EMERGING TRENDS & DIGITAL
OPPORTUNITIES: MOBILE E-COMMERCE
FOR SINGAPORE RETAILERS
A look at China’s e-commerce retail trends in Shanghai and Beijing
Written by: Ms Chai Pei Shan, 2013
This report shares on key findings from China’s e/m-commerce partners and logistics partners
based on a business mission to understand and assess the feasibility of launching a M-
commerce platform. The aim is to understand the growing opportunities in view of the consumer
landscape for mobile e-commerce, logistics framework and regulations in China.
The key objectives are:
a) To understand Chinese’s e/m-commerce landscape, trends, and evaluate the suitability
of partnering with e-commerce partners (360buy, 2nd
b) To conduct a feasibility assessment of m-commerce platform as a potential channel to
gather insights on China’s consumerism trends
largest B2C, Taobao, Yihaodian,
c) To understand value chain integration and processes for eFulfilment in China
3.0 Programme Overview
The list of meetings targets e-commerce value chain partners, from eFulfilment and logistics
partners, to brand owners and electronics retailers, to consultancy firms and payment/industry
associations to gain insights on the trends and opportunities for strategic collaboration with
1. Taobao/T-mall 天猫 (China’s largest B2C)
2. 360buy 京东 (China’s 2nd
3. Yihaodian 1号店 (China’s 3
4. VANCL 凡客 (China's biggest clothing e-tailer, selling in-house
brand fashion apparels and accessories, invested by
5. M18麦考林 (Mecoxlane, NASDAQ Listed)
6. DHgate (B2B & general merchandise)
7. Media Markt (Germany retailer expanding footprints in Shanghai and
8. iResearch Consultancy (Consultancy & research on China's e-commerce)
9. 99 Read Club/99read.com (Shanghai 99 Readers Culture Co., Ltd)
10. Creative Knowledge (Associate company founded & invested by
11. Shen Tong (Logistics company)
12. PIL Logistics (Logistics company)
13. China Electronic Commerce Association
14. Payment & Clearing Association of China
4.0 Mobile E-commerce landscape in China
Mobile commerce (M-commerce) is gaining momentum in China. Growing numbers of
consumers and retailers are displaying interest in this channel. Research firm, Analysys
International, reported that sales made through this route hit 1.67bn yuan ($261m) during the
second quarter of 2011, an improvement from 880m yuan a year earlier. More significantly,
1.2bn yuan of revenues generated between April and June 2011 were attributable to purchases
from the mobile web, and 27% to mobile transaction terminals installed on wireless devices by
Analysys International also stated smart phone sales stood at 16.8m units in China in Q2,
increasing from 13.5m year on year and aiding the sector's growth.
The view is that this mode of M-commerce can only be a supplement to the traditional
distribution channel in the short term because businesses need to develop mobile terminals
which will take time.
Yihaodian (一号店), one of China’s ecommerce pioneer and leading online grocery store (with
51% owned by Wal-Mart since Feb2012), recently tested digital "shopping walls" in 70 of
Shanghai's underground stations, as well as, 500 billboards in Beijing. Large LED screens
advertising consumer goods have been posted at nine metro lines. These tools enabled
consumers to acquire goods by scanning codes featured on digital "display shelves", with
products then delivered in 24 hours. The time-saving shopping/convenience idea is inspired by
the subway supermarket in Tesco Homeplus in South Korea, where mobile users are among
the highest in the world. Targeting the young tech-savvy consumers, Yihaodian highlighted that
the technology is sufficient to support the development of mobile commerce. The number of
smartphone users is increasing, but it is not as high as it is in developed countries. Thus, it will
take time for the business model to develop. In a news article, Yihaodian mentioned about
plans to have permanent shopping walls installed in large cities in the next few years, and
consider having the virtual supermarkets installed in local communities.
360buy(京东), another e-commerce retailer focusing on consumer electronics (2nd
China behind Taobao), saw some 1m downloads of its mobile transaction terminal tool in the
first quarter of 2011, as daily sales reached an estimated 2m yuan by the end of June.
Jiepang, a location-based mobile operator similar to Foursquare, is also partnering with 3,000
stores in six cities to roll out near field communications (NFC) wireless payment services
allowing traders to set the offers customers receive when "checking in".
Picture of a lady shopping via smartphone
4.2 Key Findings & Observations
1. China is the world’s largest e-commerce market
With more than half a billion Internet users, China boasts the greatest number of Internet
users in the world. Its online shopping market hit 767 billion yuan in 2011 and, according to a
recent report from Boston Consulting Group, China’s e-commerce market is expected to be
worth 2 trillion yuan (USD 320 billion) by 2015.
A snapshot of how China e-commerce sales compare with the rest of the world
Globally, e-commerce sales is growing exponentially (ranked):
Chinese e-commerce sales were CNY 767 billion (USD 124 billion) in 2011, an
increase of 66% from 2010. E-commerce is expected to rise from 3% of
consumption to 7% by 2015. Overall, China’s e-commerce market is expected
to be worth CNY 2 trillion (USD 320 billion) by 2015.
(Source: BCG, IDC, March 2012).
US e-commerce sales will grow 62% to USD 327 billion by 2016.
(Source: Forrester, February 2012).
European e-commerce sales will grow by 78% to USD 230 billion by 2016.
(Source: Forrester, February 2012).
Brazilian e-commerce sales will grow 21.9% to USD 18.7 billion by 2012.
(Source: eMarketer, January 2012).
Turkey e-commerce sales has reached USD 2 billion in 2010. It will grow to
USD 9 billion by 2016.
(Source: TurkStat, Deloitte, EIU, August 2012)
India’s e-commerce market is expected to grow to USD 70 billion by 2020,
from USD 600 million in 2011
(Source: Technopak Advisors, February 2012).
Indonesian e-commerce sales are forecast to grow from USD 120 million in
2010 to USD 650 million by 2015
(Source: Frost & Sullivan, February 2012).
All the e-commerce players met during the trip expressed key focus on devoting resources
on their domestic market and growing their brand, in view of the huge and rising
opportunities and fierce competition in the e-commerce space. Top tier e-commerce
companies, T-mall and Yihaodian both shared similar sentiments on the growth opportunities
in China within the next 2-3 years. Their primary business objectives are to compete
aggressively in the domestic market (e.g. bring in better products and international brands)
and increase their branding to serve the consumer segments.
Burgeoning growth opportunities for retail in China’s B2C space
China e-commerce companies shared key trends in online shopping and foresee exponential
growth in the B2C e-commerce space. Most of them (such as VANCL, T-mall, M18.com)
recognised the need to follow the interests of ‘fashionista’ (i.e. fashion conscious
consumers). Similarly, Singapore companies looking to expand in this space needs to move
fast and response quickly to consumer trends.
T-mall, Yihaodian, VANCL highlighted consumer insights on online purchases: 50% of their
customers bought food, cosmetics and health/wellness products; 30% are fashion or related
accessories and 20% for 3C electronics products. They observed that online purchases
peaked during and after work hours (normally between 10pm – 1am) and morning period
(7am) before work.
Fastest growing segments are consumer-driven, such as electronics, lifestyle accessories,
fashion apparel and food
These consumer insights mirrors recent industry reports showing e-commerce sales for skin
care and cosmetics that surpassed sales in the US, UK and Japan. Consumer Electronics is
another large and growing segment. Hence, this trend implies that Singapore brand owners
and electronics companies need to immediately think about where their products fall in this
landscape of growth as they devise their internet strategies in China.
China e-commerce growth in the past two years is significant compared with other countries.
4. Mobile commerce is slowly gaining momentum in China
However, China e-commerce dominant players see M-Commerce developments as a tool for
differentiating themselves with competitors due to the intense landscape. Yihaodian and
VANCL spent aggressive advertising budget in public spaces. This implies that M-Commerce
often serves as additional sales and marketing channels (and not the core channel) to tap on
the increased mobility of customers who shop on-the-go.
Online retailers, Yihaodian, T-mall, 360Buy, Vancl, and M18.com have developed mobile
apps as an extension of their online portal. They shared that these are targeted at special
deals, promotions and e-coupons for mobile-savvy consumers. They further suggested that
the range of merchandise on the mobile commerce platform would been to be reviewed and
updated constantly to suit the evolving needs and tastes of customers.
While M-Commerce development is gaining popularity, sales transaction conducted directly
through mobile devices (tablets, smart phones) through mobile apps (i.e. conversation rates
of sales) are less than purchases through online portals.
4.3 Assessment & Recommendations
Through this study trip, it is assessed that Singapore’s brick-n-mortar/online retailers can
collaborate with China’s e-commerce players, by adopting the following approaches and
a) Leverage 店中店 (Virtual Mall): This will allow Singapore companies to leverage on the
critical user base, high traffic and eyeballs of China portals, as well as, branding
channels to reach China consumers. Epicentre, XMI, Bluetree Electronics or other
Singapore’s electronics and lifestyle brand owners can leverage on virtual mall (店中店)
to sell to China consumers or build brand awareness.
For instance, Singapore’s BRAND'S® has partnered with T-mall to launch online
campaigns and marketing activities in the malls. T-mall commented that the campaign
received favorable responses from consumers. International brands like Nike, Adidas
are among T-mall’s clients for this virtual mall.
b) Develop multi-channels strategies in their growth plans: Adopt e/m-commerce
solutions to increase their footprints in China (i.e. increase mindshare,
marketing/branding opportunities for SKU (online and offline) and convert into sales
channels. Target customers not yet served by Taobao/T-mall, Yihaodian or typical retail
Recommended Strategies for Retailers – Drive traffic from offline to online and vice
Singapore brick-and-mortar retailers (e.g. Epicentre, Charles & Keith) should think about
how to use their existing stores to best advantage. The ability to direct shoppers in
physical stores to their online sites gives retailers an edge over e-retailers. Furthermore,
brand awareness and trust can boost traffic beyond the boundary of the store. This
means that retailers should think about how to influence shoppers online and direct
them back to their stores. Often, consumers decide on a product/brand online but
ultimately purchase the item offline (especially, consumer electronics products).
It is important that retailers learn to think like e-tailers (online mindset) to capture the
market opportunities ahead.
c) Differentiate on value added services (not solely on pricing). For instance, M18
differentiate their services by personalizing the courier-delivery man; Vancl has a
targeted channel aimed at attracting OEM brand owners to open 店中店 (V+ shop
channel) which is a popular channel on VANCL that features emerging and new labels
for Chinese consumers.
d) Partner with strong logistics players. Strategic partnership with one-stop-shop
logistics services that provides last mile delivery/4PL is critical for e-commerce.
Singapore retailers going into e/m-commerce space should decide on a service and
logistics model. Filling online orders from physical stores can be cost-effective, but it
restricts the online assortment to what is sold offline. Store-based logistics also limits
distribution. Managing purchase orders and delivery for customers outside the existing
physical network would require additional investments, since the Singapore company
would have to either work through a third-party logistics provider or build its own delivery
The recommendation is to find strategic collaborators, such as partnering China’s one-
stop logistical services (likes of VANCL, T-mall) to leverage on their strong established
logistics networks and successful models/payment gateways. The following illustrates
VANCL and T-mall operational models.
Vancl (凡客誠品) established its own express delivery company, Rufengda
(如風達) that provides last-mile delivery services to its customers. They have
strong network covering more than 1,200 cities in China (6 distributions centre
and 20 warehouses) and door-to-door delivery lead time within 24 hours.
Establish own logistics facilities (Case Study: Vancl)
Tmall (天貓), the dominant player in China’s B2C market provides one-stop-shop
logistics services to its larger-scale online sellers via its strategic partners such
as warehousing services providers, express delivery companies as well as IT
Partner with other Logistical Service Providers (Case Study: T-mall)
4.4.2 Areas of Collaboration with Singapore companies
The two tables below list the key interests where China B2C players can collaborate with
Singapore companies, in particular, electronics, food, and fashion.
4.5 Learning Points
Apart from the above strategies, below are 3 learning points for retailers who wish to compete
with China e-commerce players:
a) Adapt offerings to suit the social habits of Chinese consumers.
Chinese consumers are social online and purchase. Due to a highly collectivistic culture,
Chinese consumers rely heavily on social networks. They source for reviews and good/bad
recommendations when making a purchase decision. Chinese customers are also avid
content providers. Thus, Singapore companies going into e/m-commerce space would have
to make customer service a top priority, as any bad word of mouth can spread like wildfire
and serves to discredit them.
b) Consider other forms of market entry.
Singapore companies should consider forming strategic partnerships with local China
competitors. For example, Walmart, as part of its online strategy in China, has recently led a
consortium of investors in buying a $500 million stake in 360buy.com, and invested 51%
stake in Yihaodian. Also, instead of building an e-commerce channel of their own, several
big-name brands, including Gap Inc. and Levi Strausshave teamed up with Taobao to sell
their products online in China. Another form of entry is investing in local companies.
c) Be flexible and creative — in strategies in response to regulations.
China is a fast-evolving economy whose business environments as well as the rules
surrounding them are often non transparent and uncertain. So Singapore businesses
entering China need to be fully aware of the consequences of operating in such an
environment (e.g. e-commerce and payment gateway regulations) and need to be flexible in
Written by : Chai Pei Shan