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China E-Commerce in 2013: An Outlook
E-commerce might be one of the most eye-catching trades in 2012 with all the price wars, spars, and series of good or not-so-good rumors, and it’s evident that in the coming year the industry would be a good play, as long as you placed the right bet. In an aim to help you capture a whiff of the market in next year, Chinese portal site Tencent made some predictions about the market listed below:
Mergers & Acquisitions
In 2013, vast expansion will be the major theme for Chinese etailers, coupled with many mergers and acquisitions. The relationship among companies is likely to be ‘me in you and you in me’, forming a more complex structure as verticals (OKbuy.com) or even B2Cs (Dangdang.com) are moving to other bigger platforms like TMall or Tencent’s B2C site.
Nowadays e-commerce has been an important channel of merchandise circulation, but many problems remain unsolved, including tax, license, fake products and so on. The industry has already drawn much attention from the government in 2012, and the corresponding policies are around the corner in 2013. Stricter oversight will be arriving sooner or later in the new year.
The Turning Point of Profitability
Chased by capital and scaling-up, few companies in the industry can profit yet. In 2013, the company will have to say farewell to abundant investment and struggle to profit. Actually we’ve seen many moves towards profitability, such as Vancl’s downsizing, Gome’s restructure and so on.
If we look back at the history of e-commerce, it seems that all companies are all focusing on how to scramble for the market share in the first stage. In 2013, the competition will more lie in internal management to bring down cost and improve efficiency. Delicacy management would be the key to success.
Cloud computing and big data give rise to the unlimited possibility for the development of e-commerce, piercing into user’s needs and matching commodities more precisely. 360buy invested RMB 4 billion to build a cloud computing centre and Alibaba is also trying to give cloud computing and cloud storage power to e-commerce companies.
The bursting number of orders generated on Taobao/Tmall challenged the logistics in 2012 and demanded a higher standard of courier service next year. In 2013, the impact of e-commerce on logistics would be even greater and the delivery time is the key to a satisfied user experience. Only with improved delivery service can companies establish their foothold in the industry.
Accelerated Mobile E-commerce
In 2012 Q3, we saw a mobile transaction of RMB 15.64 billion, an increase of 401.3% yoy. Both Alibaba and 360buy developed their own mobile apps. At the same time, mobile payment rose by 50% yoy this year, and 2013 is expected to be tipping point of mobile payment.
The Breakout of O2O
A bunch of services are striving to scramble for the O2O sector like group buying services, QRcode scanner, Dianping.com, etc. In 2012, O2O sector saw no obvious improvement with group buying facing the winter. According to iResearch, huge potential still lies within O2O sector, with a market size of RMB 98.68 billion. And It is expected that in 2015 the figure would soar to RMB 418.85 billion.
More Active Micro E-Commerce Companies
Micro e-commerce companies are those who market their personalized products on weibo/ SNS. Though these micro e-commerce companies are small, they profit quite well in that their high-quality and individualized products are sought after by customers with considerable buying power.
More Creative Marketing Strategy
The development of e-commerce can be divided into four stages: stimulating users with low price, using rich marketing strategies, relying on quality, and finally establishing the reputation of the brand. Currently, most companies are in the second stage. They’re looking to more creative marketing methods for next year.
According to China’s Ministry of Commerce, the gap between etailing and tradition retailing’s growth rate widened from 4.7 times (as of 2010 Q4) to 5.4 times (2012 Q3). E-commerce has become an intrinsic drive of China’s economy and will exert more influence on economy. And more riddles will be answered in 2013.
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