Online opportunities in the world’s

largest e-commerce market, China

© Finpro

A shift in consumer behavior opens up for a new business model

Industries like consumer electronics,

appliances, toys and games, and other

household products are already firmly

established in the e-commerce space, but

food and beverage manufacturers have

overall been slower on the uptake.

As more consumers shift to a

preference for online shopping,

F&B manufacturers need to find

ways to adopt e-commerce as part

of their sales and marketing

strategies.

The e-commerce business model is here to stay –Asia (China) is leading the development

• Online retail sales is growing globally, China is

leading the development.

• Worldwide Retail Ecommerce Sales was expected

to reach $1.915 Trillion in 2016. Double-digit

growth will continue through 2020, when sales

will top $4 trillion.

• China remains the world’s largest retail

ecommerce market, with sales representing

almost half (47.0%) of digital retail sales

worldwide (eMarketer).

• Spending via mobile is booming and accounted

for 55.5% of all ecommerce sales in 2016, and is

expected to reach 68% by 2020 (eMarketer).

• Expanding middle classes, greater mobile and

internet penetration, growing competition of

ecommerce players and improving logistics and

infrastructure are the key growth factors.

China –growing demand for safe, imported food

• 40% of Chinese consumers buy food online, in contrast

to just 10% of the US consumers (McKinsey).

• The food currently offered online is dominated by dry

packaged or canned food.

• The product categories of imported fruit and other types

of fresh food are among the fastest growing categories in

urban areas.

• Chinese consumers are looking for quality & safe

imported food products. The demand for health food

and supplements is also growing.

• Domestic food scandals and concern for food safety are

some of the key drivers of the demand.

What are Chinese consumers buying online? Frequency and percentage purchased by Chinese online consumers

Where are they buying it from? Two marketplace players control 80% of the B2C market (domestic as well as cross-border)

Marketplace store VS individual brand store

Marketplace store (Alibaba’s

Tmall/Tmall Global, JD’s JD.com)

• 90% of all sales

• 50% of the brand’s SKUs (mainly

bestsellers)

• Heavy marketing

• Needs a perfect quality of service

(chat function, etc)

• Sales are public

• Volume driven

• Enclosed world –the marketplace

owns the customers and the data

• Vague search results on Baidu

Brand store (.cn store)

• 10% of all sales (some brands have less

than 1% sale on their own website)

• Full assortment of SKUs

• Branding/History/Values/E-magazine

• Shop locator/OmniChannel

• Loyalty/eCRM

Who’s buying? And why?

• According to Nielsen research, the typical online buyer of

imported products in China is female, younger than 30 and

with an income of more than RMB 11,000 (approx €1500) per

month.

Frequently cited reasons for shopping online include:

• Accessibility.

• Convenience.

• Price/discounts.

• Greater assortment.

• Detailed product information & customer reviews.

• Confidence: consumers place higher levels of trust in the

authenticity of purchases made on major B2C platforms such

as Tmall, JD.com and Yihaodian.

How to sell your products online?

Market access models

E-commerce

model

Domestic

(local

presence in

market)

Cross-

border

Marketplace

(flagship/distributor/

third party/ online

supermarket

Direct

sales

Marketplace

flagship/distributor/

third party/ online

supermarket

Direct

sales

From home

country to

consumer

From

bonded FTZ

warehouse

Valio’s Tmall Flagship store (Alibaba’s Tmall)

Kesko’s flagship store on Tmall Global (SME door opener)

08.01.2016 © Finpro

3 Finnish companies selling on JD.com

A word or two about e-com and marketing

• Social drives e-commerce, and approximately 50% of e-commerce is driven by social media

in many parts of Asia and in particular in China.

• Brand strategy, creative design and digital marketing –are key for online success.

• Identifying the customer need is key for staying ahead of the competition.

• Tmall is not only an eCommerce platform, but also works as a search and discovery engine

(like Google). Thus, Tmall is as much about content as it is about commerce

• Brand.cn site could be an option for consumer engagement and building loyalty. Make sure

it’s optimized for mobile. Many brands also build their CRM/loyalty through wechat.

Food from Finland’s B2C marketing channels in China: 芬享美食芬享美食芬享美食芬享美食

Channels:

• Wechat

(900 million users)

• Weibo

(350 million users)

Other brand investments

• Baidu (SEO –Search Engine

Optimization/SEM –Search Engine

Marketing)

• Online campaigns

• KOL (Key opinion leaders/influencers)

product endorsement

• Other Food from Finland promotions

How to get started?

• Are my products suitable for e-

commerce?

• Is there a demand for my products in

China?

• Consider domestic VS cross-border?

• Consider business model: flagship?

Third party? Distributor? Sell directly?

• There are no quick fixes! Developing

the e-commerce channel requires

time and investments.

• Branding, marketing, story-telling –key

for commercial success.

Thank You!

Jonna Wibelius, Business Development Manager (e-com, China)

+358504681764, jonna.wibelius@finpro.fi

Esa Wrang, Head of Industry, Director

+ 358 400 243 076, esa.wrang@finpro.fi

Annaleena Soult, Program Manager

+ 358 40 343 3447, annaleena.soult@finpro.fi

Tiina Luoma, Senior Program Coordinator

+ 358 50 464 3385, tiina.luoma@finpro.fi