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The Year of the Rooster is also The Year of Omnichannel
2017 will be the year for omnichannel in China. Australian retailers need to be aware of the changing landscape to take advantage of cross-border e-commerce.
While omnichannel retailing has driven the Australian retail industry for the past decade, it’s been a very different story in China, but this is rapidly changing. 2017 – the Year of the Rooster – is shaping up to be an important year for omnichannel retailing in China.
Australian retailers looking to take advantage of China’s booming cross-border e-commerce market should be aware of three key factors changing the industry to compete in this market
- Changing consumer behaviour and growing consumer-centric approach
Consumer behaviour in China has changed dramatically the past few years, leading to rapid growth in the e-commerce sector, as well as the emergence of social media and mobile payments. This has enabled Chinese consumers to acquire products from more than just one source.
New technologies and improved logistics have reduced the gap in the shopping experience between online and offline channels. Retailers are also overhauling their thinking to become more customer-centric instead of blindly expanding their sales channels.
Tech-savvy retailers are becoming more engaged with social media and new digital channels than ever before, to provide better customer service, particularly easy navigation, customer education, information updates, customer loyalty programs and efficient logistics, to name a few.
Retailers will no longer be able to simply launch e-commerce sites in conjunction with their brick and mortar stores and call it omnichannel. It also requires consistent prices, great products and impressive customer service across all channels, as well as enhanced logistics capabilities.
- Online becoming more competitive
The e-commerce sector has grown rapidly over the past few years, but the speed of growth is starting to slow. Despite the large number of retailers opening online stores, the number of online shoppers purchasing from these sites is increasing at a slower rate, resulting in rising traffic acquisition costs. Operating an e-commerce business can be an expensive option for many Chinese retailers.
Rising costs have forced online retailers to look for new opportunities to grow through their physical stores. On the other hand, physical stores are continuing to expand their operations to online channels, either to generate more sales or to introduce more offline traffic. Omnichannel retailing is a solution that creates a synergy for both online and physical retail.
- Mobile payment penetration at an all time high
Mobile commerce penetration is very high, accounting for just over half of online sales in China last year. This creates many valuable opportunities for retailers and has greatly sped up omnichannel retailing. Combining physical retailing with m-commerce will be one of the key trends in China this year.
Some popular mobile payment methods such as WeChat Pay are integrated with social functions, allowing customers to follow their favourite brands and engage directly with them. Starbucks in China, for example, recently announced it now accepts WeChat Pay mobile payments in store, as well as launching a social gifting platform to allow WeChat users to send Starbucks gifts to their friends. Retailers can determine the buying behaviours and preferences of consumers to provide better customer service.
This is a great opportunity for Australian retailers. Integrating Chinese mobile payment methods in e-commerce websites and offline cash terminals provides opportunities to build their brand among increasing Chinese tourists and the burgeoning Chinese middle class who have higher disposable incomes than ever before.
Payment providers in Australia are getting on board too. Novatti signed a deal last year with RoyalPay Australia to support WeChat Wallet financial transactions for Chinese consumers in Australia.
By factoring these developments into their Chinese e-commerce strategies, Australian retailers will be able to compete on a level playing field and successfully grow their businesses in China.