E-Commerce has become the main to consume in China. The direct consequence of this change of habit is the slow “death” of traditional retailing.
I’ll give that to you, death is a big word, however, it is undeniable that Chinese supermarket is suffering for the take over of eCommerce platforms.
To give you one example, we’ve seen recently big franchises such as Carrefour leaving the country. But it does not mean new franchise can not come to China and succeed. Aldi arrived in 2019 and is rocking it. Why? convenient, cheap, large but not overwhelming variety of choice. As always, the Chinese market will welcome you as long as you can adapt to the demand fast enough, but lets see in depth what is is exactly that chinese consumers want.
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Evolution of retail in China
The 90s were the golden age of supermarkets in China. The battle between walmart and Carefour was at its pick and each mall had its own supermarket. However, the 2000 also saw the democratisation of the internet and the arrival of ecommerce companies who steps by steps grab share of the market until it became the way to consume. Carrefour leaving China is just an aftermath. Indeed this giant groups (alibaba, tencent) have develop real online supermarket, offering quality fresh products, at a cheaper rate and that would be delivers to your door step.
The end of carefour in China
Carrefour, giant of distribution arrived in China in the early 90s. By 1995 the groups has oppenned 210 hypermarket and 24 convenience store on the chinese territory. Carrefours turnover in 2018 reached 3.6 billion euro, which was 10% less than in 2017. The turn over has been going down since the last 3 years, which led the group to sell the majority of its share.
Thus, Carrefour, join the long list of foreign distributors who “failed” in China. 2018-2019 has seens Amazon, Home Depot et Marks & Spencer as well as Auchan saying bye to the rise of the Chinese middle class buying power.
Suning aka Leader of Distribution market in China
With more than 9000 facilities in 700 chinese cities, Suning is without question one of the biggest ecommerce players of the country. Actually, Suning is the group who bought 80% of Carrefour China Share for the modic some of 1.6 billion dollars.
Almost 20% of Suning share belongs to alibaba. Alibaba also own36.6% of sun art, Auchan Filial in China.
Suning.com is one of the leaders of what we call “smart retail”. The distribution is simple O2O aka Online to Offiline. The idea is to use both online and offline to reach out to the biggest group of consumers. Suning cover every channel of retailing and distribution and is even developing overseas.
Good logistic, smart management of customers date, financial service via cloud, a presence at every level of distribution ( physical store, ecommerce on mobile and desktop etc) etc.. have transformed Suning into a winner. The group offers a complete, integrated experience to its users. It’s convenient and adapted to the chinese consumers.
As a matter of fact Suning is one of the fortune global 500.
China the Biggest eCommerce Market in the World
in 2018, China recorded a all time high record with 900 billion dollars of eCommerce sales. A 20% raise from the previous year.
The rise of eCommerce have seen the end of the border between physical and online store. Specialist call it O2O (online to offline). Alibaba is developing a network of small supermarket with Hema, they deliver to your home in less than 1 hours. Alibaba is particularly agressif with this project, buying share or taking initiative in a large number of franchises such as intime, Sanjiang Shopping Club, Lianhua and even furniture store like Easyhome)
Our case study
An exemple is worth a thousand words so let me introduce you to 2 ecommerce projects.
Lyfen is the top 3 snacks seller of China who sold more than 20 millions rmb with its last Moon Festival campaign (October 2020).
The company has been in the market for a while and have plenty of physical store accross chinese cities.
The snack market in China is evaluate at several trillion dollars. The market in competitif and and recorded a 422% growth between 2002 and 2016.
Even though Lyfen is alreayd doing great in China, its desire to grow as not fadded and the brand was looking to attract a new audience when they contacted us.
What kind of solution for already well establich brand in China?
The first step we took was the creation of a beautifully designed packaging that was more than a box of snacks. The box was designed to be a jewellery box once empty. from snack to gift.
In order to promote Lyfen gift Snack Jewelry box, we worked with 200+ kols and launched a video on several platforms.
- + 7 Millions visitors on Lyfen Tmall Store
- 20 Million Rmb worth of sales (3 millions Euros) in a month.
To sum up
The purpose of this article is not to discourage you but to let you know that the digital world in China has become to important to be ignored.
Franchise such as Aldi show us that, offline store can still make it in China, however, to work, it needs to adapt to the demands: convinience, competitive prices and quality products.
Feel free to ask us about distribution and eCommerce in China. We are the most experienced digital marketing agency in China with 7+ years of experience.