Top Biz News

The 'Me Commerce' revolution is near

By SNS (China Daily)
Updated: 2010-02-26 11:43

The year 2010 will mark the 15th anniversary of China's connection to the public Internet and 10th anniversary since the bursting of the first dotcom bubble.

One of the contributors to China's 1999-2000 Internet bubble - commencing with the June 1999 IPO of China.com and ending with the stock market crash in April 2000 - was talk of a consumer e-commerce revolution that was set to transform China's economy.

That never happened. And the early promise of China's pioneering e-commerce ventures such as 8848.com also failed to be realized.

Payment challenges, inadequate logistics, a lack of trust among consumers and - most critically - the inadequate spending power of such a young and sub-critical mass of users meant that consumer e-commerce back then simply wasn't a viable market.

Yet there is good reason to believe that 2010 will be the year when the massive momentum of China's burgeoning e-commerce market becomes apparent.

China today has a robust broadband, payment and logistical infrastructure. A booming economy and rapid urbanization are driving an aspiring consumer class with the means and motivation to spend.

Innovative entrepreneurs have built ventures in a range of niches and business models, which are now having the transformative effect on China's economy that was predicted a decade ago. In particular Alibaba Group's Taobao e-commerce platform is creating an online experience for consumers that is highly interactive and personalized to their needs.

This fusion of commerce and social networking is best described as a "Me Commerce" revolution, with success driven by meeting the specific aspirations of vendors, including a large number of small merchants, and consumers rather than an emphasis on the "electronic" nature of the transactions.

Because the fusion of social network services (SNS) and e-commerce is making for a highly personalized experience, buyers can use all the tools of social network services to improve their shopping online, interacting with vendors including using video and multimedia messaging services (MMS), ranking them, comparing with friends.

Taobao now has a huge advantage with over 200 million items online, and it will be hard for others to catch up with it anytime soon. But Tencent has prowess in digital items that it can try to build on. Baidu has partnered with Rakuten, the leading e-commerce company in Japan.

Chinese e-commerce behavior is very different from the United States. EBay in the US generates roughly half of its Gross Merchandise Volume through auction-style transactions.

In China, auctions on Taobao are less than 5 percent of Gross Merchandise Volume, as Chinese consumers prefer to buy new things at fixed prices than bidding for used items in an auction.

The author is president of consulting firm BDA China.