China e-Commerce

A calligrapher writes blessing ornaments “fai chun” to mark the coming Chinese Lunar New Year of Tiger in Hong Kong. (Photo by Bertha WANG / AFP)

Maintaining supply chain efficiency is mission-critical for China e-Commerce

The e-Commerce industry in China is the biggest in the world. And Chinese New Year is one of the biggest celebrations in Asia with China and several Southeast Asian countries enjoying most of the festivities. With concerns of the pandemic hampering celebrations over the last two years, retailers have been using e-commerce platforms to make their sales.

Technology has enabled retailers to leverage various e-commerce and social media platforms to boost their sales during this festive period. In fact, statistics have shown that e-commerce sales during the festive period and shopping festivals continue to make huge profits, bringing record profits to most retailers and merchants.

According to a report by South China Morning Post, China’s retail sales are set to grow 6% in 2022 as the focus shifts to green living and rural consumption. China wants domestic retail sales to reach US$ 7.85 trillion by 2025, up from US$ 6.13 trillion in 2020.

However, despite the profitable sales, retailers soon found themselves with another problem. Supply chain issues, especially in logistics have led to some retailers being unable to meet the demands of consumers, resulting in shipment delays. The supply chain issues have also seen some loyal consumers moving to competitors who are able to provide the product.

Ben Kwan, Partner and Digital Leader at EY Parthenon for Greater China speaks exclusively to Tech Wire Asia on how the e-commerce industry has helped retailers survive these challenges.

How can businesses deal with supply chain issues especially with demand for products increased during the Chinese New Year?

Ben Kwan, Partner and Digital Leader at EY Parthenon for Greater China

Maintaining supply chain efficiency and resilience is mission-critical for e-Commerce in China with operations all year round in the Chinese market. Besides Chinese New Year, nationwide spikes in consumer demand and cargo rush during major online shopping festivals (e.g., Double 11, Double 12, 520, 618) also pose great challenges to the congested supply chain.

The intelligent use of advanced analytics and integrated IT systems can be game-changing in supply chain management. Leading retailers are leveraging e-Commerce platform providers’ data intelligence tools to gain diagnostic and predictive sales insights derived from purchasing and traffic data of online consumers.

They are also integrating siloed supply chain IT systems (e.g., Warehouse Management System, Order Management System, Transportation Management System) to enable seamless supply chain management and improve the supply chain management efficiency.

Apart from supply chain constraints, do retailers face challenges when dealing with e-Commerce applications?

With constant innovation of retail technologies and business models, the Chinese e-commerce application ecosystem is increasingly diverse, complex, and challenging for retailers to navigate. From online e-commerce channels to online-offline experience integration, retailers require much broader technical expertise today to tackle new challenges in consumer acquisition, channel operation, pricing and promotion management, inventory and logistics management, data analytics, and such.

To maximize business velocity and agility, forerunning retailers are leveraging ecosystem partners more heavily to bridge internal skill gaps, instead of building and scaling every capability independently. The development of end-to-end cross-platform e-commerce operation is also a common approach to reduce operational effort and optimize information flow between traffic acquisition platforms with social commerce, e-Commerce operation service providers, IT/software enablement, and advanced data analytics tools among other things.

What emerging technologies should retailers look to enhance customer experiences and boost sales during Chinese New Year following a challenging period for many businesses?

china e-Commerce

A worker sorts packages for delivery in China (Photo by Jade GAO / AFP)

The retail industry has been one of the most pioneering industries in emerging technology adoption – data analytic-centric CRM, AI-powered precision marketing, online chatbots, machine-learning-based suggestion algorithms, AR try-on, etc. are all effectively enabling retailers to enhance customer experience and sales performance.

Among all emerging technologies applications, Social CRM is one of the most valued technology applications. The e-Commerce landscape in China becomes more social and content-centric, where multiple platforms and channels are utilized for customer interactions. Retailers may struggle to effectively and efficiently integrate data, derive customer insights, and handle multiple channels’ operations. Successful adoption of Social CRM will improve cross-channel management efficiency and empower customer analytics precision and granularity, thereby driving customer loyalty and ultimately capturing full customer lifetime value.

How should retailers transform their business profitably and sustainably to deliver the personal, seamless, omnichannel experience that shoppers increasingly demand?

Direct-to-consumer (D2C) and consumer-led innovations are inevitable trends for retail businesses in China. Some brands have built full omnichannel operations and established direct relationships with consumers in order to better understand their personal desires. New brands, categories, products, and campaigns are now launched both online and offline in much shorter cycles by adopting a data-driven approach.

For traditional retailers without D2C in its DNA, such radical transformations can only be realized through 360-degree strategy redesign and robust implementation management. The transformation journey should include a “future-back” vision and strategy, management-aligned operating model, capability gaps identification, and ecosystem partnerships.

Lastly, with e-Commerce sales expected to boom and consumers preferring online shopping, will physical shopping experiences be a thing of the past?

Both online and offline experiences are valued by consumers nowadays as the entire customer journey and purchase decision-making involves both digital and physical touchpoints. Therefore, to achieve and sustain a winning position in the market, retailers and brands are recommended to synergize the advantages between online and offline and adopt an omnichannel strategy to create a seamless and immersive experience for consumers.

Many leading brands adopting omnichannel strategy have demonstrated success in maintaining long-term customer loyalty and enhancing market competitiveness. Taking leading global consumer electronics companies for example, besides their excellent products, big names are winning in the global consumer electronics market through online and offline customer-experience-centric services, building consumer communities that simultaneously cultivate a hyperconnected omnichannel experience.