Opportunity or Disaster? China’s international e-commerce apps post-Covid
From 2020 until today, the global impact of Covid-19 has not been completely eliminated. Various countries are quitting globalisation. They changed their tastes, closed their doors, only thought about the development of their own industrial chains instead. There are also some developing countries, taking China as an example, that have begun to invest in the development of global business actively.
Is this a new blue ocean or a catastrophic challenge for China’s cross-border e-commerce apps?
First, I think this issue should be viewed dialectically.
The entire Covid-19 crisis has brought many secondary hazards, such as financial market turmoil, and commodity turmoil, but the most serious ones are economic stagnation and social unrest. The Western media’s smearing of China, even fabricating fake news, setting import taxes specifically for China, etc., have had a certain impact on the export of Chinese goods. Taking my own experience at work as an example, when I’m working on a Client Service account, I can clearly see that more and more customers will directly ask: Is this product made in China? I don’t like Chinese goods and so on.
In 2021, the marketing channels of China’s cross-border trade enterprises will be severely hindered, and they will face many problems such as difficulty in obtaining traffic, slow logistics, increasing costs, and high compliance risks.
For example, platforms led by Amazon have imposed account bans on more than 50,000 Chinese sellers, and the ban on Chinese sellers has caused an amount of 100 billion yuan industry losses.
In addition to external influences, the low-value products of the overall cross-border e-commerce have also become an urgent problem to be solved. Cross-border e-commerce exports are mostly commodities with low technical content and low added value, and most of them are daily necessities. Take the APP Aliexpress as an example, I myself often use this software. However, the products on the entire software show that, with low price as the selling point, low added value, lack of sense of technology, single marketing method, and insufficient product variety and refinement, my consumption experience is not really good.
In response to the above problems, the development of China’s export e-commerce marketing is also actively changing, with four new characteristics mainly presented: brand, product, direction, and channel.
Brand Rise — “Brand” will become the core competitiveness of cross-border e-commerce export enterprises in the future. “Valuable”, “meaningful”, “differentiated” and “high-quality” products will become the mainstream of brands going overseas.
Product changes — China is undergoing a transformation from a manufacturing powerhouse to an inventing powerhouse, thereby avoiding low-price competition and providing more differentiated goods instead, technically and design-oriented quality products and services.
Changes in direction — Europe and the United States are still the core markets for cross-border e-commerce exports, but Southeast Asia and other places are rising rapidly; differences in consumer preferences, consumption levels, and payment habits in different regions have put forward differentiated requirements for cross-border e-commerce companies.
Diversified channels — Cross-border merchants generally operate on multiple sites, leveraging more traffic. With the upgrade of China’s overseas branding, DTC, overseas warehouses and other models are running in parallel to jointly promote the building of brand power.
In China, in order to change the low-value status of China’s cross-border export e-commerce products, the Chinese government is also making it the mission of contemporary excellent cross-border e-commerce to promote Chinese domestic brands and high-quality sellers to go overseas. No matter the cross-border e-commerce software is in the traditional red ocean market or the emerging blue ocean market, there has no huge oligarchs with obvious advantages, swallowing most of the market. For example, on Aliexpress, even with the support of the powerful Alibaba Group, most of AliExpress’s categories are still oligarchic, which means that anyone can become an oligarch.
Therefore, many small and medium-sized enterprises can abandon the original operational thinking of “waiting for the wind to come” and conduct in-depth research on the psychology of overseas customers. For example, compared with low price, it pays more attention to brand building, exclusive design, or high technology. Due to the difference in the way of life and living habits of eastern and western people, we make products suitable for foreign markets. From the original low-price competition, it has changed to establish a brand image, exert the spirit of craftsmanship, and focus on product performance, technology, appearance and quality.
Over the years, the scale of e-commerce channel transactions has continued to grow globally. Due to its own advantages such as convenience, diversification and liquidity, the online retail market has penetrated into many other industries, continuously expanded its scale, and increased the penetration rate of e-commerce.
According to the data, in 2020, the retail sales of e-commerce channels in the world reached 4.28 trillion US dollars. It is expected that the compound annual growth rate from 2020 to 2024 will exceed 10%, and the future growth rate is expected to remain high. This is a good explanation for the opportunity of e-commerce in total global retail sales. E-commerce accounted for 18% of the overall retail industry in 2020 and is expected to reach 21.8% in 2024. It is worth mentioning that the proportion of retail sales and e-commerce in Europe and the United States has also shown a continuous upward trend year by year.
In conclusion, under the impact of Covid-19, a large number of foreign users have begun to experience the convenience of online shopping, which has greatly improved their trust in e-commerce. Under this bonus, if China’s cross-border e-commerce actively conducts brand marketing, improves logistics speed and service quality, and adds payment methods from different countries, it can create a brilliant cross-border e-commerce ‘made in China’. At the same time, I also suggest that each seller creates profiles for their clients' different countries where their products are exported, profile them, understand the consumption habits of these customers, understand their competitors in these countries, make adjustments according to the specific business environment, and develop products for these specific products of the region. For cross-border sellers, there are endless possibilities.
About this article
This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminate the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.
