E-commerce is Thriving in China Due to 'Retail Entertainment' As consumers become increasingly sophisticated, so too have their demands for entertaining brand experiences

Nearly a decade after Alibaba launched 11.11 as an antidote to Valentine's Day, the event has totally redefined both how consumers shop and brands sell. Driven through a blend of technology, retail, social, and key influencer involvement, the day undeniably demonstrates the might of China's domestic market. E-commerce is no longer just about shopping. With a strong focus on content, it has become an interactive media and entertainment channel. As Joe Tsai, co-founder of the Alibaba Group, famously said, "Retail is entertainment". This couldn't be truer than in 2018.

After a day's frenzied buying and selling from over 180,000 brands, Alibaba reported record sales of $30.8 billion, up 27 percent on last year's record, or in other words, double Black Friday and Cyber Monday combined. Despite this year's impressive growth figures – the largest growth gains in the developed world - investors are beginning to worry that the shopping day has hit a ceiling. This year's gains represent the lowest YOY development in the day's history, down 36 percent from 2017.

Both a maturing market and increasingly sophisticated consumers are ensuring that the landscape continues to evolve. There has never been a more important time for brands to take stock and re-think their retail strategies to ensure they are future-proofed to meet consumers' growing expectations.

Growing Competition

China's e-commerce market, the most sophisticated in the world, is maturing. More platforms are popping up, vying for a share of wallet and rivalling the dominance of Alibaba. China's established second, JD.com, as well as newcomer Pinduodu are both witnessing explosive growth. With competing sales festivals, brands find themselves constantly encouraged to offer sales. Many of these sales events have turned into month-long festivals.

Across More Channels

At the same time, a shift towards China's New Retail has seen online, offline and logistics merge together. Redefining retail, brands are now offering consumers omnichannel experiences, with physical brick-and-mortar stores partaking in online sales events, looking for their own slice of the pie. Seeking to offer consumers a greater experience than what's available online, they are taking O2O (online to offline) to the next level. With a consumercentric model in place, brands are offering customers a seamless experience. They can now shop while enjoying content or spending time on social networks — both in store and on e-commerce platforms.

Sophisticated Consumers

A rising middle class with increasing disposable income and Internet access has fuelled the growth of e-commerce platforms. Today, most users still turn to such platforms, however, less out of loyalty than habit. As Chinese consumers become increasingly sophisticated, so too have their demands for entertaining brand experiences coupled with great prices.

A Time For Reconsideration

The Chinese e-commerce market continues to lead the world in both infrastructure and opportunity. Thanks to digital wallets, one can shop anywhere at any time. However, with increasingly adventurous and opportunistic consumers, it is now time for brands to reprioritize experience while maintaining healthy margins. Brands should ask themselves what partnerships they should be forming to take advantage of innovative solutions, as well as how they can better integrate online and offline to offer customers a quality experience. As we look ahead, brands that succeed in making retail "entertainment" will win.

(This article was first published in the December 2018 issue of Entrepreneur Magazine. To subscribe, click here )