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US vs China Ecommerce
- 1. Ecommerce Disparities Global Marketing 12/7/15 AkilahDaniels Feng Liu Tao Chengyi
- 2. Agenda • Purpose • EcommerceDefined • Ecommerce Footprint • Ecommerce in US • Ecommerce in China • Top Ecommerce Sites Review • Amazon Advantage • Amazon Disadvantage • Chinese Market Importance • Solutions • Ecommerce Future
- 3. Purpose Some companies havehas success in certain markets, but that success has not translated in the Chinese market. • Explore why one company is successful and why they are not as successful in the Chinese market • What are some key factors that help an ecommerce company flourish in China. – Define the ecommerce market for the US vs. China – Evaluate top ecommerce sites – Understand Amazon’s advantages – Understand Amazon’s disadvantages – Understand China’s impact on ecommerce – Provide solutions
- 4. Understand Ecommerce Activities thatrelate to the buying and selling of goods and services over the Internet - Merriam -Webster Dictionary Source: http://beta.merriam-webster.com/dictionary/e-commerce
- 5. Ecommerce Terms • B2C(Business to Customer) - Business or transactions conducted directly between a company and consumers who are the end-users of its products or services. (23) • B2B (Business To Business) - A type of commerce transaction that exists between businesses, such as those involving a manufacturer and wholesaler, or a wholesaler and a retailer. Source: http://www.investopedia.com/
- 6. Why E-commerce ? •To achieve their expectation with a lower price • Convenience/fast delivery
- 7. E-Commerce Footprint • Ecommercemakes a small percentage of the total amount of sales per year • Growing each year Source: http://www.marketingcharts.com/traditional/global-retail-and-e-commerce-sales-forecast-2013-2018-49733/attachment/emarketer-global-retail-and-ecommerce-sales-forecast-2013-2018- jan2015/
- 8. Ecommerce Statistics Source: http://www.statista.com/topics/871/online-shopping/ EcommerceStatistics E-commerce Worldwide E-commerce Worldwide Values B2C e-commerce sales worldwide $1,471bn B2C e-commerce sales per digital buyer $2,466
- 9. Top Ecommerce Markets Source:http://www.adweek.com/socialtimes/top-global-e-commerce-markets-and-trends-infographic/626303
- 10. World E-Commerce Data Source:http://www.emarketer.com/Article/Worldwide-Ecommerce-Sales-Increase-Nearly-20-2014/1011039 • Asia- Pacific surpasses North America in sales shares • Buyer penetration increase at a constant rate with a constant leader
- 11. United States • OnlineSpending by Device • PC: 72% • Tablet: 13% • Smartphone: 15% • 191.1 million online US buyers • 28% of small businesses are selling their products online. • 57.4% US shop online • 98.9 million Americans have purchased, at least once, on a mobile device. • US shoppers place a strong value on the ability to check for product availability at brick-and-mortar stores near them. U.S. E-commerce Values B2C e-commerce volume in the U.S. $703.28bn B2B e-commerce volume in the U.S. $5,294.9bn Retail e-commerce sales in the U.S. $237bn Mobile Retail Values Mobile retail commerce revenue in the U.S. $12bn Number of mobile buyers in the U.S. 121.7m B2C m-commerce sales in the U.S. $58.5bn Source: http://www.remarkety.com/global-ecommerce-sales-trends-and-statistics-2015#C
- 12. China • Population contributeto their top slot • 600 million internet users • Shopping is the fastest growing online activity in China Source: http://projects.wsj.com/alibaba/ Source: http://www.statista.com/topics/1007/e-commerce-in-china/ General Overview Values B2C e-commerce sales worldwide $1,471 B Number of online shoppers in China $361.42 M Forecasted revenue of e-commerce in China by 2015 $21.95 B Projected % of global B2C e-commerce sales of China by 2016 23.4% China's share of B2C e-commerce sales in the Asia Pacific Region 54.73%
- 13. US vs. China Source:http://www.adweek.com/socialtimes/top-global-e-commerce-markets-and-trends-infographic/626303
- 14. Top Company GlobalMarket Reach Source: http://www.statista.com/statistics/274709/worldwide-audience-reach-of-online-retail-and-auction-sites/
- 15. Amazon Founded Founded in1994 by Jeff Bezos About First to sell products over internet First affiliate marketing program - 40% of sales Differentiation Customer reviews Global Net Revenue20 $88.99 Billion Users20 270 million Employees 20 154,100 Market Cap 17 $315.60 Billion 17Source: http://www.marketwatch.com/investing/stock/amzn/profile 20Source: http://www.statista.com/topics/846/amazon/ Affiliates Amazon sites
- 16. Ebay Founded Online inSeptember 1995 About13 Grown by trial and error. Differentiation Trust between strangers Source of amusement Global Net Revenue21 $17.9 billion Users 135 million users worldwide Employees18 36,500 Market Cap18 $34.94 billion 21Source: http://www.marketwatch.com/investing/stock/ebay 18Source: http://www.statista.com/topics/2181/ebay/ 13Source: Affiliates Ebay sites
- 17. Alibaba Founded April 4,1999 About Alibaba is the leading international Chinese Internet company. 24/7 meeting platform for suppliers and buyers around the world. Differentiation Pairs buyer with sellers where buyers are free and sellers pay Global Net Revenue19 $12.30 billion Users 4.4 million users Employees19 34, 985 Market Cap19 204.46 billion 22Source: http://www.statista.com/topics/2187/alibaba-group/ 19Source: http://www.marketwatch.com/investing/Stock/BABA/profile?CountryCode=US Affiliates? Affiliates Taobao Taobao Product Listing Taobao Homepage Tmall Tmall Product Detail
- 18. JD.com Founded Online inSeptember 1995 About (12) Largest online direct sales company in China Differentiation Strong supplier relationships Global Net Revenue17 18.64 billion User 47.4 million active customer accounts (2013) Employees 68,109 Market Capitalization17 40.86 billion Source: http://www.marketwatch.com/investing/stock/ebay 21 Source: http://www.marketwatch.com/investing/stock/jd/profile 17 12Source: Affiliates 360 Buy Corp
- 19. Amazon Advantage How AmazonEarns Money in US • The main income is earned through: – Fulfillment by Amazon products • Annual fee (customers) – RBC Mark Mahaney estimated that Prime membership was around $40 to $50 million. – In 2016 it will be $85 million • Order processing fee • Package fee • Weighing fee – Storage Fees
- 20. Amazon Advantage How AmazonEarns Money in US – Prices differ based on volume and season – Prices differ based on the time stored – Storage fee will increase at end of each year during Thanks giving or Christmas Time Based Fees: Season/Volume:
- 21. Amazon Advantage Amazon losesmoney on the cost of shipping Amazon Shipping Costs
- 22. Amazon Advantage How AmazonAchieves 2 Day Shipping • 173 large distribution center world wide • In 2012, Amazon bought Kiva systems which product intelligence robots • Amazon owns more than 30k kiva intelligence robots • Called Amazon Robotics
- 23. Amazon Advantage Adaptation Strategyin China • Overseas online shopping platforms • Used the short and easy to remember domain name Z.cn • Offer more categories and products to Chinese market in home page • Free shipping with a certain purchase amount • No annual fee • Fast delivery usually 1-2 days to main cities
- 24. Amazon Advantage Amazon’s Advantagesin China • Authorized products – No counterfeit items if sold by Amazon • Experienced in logistical industry • Good supply chain management • Strong brand reputation and awareness
- 25. Amazon Disadvantage Amazon MarketingProblem in China • Too many competitors in China – Taobao, JD.com, and other strong E-business companies • Lack of government support • Limit products categories to satisfy all customer needs • Less promotions in market • Free and fast shipping is not unique • Shipping cost is low in China • Price is not competitive
- 26. ￥1700 RMB $270 Dollar Taobao China $299Dollars Amazon US ￥2680 RMB $425 Dollars Amazon China Amazon Disadvantage Amazon Price Difference Bose ® Quiet Comfort ® That is a difference of $155!
- 27. Amazon Disadvantage Why PricesAre High in China • The same product has different price in the world (Price Adaptation) • Taobao sellers usually buy products at a lower price direct • Sell it to the Chinese market at a discount • Avoids taxes to Chinese government (Tax? • Amazon does not have the same relationship • Forced to list products the same price as the official price • Additional government taxes and fees are imposed on product Confirm
- 28. Amazon Disadvantage Additional Taxesand Fees • Duty is around 10% • Person purchase tax 17% • Retail rent fee and other promotional fees • Products sell more than 50% of original US price in China • Amazon is forced to sell products the same price as the official list price
- 29. Solutions Possible Solutions toIncrease Amazon Competitiveness • More freedom to third party to sell products on Amazon • Build better relationship to hot products (like Xiaomi phone) • Increase the global shopping channel to increase products categories – need better handle and public relationship to custom • More holiday promotions – Single day – New year
- 30. Chinese Market Importance •The peak shopping day: – Single day (China) VS Black Friday (US) • Taobao sales was $14.25 Billion on Single’s Day 2015 • Top 100 US retails sales was $4.47 Billion in Black Friday – Retail store sales was $12.1 Billion on Thursday and Friday 2015 • Chinese is a huge potential market, and the number of E-commercial customers are still increasing Source: http://www.reuters.com/article/2015/11/28/us-usa-holidayshopping-idUSKBN0TH0R020151128 Single’s Day
- 31. Solutions How to IncreaseCompetitiveness in China • A vast selection of products at competitive prices • High-quality international brands and exclusive products • Fast delivery, convenient service
- 32. Ecommerce Future Future Visionof E-marketing • Going mobile all the way – Apps • Less good moves in the supply chain • Central price website • Create more base stations Source: http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/
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- 35. Sources: 12. 12 13. 13 14.http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile- marketing-statistics/ 15. http://www.reuters.com/article/2015/11/28/us-usa-holidayshopping- idUSKBN0TH0R020151128 16. http://www.marketwatch.com/investing/stock/amzn/profile 17. http://www.marketwatch.com/investing/stock/jd/profile 18. http://www.statista.com/topics/2181/ebay/ 19. http://www.marketwatch.com/investing/Stock/BABA/profile?CountryCode=US 20. http://www.statista.com/topics/846/amazon/ 21. http://www.marketwatch.com/investing/stock/ebay 22. http://www.statista.com/topics/2187/alibaba-group/ 23. http://beta.merriam-webster.com/dictionary/e-commerce
- 36. Sources: 1. http://www.miva.com/blog/the-history-of-ecommerce-how-did-it-all-begin 2. http://www.ecommerce-land.com/history_ecommerce.html 3.Source: http://www.statista.com/topics/871/online-shopping/ 4. Source: http://www.statista.com/topics/1007/e-commerce-in-china/ 5. Source: http://www.adweek.com/socialtimes/top-global-e-commerce-markets-and-trends- infographic/626303 6. Source: http://projects.wsj.com/alibaba/ 7. Source: http://www.adweek.com/socialtimes/top-global-e-commerce-markets-and-trends- infographic/626303 8. Source: http://www.statista.com/statistics/274709/worldwide-audience-reach-of-online-retail- and-auction-sites/ 9. http://www.remarkety.com/global-ecommerce-sales-trends-and-statistics-2015#C 10. http://www.emarketer.com/Article/Worldwide-Ecommerce-Sales-Increase-Nearly-20- 2014/1011039 11. Source: http://www.reuters.com/article/2015/11/28/us-usa-holidayshopping- idUSKBN0TH0R020151128