Chinese eCommerce platforms should step up investments to improve the consumer shopping experience, experts said. — China Daily
SHANGHAI: Competition in China’s online shopping sector is heating up as major eCommerce platforms offer steep discounts and low-priced products to attract price-sensitive consumers and drum up sales during the end-of-year shopping extravaganza, experts say.
They also noted that traditional online retailers such as Alibaba Group Holding Ltd and JD are doubling down on the low-price strategy to strengthen consumer engagement in the face of a massive challenge from online discounter PDD Holdings.
The latter saw both its revenue and net profit surge in the third quarter.
Chinese eCommerce platforms should step up investments to improve the consumer shopping experience by offering cost-effective commodities and upgrading supply chain systems by leveraging innovative digital technologies, experts said.
Alibaba’s online marketplace Taobao kicked off its year-end promotional event on Saturday after cancelling the annual Double 12 or 12-12 shopping spree, which usually takes place a month after its sister event Singles Day, also known as Double Eleven or 11-11, which signifies Nov 11.
Taobao launched a discount campaign worth 10 billion yuan and promised to provide an array of perks and deep discounts on a wide range of products, including smartphones, electronic devices and appliances, wine, fruits, cosmetics, shoes and apparel during the end of the year shopping festival.
Compared with previous Double 12 shopping carnivals, the discount intensity and scale have greatly improved this year, Taobao said.
Merchants from Tmall, Alibaba’s online marketplace for established brands, have also participated in the promotional gala, vowing to offer direct price cuts and discounts on merchandise.
PDD’s growth in the domestic market has outstripped that of competitors, including Alibaba and JD.
Liu Qiangdong, founder and chairman of JD, said on an internal network of the company on Saturday that JD must change and added that he believes the company will walk out of the trough.
The net revenue of JD only increased by 1.7% from a year ago in the third quarter.
Liu blamed himself for JD’s problems and said it takes some time to change as the company’s organisational structure is now bloated and low in efficiency.
Jack Ma, co-founder of Alibaba, said in November that he believes Alibaba will innovate in response to PDD’s strong financial performance.
He said the era of artificial intelligence-powered eCommerce has just begun.
“Enhancing user stickiness and cultivating high-quality users are crucial for Chinese online retailers,” said Mo Daiqing, a senior analyst at domestic consultancy Internet Economy Institute.
“They have considerably ramped up efforts to offer discounts and price cuts to lure price-conscious customers, given that the growth of the domestic eCommerce sector is slowing.”
Mo said high-priced items might deter some price-sensitive consumers, so the low-cost strategy will be key to acquiring new users, improving user loyalty and repurchase rates, and bolstering sales.
Li Chengdong, founder of Beijing-based eCommerce consultancy Dolphin, said major online retailers are accelerating steps to bring more competitively priced products to shoppers amid intensified competition in the domestic online shopping sector.
He added that they should also strike a balance between bringing in cheaper goods and improving users’ shopping experiences.
Dai Shan, chief executive officer of Alibaba’s Taobao and Tmall Group, said in an earlier earnings call that the company will continue to invest heavily in the value-for-money battle.
As the Chinese consumer market gradually recovers from the Covid-19 pandemic, it is a critical time for brands and retailers to reshape strategies and strengthen market adaptability, according to a report from consultancy Bain and Company.
Retailers need to leverage data and technology to better understand consumer behaviour, thus optimising their product mix and promotional strategies, as well as balance the tasks of maintaining competitive pricing and focusing on product quality, product innovation, supply chain and sourcing.
Zhuang Shuai, founder of Bailian Consulting, said eCommerce platforms should improve the quality of products, strengthen the construction of supply chains and optimise their operational models in accordance with shoppers’ buying habits. — China Daily/ANN
