By Mike Vinkenborg
Chinese e-commerce sales are expected to reach new heights on the country’s upcoming Singles’ Day shopping festival, with analysts predicting sales to reach US$20 billion (around RMB 135 billion) on Alibaba’s platforms alone. This figure represents continued growth at remarkable speeds for the landmark online shopping event. Since Alibaba popularized the former small Nanjing University tradition in 2009, revenues grew from almost RMB 1 billion in 2010 to 5.2 billion in 2011, 19.1 billion in 2012, 35.2 billion in 2013, 57.1 billion in 2014, and 91.2 billion in 2015.
Each year Alibaba utilizes Singles’ Day to launch new innovations in the e-commerce scene, and this year it plans to launch, amongst others, a new virtual reality (VR) shopping experience, which the company claims will transform how people shop both online and offline. Ongoing innovation in Chinese e-commerce signals the intense competition among online retailers to capture the lucrative market, as well as offering a preview of possible ways consumers will embrace technology to shop in the future.
Big data and e-commerce innovations
On the coming Singles’ Day, Alibaba asserts that it will show China and the world the future of online shopping. Through its integrated e-commerce, social media, payments, and location-based services, Alibaba has managed to gather immense amounts of data, which it plans to leverage to personalize the shopping experience. This creates opportunities for retailers to engage on a deeper level with their customers by allowing them to customize their online stores based on individual preferences.
What’s more, on Singles’ Day the company will introduce Buy+, a VR technology that creates a virtual shopping environment. Following a US$793.5 million investment in Florida-based VR startup MagicLeap, Alibaba opened its own ‘GnomeMagic Lab’ in March 2016, a research laboratory working on VR and augmented reality (AR) technologies. Thus, Singles’ Day will unveil the world’s first complete VR shopping experience on Alibaba’s Tmall and Taobao platforms.
The experience utilizes a cardboard glasses frame in which a smartphone can be inserted, thereby creating a makeshift VR headset that shoppers can use to enter the digital shopping environment. Shoppers can virtually visit shopping malls all over the world and have a 360-degree panoramic view of products during the process, and with Alipay integrated into the platform, a simple nod of the head can be used to make a purchase.
In addition to this, Alibaba wants to show its progress on its ability to integrate online data with offline activities by launching a location-based AR game similar to the popular mobile video game Pokemon Go. In this game, consumers can follow the Tmall Cat mascot on an adventure across both its online marketplace and physical stores such as Suning, and at other locations such as Starbucks and Disneyland Shanghai. Furthermore, to lead up to Singles’ Day, Alibaba hosted an eight-hour live stream of a fashion show where shoppers were able to buy what they liked at high discounts on demand, in what was called a “See Now, Buy Now” promotion.
Competing platforms are not just sitting in waiting either: JD has announced its own investment into VR and AR technologies last September to keep up with Alibaba, and electronics retailer Suning invested in Shenzhen-based VR camera maker Insta360 last August. But while competing companies are investing in their own research and development capabilities, it is evident that Alibaba is leading the way in innovation.
The future of e-commerce
Successful implementation of VR and AR technologies will contribute to the gamification of shopping, leveraging technology to make the online shopping experience more social and interactive. Forward-thinking investors keeping up with the latest trends in China’s dynamic e-commerce market can benefit from proactively embracing emergent technology and consumer habits, and gain from the visibility of being on the forefront of the next generation of e-commerce innovation. However, the full-blown integration of VR and AR into shoppers’ daily habits have not yet been realized. Regardless, by setting up stores on one of the platforms, retailers will have access to large amounts of data and be able to market their products in an effective and personalized way.
These innovations in conjunction with the use of big data will facilitate the continuing growth of the e-commerce sector. Annual online retail sales in China reached US$622.5 billion last year, solidifying the country’s status as the largest e-commerce market in the world. Sales are predicted to double by 2020, reaching US$1.3 trillion. Cross-border e-commerce sales are set to make a major contribution to this growth, with sales expected to almost triple in the same period, going from US$57.1 billion in 2015 to US$157.7 billion in 2020. As such, the e-commerce sector in China remains a highly captivating sector with opportunities abound for foreign investors.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
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