The year 2020 will go down in history as a year of profound change. Many lifelong habits had to be abandoned and new habits learned, and new phrases like “social distancing” and “shelter in place” entered the common lexicon.
China was the first country to battle the outbreak of the coronavirus and the first major economy to emerge from widespread lockdowns that paralyzed economic activity. As countries start to vaccinate their populations, we ask several commentators what 2021 holds for the e-commerce industry.
The consensus view is that many of the innovations and consumer behavioral changes brought about by the coronavirus will take root and mature in the new year, aided by technologies such as augmented reality and 5G.
Livestreaming commerce was taking off even before the onset of Covid-19 as a way for brands to sell their wares to consumers. This was usually done through popular influencers, who cajole their millions of followers to buy what they recommend. The variety-meets-talk-show-meets-infomercial format has helped celebrity influencers set jaw-dropping sales records. One top promoter moved almost $5 billion in merchandise in 2019 and held the distinction of having more people watch her livestream than the finale of “Game of Thrones.”
In many ways, livestreaming was the perfect medium for 2020. As consumers spent more time online during the lockdowns, the border between entertainment and online shopping has crumbled, and livestreaming has become a favorite pastime for many stay-at-home consumers.
Even if consumers can shop offline in 2021 as freely as before, livestreaming will stay and develop further in 2021, market observers said.
“I think the word for China’s e-commerce for 2020 is live commerce … and Covid-19 will have a lasting impact on it,” said Jialu Shan, Research Fellow at IMD Global Center for Digital Business Transformation. “With the adoption of 5G next year, we will see the market will continue to grow and expand in China.”
Shan expects live commerce to not only cover fast-moving consumer goods (FMCG), but also high-value items such as cars and luxury products. “It can basically cover everything that consumers may think of,” she said.
In July 2020, Pinduoduo offered new apartments for sale in a livestreaming session. The livestreaming of the event attracted a total of more than 720,000 views. More than 600 apartments in the city of Zhongshan were sold within four hours of the start of the promotional campaign.
According to a report by EqualOcean, the livestreaming market is estimated to be worth more than 80 billion yuan ($12 billion) in 2021 and will break the 100-billion-yuan mark by 2023. The confidence in the long-term growth of livestreaming is shared by market watchers including Jessica Li, an early-stage investor and mentor for startup communities.
“I also think even more people will be introduced to livestreaming, especially as the practice has been normalized and proliferated during COVID-19,” said Li.
As of 2020, most livestreaming marketing happened on e-commerce platforms. In 2021, so-called V-commerce, or e-commerce on short video platforms, could mature and become a mainstream channel for e-commerce sales.
The rapid development of short video platforms in China has fostered many users accustomed to watching live broadcasts and short videos. The rise of these platforms has also incubated thousands of influencers looking to turn their internet traffic into profits.
Douyin (Chinese version of TikTok) and Kuaishou are two leading short video platforms entering the e-commerce fray.
Douyin in 2020 tested embedding links to e-commerce within video content on selected accounts. Kuaishou achieved a livestreaming e-commerce GMV of 35 billion yuan in 2019. For 2020, it has set a GMV target of 250 billion yuan, representing a seven-fold increase year-on-year.
Brand collaborations between two completely different industries have been a useful tool for generating buzz, especially on social media and among China’s Gen Z.
Such collaborations have helped many heritage Chinese brands rejuvenate their image and woo young consumers. The partnerships tap into the current consumer craze for national brands, cultural creations, and nostalgia.
Among the collaborations that went viral on the Internet are the partnership between Liushen, a traditional Chinese mosquito repellent brand, and KFC, the fast-food giant. Shanghai Soap, a century-old soap brand, worked with the Palace Museum to develop sandalwood-flavored soap.
As more young consumers express a preference for “Made in China” brands and products, international brands may find that collaborations with local brands can be an effective way to establish connections.
“I think there will be greater cross-sector brand collaboration to more effectively market and build relationships with specific consumer profiles,” said Li. “I think larger brands will collaborate more closely with local brands to build greater trust with consumers.”
Expect even more responsive manufacturing supply chains as the manufacturing, movement and selling of goods become even more intertwined and responsive to consumer needs. E-commerce platforms like Pinduoduo have helped manufacturers to more accurately pinpoint consumer demand and shorten the time needed to develop new products through the C2M "New Brand" initiative. The next stage of innovation will involve intelligent logistics.
"We are on the verge of smart and increasingly automated national logistics networks," said Jeffrey Towson, Professor of Investment at Peking University. "These will connect consumers with sellers and manufacturers in real time."
Online Grocery Shopping
Many consumers have taken to buying groceries online as a result of changes brought about by Covid-19. This trend is expected to continue.
"I'm watching the online grocery space very closely. I thin grocery can be a highly retentive product, and I'll be watching to see what companies are able to build long-term relationships and expand outside grocery with those customers," said Turner Novak, General Partner at Gelt Venture Capital.
Line Juul, Director of Operations at China Experience, sees sustainability as one of the rising trends in China e-commerce, with more brands undertaking sustainable practices for their products as consumers become more demanding about the impact of their choices. Education will also undergo a revamp with the merging of entertaining and shopping throwing up new ways to engage with consumers, Juul said.
"Apart from the shopping experience e-commerce can offer, such as social-commerce and the boom of live-streaming, China will become the first country to enable a digital currency, the digital yuan to online shopping," said Renata Thiebaut, a digital strategist and author about e-commerce trends. "I believe this will be a trend for next year across different marketplaces and verticals in China."
China's central bank concluded its second digital-currency pilot program this month, bringing closer a formal rollout that would make the country the first major economy to introduce such a system. Authorities in Suzhou, a city near Shanghai, handed out 20 million digital yuan, or equivalent to $3.1 million, to local residents through a lottery. The winners who receive the new digital currency can spend it online or offline.
Chinese authorities had teamed up with tech companies including JD.com, Meituan, Didi Chuxing to test the use of digital yuan for services such as e-commerce, food delivery and ride hailing, respectively. The central bank's offline-payment feature does not require an internet connection and can be utilized with a brief tap of devices between consumer and vendor, according to news reports. This could help facilitate digital payments in areas with poor mobile coverage, officials said.