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Smartphones expect to ring up increasing e-commerce sales
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online retailing has grabbed as much attention as traditional walk-in stores during the global holiday shopping season. Nowhere in the world is the online shopping frenzy more explosive or more watched than in China.
People of all income levels are looking to the Internet to find bargains, expand choice or just enjoy some leisure browsing at a time and place of their choosing.
Chinese consumers made headlines on Single’s Day on November 11 by spending an aggregate 35.02 billion yuan (US$5.8 billion) within 24 hours on just two online sites — Taobao and Tmall.
Shanghai Daily sat down with Hanjo Schneider, executive board member of the Otto Group, the world’s second-largest business-to-consumer e-commerce company, to talk about his perceptions of China’s massive online market.
The company recently introduced to China its lingerie brand Lascana, which is sold on its official website and the popular online site Tmall.com.
Otto also works with domestic and multinational companies seeking to tap the online market in China.
Q: Which aspects of e-commerce are the most promising?
A: Mobile. In China and many other countries, almost every young person owns a smartphone. This is a huge opportunity for online shopping. This is quite an evolution. Previously people needed a computer and other facilities to surf the Internet, but now all you need is a phone with a data connection. It’s easier and sometimes cheaper for a potential shopper.
Q: How should traditional bricks-and-mortar retailers adapt to this trend?
A: I believe in a multi-channel approach. Success lies with companies that can handle both physical stores and e-commerce. The biggest challenge is for companies to understand that the Internet is a unique channel and that simply moving their products from shops to online to sell them doesn’t usually work.
Q: E-commerce has been eroding the market for traditional retailers. Can they really survive?
A: Shopping centers in prime locations are working extremely well and won’t have problems. Those in less desirable locations and in smaller cities may face difficulties. The social functions of shopping centers distinguish them from online shopping. People still need a place where they can have fun and chat while shopping.
But this is also different for the younger generation. Take my daughter for example. She will hang out with friends in shopping centers, but instead of buying things in the shop, they all go home and order online. She said it can be cheaper and she needs time to think about it.
Q: What would you see as an effective model for online-offline interaction?
A: I can give you examples. When people shop online, they inevitably need to return products sometimes because they don’t like them or they don’t fit. If they can drop the goods at your store, it will automatically generate traffic. Also, you get the opportunity to talk with customers and hear their needs. Or, the other way around, you can set up tablets or computers in your store, so when customers cannot find the size or color they want, they can place an order online directly.
Q: As an e-commerce operator, has your company felt the economic slowdown in China?
A: No. As far as I know, there are 300 million people shopping online in this country and there are about twice that number who own a smartphone. This is a market with huge potential. We see similar things in Brazil, where our e-commerce revenue doubled last year, despite a slow 3 percent increase in the country’s economic growth. The online market is driven by people’s increasing access to the Internet, and it is somehow independent from the general economic situation. We are now helping two European retailers with physical presence in China to set up online shopping sites here by the end of next year.
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