Shanghai cityscape. Source: Unsplash/Li Yang

Strategy
Harvard Business Review

China is reinventing online retail: Five e-commerce lessons for Western companies

Authors
Harvard Business Review
15 minute Read

China is both a large and a fast-growing retail market — worth about US$5 trillion in 2020 — and highly digitised. Given that the COVID-19 pandemic has made digital every retailer’s strategic priority, it’s not hard to see why the Economist opened 2021 with a cover story headlined “Why Retailers Everywhere Should Look to China.”

In China online sales have grown about 25% in each of the past seven years and reached about US$1.9 trillion in 2020, when they amounted to some 25% to 50% of total retail (compared with 10% to 20% in the United States). More than 90% of those sales are on mobile devices, compared with less than 50% in the United States. So it should be no surprise that Chinese companies and individuals have led the way in developing video retail, social commerce, community retail, retail-as-a-service, and many other new digital channels, including the super app, which provides an all-in-one experience for consumers by accessing various services and offerings.

Who are these leaders?

There’s Douyin — known in the West as TikTok — which started as an entertainment app for sharing short videos and soon discovered that many users were commenting on popular videos by creating their own versions. Douyin encouraged participation by welcoming content creators, who often featured their favorite products and clothing styles, making the app a marketing tool. China’s livestreaming market has reached US$16.3 billion and is now integral to how people shop — which is why Walmart invested in Douyin.

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