands to seize the opportunities offered by short-video apps that are building out e-commerce features. Brands may also leverage short-video platforms for content marketing and e-commerce support, such as for analysis of account growth trends and detailed traffic data,” the report said.

Recommerce – selling off second-hand goods – is expected to reach 1.25 trillion yuan (about $178 billion) this year, about 46% of the total economy, driven by consumer demand for “variety, sustainability and affordability,” the report said, recommending new-goods purveyors partner up with resale sites as consumer interest in recycling, reselling and upcycling grows.

Chinese consumers also are showing increased interest in buying in large quantities to save money, with many in low-tier cities banding together to make the purchases. Pinduoduo, JD.com and Alibaba all saw their group-buying platforms do well during last year’s Singles’ Day shopping festival, the report said.

Mini programs that operate within apps offer an additional sales platform that can be used to supplement the larger platform, offering a second channel that can be used as a branding tool.

Companies also are working to speed delivery, with same-day service becoming more common for a wide variety of products. Adoption of 5G technologies is expected to improve logistics further, allowing brands and retailers to leverage such tools as smart routing.

The consumer-to-manufacturer model will allow manufacturers to better address consumer needs by using big data to analyze consumption characteristics.

Vertical marketplaces are expected to gain traction by binding like-minded consumers and providing better content to enable users to make buying decisions.

Alibaba is likely to account for more than half of China’s cross-border e-commerce once it integrates Kaola, which it bought in September, into Tmall, boosting access to affluent Chinese shoppers looking for goods from foreign merchants. Statista estimates cross-border sales will reach $164 billion this year, representing about 20% of total e-commerce sales.