The iPhone 6 and iPhone 6 Plus introduced today offer larger screens, mobile wallets, wireless payment technology, faster processors, higher screen resolutions and more. ...
(Page 2 of 3)
Gome Electrical Appliances Holding Ltd., the seventh-largest e-retailer in the China 500, is another China 500 merchant with big plans to grow its e-commerce base. The operator of 1,600 bricks-and-mortar stores in 400 cities, which specializes in consumer electronics and household appliances, is updating its e-commerce site with new features such as personalized product recommendations and aligning its stores more closely with its e-commerce operation.
And very much in the race is Amazon, the fourth-largest online merchant in the China 500, which originally entered China by way of its acquisition of bookseller Joyo.com in 2004. Amazon last June began selling Kindle e-readers and tablets in China and opened its first direct Amazon Web Services business in Beijing with local partners.
But if many of China's top e-retailers see going big as the path to success, some smaller China 500 merchants are concentrating on a single niche. One example is Guangzhou Huimei Fashion Co., No. 51 in the China 500. A Chinese clothing manufacturer that used to develop and sell products for export, Guangzhou Huimei now promotes its Inman brand of women's linen apparel via the Internet to fashion-conscious Chinese women.
By concentrating on a particular niche, Guangzhou Huimei's web sales increased to an Internet Retailer-estimated $185.1 million in 2013 and the company's e-commerce site now serves around 4 million shoppers, says founder and CEO Fang Jianhua. And Inman.com.cn plans to add accessories lines, such as shoes and bags. "Our product style is unique and made by natural fabrics," Fang says. "We are expanding from a sole brand to multiple brands."
However, for many China 500 merchants, such as JD.com and Gome, their e-commerce development efforts focus on getting bigger and more diverse. JD, which launched in 2004 as an online consumer electronics products retailer, claims that over 60 million consumers have registered with its site and that nearly 30,000 merchants now sell on JD in 12 product categories, including books, furniture, food and cosmetics. JD says it averages 500,000 orders and more than 100 million page views per day.
The company has been particularly aggressive building out its delivery infrastructure; it says it directly fulfills orders to consumers in 400 Chinese cities. As a result of that rapid expansion, JD grew its web sales 83% to $18.18 billion in 2013. JD also plans to keep growing its marketplace with new initiatives, such as a program that lends money to sellers, which Alibaba also does, and with pilot programs such as the one it launched in December with Beijing convenience store chains that take orders via JD.com and promise delivery within 10 minutes. "JD will have a three-digit growth rate in 2014," CEO Richard Lu told reporters at a company press conference.
At Gome, the chain retailer invested heavily in 2013 to tie together its online and offline stores and it is now seeing the effort pay off, says senior vice president Mu Guixian. In a January financial forecast with the Hong Kong Stock Exchange, Gome attributed its positive financial results last year in part to its work integrating its online platform into its bricks-and-mortar stores. Gome said in the filing it expected same-store sales to increase more than 12%. By contrast, larger rival Suning Appliance Co. Ltd., the No. 2 retailer in the China 500, reported comparable-store growth of 8.9% in 2013. With Internet Retailer-estimated web sales that increased 127% to $1.65 billion, "Gome's online business is running on a fast track," Mu says.
While Suning is still the bigger web merchant with e-commerce sales that grew 63.6% to $4.96 billion in 2013, Gome grew twice as fast as its main rival by focusing on improving its web shopping experience and increasing its online product inventory, Mu says. Monthly unique visitors to the retailer's e-commerce site, Gome.com.cn, more than doubled in 2013 to an average of 40.9 million from 17.5 million in 2012, according to web measurement firm comScore Inc. Mu also says the retailer has taken several steps to make sure its e-commerce site is an ally, not an enemy, of the company's more than 1,600 stores across China.
For example, inventory information is shared between the e-commerce site and stores so that consumers can order products online and pick them up in stores. Stores offer wireless Internet connections so that employees can place orders from online inventory when a shopper can't find what she wants in the store.
To make its web site appealing, Gome in 2013 began presenting personalized product recommendations and advertisements, Mu says. It also created a single shopping cart a shopper can use online to buy from Gome and the more than 10,000 outside merchants that sell on the retailer's marketplace. Those merchants account for about 20% of the value of goods sold on Gome.com.cn, Mu says.
While 80% of all Gome's web sales still come from consumer electronics, the retailer is expanding into new product categories online, including furniture and home improvement products. Gome last year added to its e-commerce site consumer packaged goods, such as toiletries or paper towels, which are typically low-cost items that consumers buy frequently. Mu says the hope is that those items will increase consumers' shopping frequency. This year the retailer plans to continue adding categories, such as jewelry and automobiles.
Gome encourages customers in its stores to compare prices with online competitors, because, Mu says, Gome's large volume allows it to negotiate favorable terms with its suppliers. For example, Gome recently announced a commitment to purchase at least $495 million worth of products in 2014 from Chinese manufacturer Haier Group in return for low prices on TVs, washing machines and air conditioners designed specifically for Gome.
Gome also plans to continue investing in mobile and social media initiatives, Mu says. Mobile devices accounted for 15%, or $247.9 million, of Gome's online sales last year, and Mu projects that will reach 50% by the end of this year.
To sell successfully online in China, web merchants need to commit to investing the time, money and resources into an e-commerce market that is years away from full maturity, say e-commerce and retailing analysts.