In the wake of another record-breaking Singles’ Day festival in November – with US$25.3 billion spent across Alibaba’s platforms – the importance of e-commerce for retailers and their customers in China has never been more apparent.
A recent report by KPMG China and GS1 Hong Kong has found that the mindsets of CEOs of retail brands and consumers are both shifting. The need for a significant presence online is no longer just a benefit, but a necessity.
The annual report, titled “Outlook for e-commerce in Hong Kong,” surveyed 162 CEOs in Hong Kong – from local and multinational companies from the consumer and luxury retail sectors – on their business and e-commerce strategies. It also surveyed 1,000 consumers in Hong Kong and Mainland China on their spending patterns.
The exponential rise of e-commerce is reflected in the survey results, where a significant majority of CEOs note that they are looking to increase their investment in e-commerce to drive growth. Notably, one in three CEOs intends to increase this investment by more than 20%.
Furthermore, smartphone penetration and connectivity in Hong Kong and Mainland China are rapidly increasing. According to the China Internet Network Information Centre, the number of mobile internet users in Mainland China hit 724 million at the end of June 2017, with mobile users accounting for 96.3% of all internet users. Meanwhile, data from Hong Kong’s Census and Statistics Department shows that the smartphone penetration rate in Hong Kong reached 85.8% in 2016.
This surge in smartphone use is leading to consumers increasingly interacting with brands and each other online. WeChat use is at a record high, with 980 million monthly active users (MAUs) in China at the end of September 2017, according to Tencent. This dramatic rise in online and mobile activity is undoubtedly bringing the importance of e-commerce to the fore.
We also see a large number of corporates trying to understand changing consumer trends. Shoppers are more unpredictable than ever, and China’s millennials, estimated at more than 400 million, are becoming an increasingly important and influential demographic group.
Customer experience is at the core of these trends. To this end, the report finds that improving the customer journey and creating a consistent brand experience across channels are highlighted as key objectives for retailers.
To achieve these objectives, company executives tell us that they are embracing data analytics tools and innovative technologies to better understand consumer preferences and enhance their product offerings.
Social media is also being used more frequently by consumers to engage with their favourite brands, as well as to make purchases. Many businesses are responding to this by actively using a range of social media platforms, influencers and KOLs (key opinion leaders) to interact with and sell to their customers. This richer interaction with consumers can help businesses get it right, but CEOs must pay close attention to these growing social media trends.
The pace of change in today’s marketplace often takes retailers and brands by surprise. By monitoring signals of change and making sense of them, companies can develop the right strategies to survive and thrive in an increasingly disruptive environment. We have also found that many CEOs are open to exploring new strategic alliances and partnerships to drive growth and broaden their product range, geographical presence and customer base.
While there is more disruption than ever before, the future certainly holds opportunities for retailers. To stay ahead of the competition, it is vital that brands stay abreast of ever-changing technologies and consumer purchasing behaviours and expectations, and ensure that their e-commerce strategies are constantly evolving.
Ultimately, the winners will be the businesses that are willing to embrace change, innovate and use technology as a key enabler, and that recognise the importance of ensuring an enhanced, consistent and seamless customer experience throughout the shopping journey.