This year's Singles Day proved it again, marketplaces rule the e-Commerce world in China. But outside these marketplaces, brands sometimes misvalue or even forget to invest in the channel that stands right in front of them: their own website.
The standalone e-Commerce pie, a piece worth taking
Marketplaces Taobao, TMall and JD take 90% of the e-Commerce pie, leaving only 10% market shares for standalone e-Commerce.
But let's take a closer look at these 10%. The global e-Commerce market in China is valued at 450bn USD, meaning the 10% standalone e-shops part is still worth 45bn USD. That's more than South Korea's total e-Commerce market value alone. That's also more than Spain, Italy, Portugal and Switzerland e-Commerce value combined.
For years, brands have been investing in their own e-Commerce in the Western world and it's a wonder they don't do the same in China considering it's a much more valuable market.
By 2020, McKinsey predicts the China's e-tailing market to be close to 650bn USD. Some e-Commerce industry leaders even say standalone market might reach 15% or more in the future - that would be close to 100bn USD. This would also be close to the UK's e-Commerce estimated value for 2015, Europe's biggest e-Commerce market. I say it would still be worth getting a piece of it!
Advantages of having your own e-Commerce site
Aside from differentiating yourself from the competition, a standalone e-Commerce gives you much more freedom compared to marketplaces:
- You have the power to design your site and create the visual identity of your brand without having to fit in to the strict frame of the marketplace. So for those who want to be disruptive; here's your chance to try something bold. Above all, this means you can provide your customers with an adapted User Experience.
- Gather data from your customers. You'll get much more information from the analytics of your own website than from marketplaces, this will highly help to segment your user database for marketing campaigns including direct email marketing, SMS marketing, marketing automation, loyalty programs, etc.
- Implement an omni-channel strategy with O2O tools such as a store locator, coupons, etc.
- It allows you to control distribution.
- You can control both customer support and service.
- It allows you to manage your inventory. You can promote new products on your website as opposed to submitting everything you sell to the long process of marketplace approval.
- There is no commission fee to pay.
- Consumers are more likely to trust the products from a standalone website than those sold in the marketplace, which run the risk of being counterfeit.
Take it step by step
Big budget brands probably have the funds to launch everything with a bang, e.g. their e-Commerce and marketplaces at the same time. Smaller companies can take it one step at a time if necessary.
Start with having your own website for branding and education purpose, and use marketplaces as your online sales channel.
What we would suggest is to still have the premises of an e-Commerce on the website, with the product listing and the "buy" button redirecting to the marketplace shop.
This way you show your customers your TMall shop is legit and you start building your SEO presence at the same time.
Then, once you have enough traffic on your website, you can fully launch the e-Commerce part.
Of course, choosing between a standalone e-Commerce and a marketplace as the first step in the online commerce strategy would depend on the brand's vision and mission. For a brand - regardless of its size - that prioritize street shops over shopping malls; it would make sense to take the same digital direction and have their own e-Commerce selling channel.
If you are still unsure where to settle your e-Commerce ship in China, talk to us about your project. We do everything from e-Commerce websites design and development, to TMall shop set up.
So when it comes to Chinese e-Commerce, IT Consultis is the expert to go to.
Keep in mind that we certainly do not recommend trying to penetrate the Chinese market with just your own e-Commerce. It is best to have both a marketplace presence as well as a stand-alone site. As opposed to taking your chances of being in the right place at the right time, it is best to be everywhere, all the time.
Choosing the selling channel to invest in will eventually come down to the ROI discussion. Although it might take some time for your standalone e-Commerce to take off, your online store could be greatly profitable in the future.
Luxury brands are in fact expected to massively invest in their digital strategy in 2016. Louis Vuitton is probably wishing they had done so before opening so many retail stores in China, and then closing them down. Investment in a online flagship store would surely have been more cost effective.