Jenny Chan 陳詠欣
Apr 17, 2014

Get at least 5% of your China sales online: GroupM Interaction

CHINA - With the inexorable shift to online shopping in China, GroupM Interaction's 2014 Digital Playbook advises brands to get at least 5 per cent of their China sales online.

Apple opened its official Tmall store in Jan 2014
Apple opened its official Tmall store in Jan 2014

With online sales forecast to take 7.5 per cent of China's retail market next year, too many brands are still taking a wait-and-see approach, according to the agency. Rather than leading with China e-commerce initiatives, too many multinational brands wait for directives from their US and European headquarters, where the markets are different and slower in development. Getting up to speed now will help prepare for the not-too-distant future when half or more sales run through online channels in China, advises the agency.

In 2013, China leap-frogged the US in e-commerce to lead the world in gross merchandise volume. Forrester estimates China had nearly 300 million online shoppers in 2013, and will add 250 million more shoppers by 2018. In addition, A.T. Kearney recently ranked China as the most attractive e-commerce market in the world, the GroupM report noted.

Getting out to shop in physical stores is challenging in China, especially in first-tier cities that suffer from pollution, parking shortages, and long lines. China's retail sector is "archaic and inefficient" in the higher-tier cities, and brick-and-mortar has not yet arrived at scale in the lower tiers, GroupM said.

E-commerce, by contrast, offers consumers competitive prices, huge selections, online records of all purchases every made, and easy payments, according to the agency. "It suits the connected-ness and impatience of modern consumers who might discuss something at a dinner party, and pull out their phones to buy it right then and there," so says a line in the playbook.

 

China is dominated by "do-it-yourself-retail-marketplaces" such as Tmall that charges retailers a deposit fee and a commission on sales, and consumers prefer to buy from brands directly online because they are more confident the goods are not counterfeit.

GroupM Interaction also calls e-commerce the "ROI endgame for digital marketing", as it is a platform that enables marketers to correlate their media investment with actual sales, closing a virtuous circle where the effectiveness of digital marketing can be evaluated and attributed to each stage of the purchase funnel.

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