Amazon China Powers Up With Cross-Border eCommerce

On August 20, the company’s 10th anniversary in China, Amazon announced a strategic cooperation with the Shanghai Free Trade Zone (SFTZ) and Shanghai Information Investment. The agreement ensures the direct delivery of millions of products from Amazon sites across the globe to Chinese customers and will allow small and medium-size Chinese enterprises to conveniently export their products to Amazon customers around the world.

With the already fierce competition in China’s eCommerce market ramping up, eCommerce players are scrambling to find ways to increase their competitiveness. After 10 years of operating in China, Amazon has found its new growth opportunity: cross-border eCommerce. The overabundance of middlemen in China’s traditional retail industry has driven up retail prices, especially for imports — so online retailing of imported goods via a large-scale eCommerce platform confers tremendous price advantages. Amazon aims to provide the best cross-border shopping experience for all of its customers — both in China and around the world. Amazon will invest and locate its cross-border eCommerce platform in the SFTZ and establish a logistics and warehouse center there; goods from Amazon’s overseas sites and vendors will enter China through the SFTZ. Amazon has a few key competitive advantages over other cross-border eCommerce vendors by offering:

  • A vast selection of products at competitive prices. Amazon will introduce more than 13,000 product items from 27 countries and focus on four major categories: international boutique, fashion, smart devices, and kitchenware. Consumers will have a vast selection of imported goods from Amazon’s platform. The scale of Amazon’s global operations gives it an unassailable price advantage over both online vendors and traditional retailers.
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Alibaba Beyond eCommerce: Understanding The World’s Biggest Digital Ecosystem

Following Alibaba’s announcement that it will list on the New York Stock Exchange, global eBusiness professionals are paying closer attention to the Chinese Internet giant, wondering what impact it will have on their business. For those who need to get up to speed on the company, here is a preview of Forrester’s upcoming report on Alibaba, which summarizes its development history, revenue streams, business expansion, and the impact it will have on digital services business value chain:

  • Alibaba draws its revenue streams from the ecosystem around its eCommerce platform. According to Alibaba Group’s F-1 filling, the main businesses for the Alibaba Group include B2B (168.com and alibaba.com), C2C (Taobao.com), B2C (Tmall.com, Juhuasuan.com and AliExpress.com), and digital services. Alibaba's revised filing from August 2014 indicates that it handled more than RMB 1.8 trillion (about $296 billion) of transactions for 279 million active users across its three Chinese online marketplaces in 2013. Over the past 15 years, Alibaba has built an ecosystem of buyers, sellers, third-party service providers, and strategic alliance partners around its platform. By leveraging buyer and seller data from this ecosystem, Alibaba has created a data analytics product that gives a complete view of a customer at any phase of their purchase journey, resulting in a very successful marketing and commerce business that generates significant revenues.
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Chinese eCommerce Giant JD.com Develops Its Territory Further

JD.com is the second largest B2C online retailer in China. Through 10 years of development, it has become the largest direct sales eCommerce company in China. It now has 46% of the total direct sales eCommerce market share and 47.4 million active users. Further cementing its market-leading position, JD.com successfully listed on Nasdaq in May 2014, with a market value of US$39.3 billion by August 12.

In the past few years, JD.com has made enormous investments in its logistics service to provide fast delivery and a competitive customer experience, including same-day delivery and half-day delivery in selected top tier cities. Recently, it launched a pilot project of mobile self-pickup van in Beijing and Chengdu, giving its delivery service more extensive coverage. When consumers shop on JD.com, they can choose the “self-pickup” option, select their location, and then choose the new “mobile self-pickup” option. By clicking the map under this option, shoppers can see the detailed location and operating time of the mobile self-pickup van. 

Figure 1: JD.com’s mobile self-pickup van

The mobile self-pickup van meets the needs of customers who can’t receive their goods at home or at a place of work, such as a factory district or school campus, which the delivery service can’t enter. This service gives customers more choices.

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Can Huawei’s Honor Write A New Brilliant Canto?

On June 24, I attended the launch event for the new flagship of Huawei’s Honor product family, the Honor 6, in Beijing. As one of the world’s largest telecom equipment manufacturer, Huawei has been cultivating a mobile phone business in the past few years, and became the third largest smartphone vendor in the world at the end of 2013. Until now, Huawei’s mobile phone business has mainly followed a B2B2C business model: selling its devices via mobile network operators. Huawei launched Honor in December 2013 as an independently operated Internet brand that aims to adapt quickly to changes in the age of the mobile Internet and provide high-performance products at reasonable prices. As a former member of the mobile phone fraternity, I was impressed by Huawei’s technical leadership at the two-hour launch event — but behind the revelry, I noted that Huawei faces a few dilemmas:

  • A confused brand proposition. Huawei’s speakers spent a lot of time talking about the Honor 6’s technology framework and chipset, but didn’t mention what consumers can get from those technical advantages. The Honor 6 is a high-performance product with powerful functionality — high-speed LTE Cat6, an octacore Kirin 920 processor, long battery life, a powerful camera, innovative features, and a fancy Emotion UI — that retails for just RMB 1,999 (usually the price of a mid/low-end smartphone in China). Honor 6 is marketed as “the world’s fastest 4G smartphone”, but the promotional video suggests that the phone’s target audience is the young struggling working class. The brand message is inconsistent with the product positioning.
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Understand The Digital Wallets Landscape In China

Internet giants like Alibaba and Tencent are aggressively promoting digital wallet usage via competing mobile apps for taxi-hailing. Alibaba has gone further and is cooperating with big brick-and-mortar shopping mall chains to promote mobile commerce via the Taobao and Alipay digital wallets, with the aim of boosting merchant adoption of its digital wallet solution.

In light of the emerging trend of digital wallets in China, my first Forrester report, Understanding Digital Wallet Options For Your Business In China, introduces the digital wallet solutions that the major players in the Chinese market provide, the typical usage scenarios, and merchants’ adoption strategies. Most of the digital wallet options offer abundant value-added services as a means of attracting consumers.

The following chart shows the digital wallet options that the major players provide in China. They fall into three types: remote-only, proximity-only, and omnichannel wallets. The latter incorporates the different types, provides the most value-added services, and integrates mobile commerce, payments, and financial management in a single mobile app — giving digital wallet players the most space to deliver their services and capture consumers.

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Internet Finance Is Disrupting The Banking Business In China

Yuebao is a hot topic in China, and has even gotten international attention. But what is it? Yuebao is a value-added service that customers of Alipay (China’s version of PayPal) can use to earn interest and to make payments and transfers. An individual can start a Yuebao account with as little as RMB 1 (US$0.17).

The Alibaba Group launched Yuebao in June 2013. By mid-February 2014, 61 million people had invested money in Yuebao, and total fund skyrocketed to RMB 400 billion (US$65 billion) – making it the largest fund in China.

People are drawn to Yuebao because of its:

  • High yield. The average annualized return is around 6% — much higher than similar funds and banks’ financial products.
  • Good liquidity. Yuebao offers great flexibility; investors can deposit and withdrawfunds anytime. Other financial institutions require lock-in periods and much higher initial investments.
  • Ease of use. Yuebao offers a much easier way to invest. People can see the value of their assets anytime, anywhere on their smartphones.
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