By Eddy Chan, Senior Vice President, Head of China, FedEx Express
With the Internet economy booming globally, e-commerce plays a remarkable role in boosting economic and trade activities, especially in China. In 2016, China’s e-commerce transactions reached RMB20.2 trillion, up 23.6%. Given e-commerce is playing a critical role in China, the question is not whether enterprises should move their business online, but rather how they should go about tapping e-commerce for new sources of growth.
Fully embracing the era of the mobile Internet, e-commerce has taken a turn towards more mobile and social network-driven growth. Mobile devices have surpassed PCs as the mainstream model of retail business. By December 2016, China had an estimated 731 million netizens, with 63.4% of them using mobile devices to shop. During the peak of “Singles’ Day” online shopping spree last year, it is reported that 82% of online transactions were mobile-based.
The reasons for this mobile boom are very simple. The biggest advantage lies in the fact that shopping can be done anytime, anywhere, and without additional input. Mobile shopping fits in nicely with the rapid pace of modern life. Imagine how easy it is for office workers to make several clicks on e-commerce apps to buy daily necessities during their morning commute or noon breaks. Shopping in brick-and-mortar stores or on desktops can hardly deliver such convenience.
A key force behind the growth of mobile commerce is the extensive penetration of mobile payment tools such as Alipay, WeChatPay and Apple Pay, which help people easily make online shopping payments. It is no exaggeration that most people can now travel without a wallet but mobile phones are a must; mobile apps broadly cover people’s everyday needs for transport, shopping, catering, and entertainment.
In addition, the mobile Internet has promoted the spread of online social networking. In 2016, there were a total of 514.48 million social network users in China, which have a commercial value that has drawn business attention. By making use of social networks, enterprises can develop a softer and more human-centered platform for public communication. Led by WeChat and Weibo, social networks provide businesses an additional interface for customer interaction in today’s competitive commercial landscape.
People tend to purchase items based on online comments or suggestions taken from their circle of friends on WeChat; therefore, the spread of reviews on social networks or participation of key opinion leaders (KOL) can boost sales. Calling in an opinion leader before selling commodities has become an effective way of marketing. For instance, book publishers invite scholars or experts for comments on a hot topic or incident to create social empathy before promoting and pitching relevant books.
As an extension, social commerce combines the communication functions of social media and online transactions to form a sales model based on reputation, which attracts a large number of individual users interested in product quality. Consumers also have an increased interest in the final delivery process. Social network-based consumers, mostly individuals, require a more rapid, reliable and customized delivery experience.
The quality of delivery as a final step has a direct bearing on consumers’ overall impression of the shopping experience and ratings of merchants. Compared with physical shopping, individual buyers on social networks are more sensitive to friends’ recommendations and the ratings of logistic services. Satisfactory logistics prompt consumers to recommend merchants through their “friend circles”, while poor delivery services lead to a bad reputation.
Since social commerce focuses on personal needs, logistics providers chosen by merchants have a direct impact on the consumer experience. Vital to the shopping experience is whether they can offer flexible services to suit different requirements regarding delivery time, location and method. For example, holiday gift deliveries should meet strict time requirements because a small delay could affect the entire celebration.
A logistics provider with a sound brand image leaves a good impression on consumers when goods arrive and gives them confidence for repeat shopping. This translates into higher sales and a competitive advantage for merchants.
The consumer experience doesn’t end when a shipment is delivered. Logistic providers for mobile and social network platforms should be able to offer sound solutions for reverse logistics involving changing and returning goods. For example, after selecting and paying for clothing items, consumers sometimes find that they don’t meet their expectations in terms of color or style and ask for a refund or change. In such cases, logistic providers should analyze potential after-sales issues and design reasonable and sound return procedures for e-merchants in order to alleviate customer concerns and help facilitate pleasant transactions between sellers and buyers.
In the era of mobile internet-based e-commerce, the final step of delivery has to be effectively addressed in order to create more commercial value. Only businesses that have an “Internet mentality” and the capacity to integrate production, warehousing, sales, logistics and delivery effectively can win in the mobile Internet age.