In China’s Bricks v. Clicks War, Online Shopping is Winning

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In China’s Bricks v. Clicks War, Online Shopping is Winning



Everyone curses their luck when they get stuck in a traffic jam. But pity the poor souls who ventured out to do some late-day shopping in Beijing on Oct. 8 without first checking road reports. Thousands of motorists, returning all at once from the end of the 7-day Golden Week holiday, sat for hours on the G4 Beijing-Hong Kong-Macau Expressway while waiting to merge from 50 lanes down to 20.

It’s that kind of urban hassle, along with others unique to rural China, that is increasingly making e-commerce a better option for the nation’s consumers. Powered by the rapid growth and expansion of online marketplaces, millions are taking advantage of the convenience and ease of digital browsing and buying. The upcoming 11.11 Global Shopping Festival, led by Alibaba, is expected to continue that trend.

In 2014, 27,000 merchants participated in the 11.11 event. This year, 40,000 merchants are on board, which includes tens of thousands of newly recruited brick-and-mortar stores in 330 cities across China that will offer omni-channel retailing for the first time.

Omni-channel, also known as O2O (online-to-offline), combines the convenience of digital shopping with the advantages of browsing in physical stores (such as being able to try on a garment before purchasing). Among other omni-channel offerings, Alibaba during the 11.11 festival plans to partner with major retailers to reduce the time it takes to deliver purchases to consumers. Shoppers order online and then choose to have their goods delivered at home from the closest retail store, or they can pick up their purchase in-store.

Outside of urban areas, the opportunity to shop through Alibaba’s channels is resolving some major issues that have long put consumers in rural areas at a disadvantage.

In a nation as large and vast as China, the number of retailers is spread extremely thin and the opportunity to purchase in person is not the same as in other nations. The U.S., for example, has less than one tenth the population of China. Yet it has four times as much retail space per capita.

As Alibaba founder Jack Ma, has noted, that kind of imbalance actually helps drive e-commerce growth in China.

“E-commerce in the USA is what I call the dessert,” says Ma. “It’s supplementary to their main business, because the USA’s infrastructure of doing business is so good. But in China, because the infrastructure of commerce is too bad, then e-commerce becomes the main course.”

With so little retail infrastructure and such long distances between locations, it’s no surprise then that rural consumers are turning to mobile shopping with a passion. One report shows that that purchases made via mobile devices increased by 250% over the last year.

Alibaba is also seeding the popularity of e-commerce in locations where consumers may not have personal Internet connections. The company’s growing Taobao Rural Service Centers, now in 17 provinces, gives offline shoppers physical locations at which they can order online (and sell their goods online as well) and receive shipments.

With the rise of a powerful consumer class and more residents coming online, China’s e-commerce market is expected to continue its upward trend. In both rural and urban areas combined, the nation now ranks as the largest e-commerce market in the world with sales of $473 billion in 2014. In 2015, the number is estimated to be $672 billion.

All that growth doesn’t mean an end to traffic jams. But here’s a thought for China’s motorists the next time they find themselves stuck: Perhaps they can use those moments between cursing their luck—and other drivers—to place a few mobile orders.

Golden WeekTmall

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