Mobile accounted for 25% of Ulta's e-commerce revenue during Q2.
Maimaibao projects its sales will reach $327 million in 2013.
More than 200 million Chinese have moved from the countryside to cities in the last three decades, taking factory, construction and service jobs. They often don’t have a computer, but most have at least rudimentary mobile phones, and one Chinese retailer is targeting this audience by selling exclusively through a mobile commerce site.
Wuxi Maimaibao Information Technology Co. Ltd., founded in 2006, says its sales now exceed 100 million yuan ($16.3 million) per month and estimates its annual sales will reach 2 billion yuan ($327 million) this year, 100% growth from 1 billion yuan ($163 million) in 2012. Its 2012 mobile sales would have placed it No. 12 in Internet Retailer’s Mobile 400, a ranking of retail, travel and ticket companies by their mobile sales. Those 2012 sales represented tenfold growth from 100 million yuan ($16.3 million) in sales in 2010, just two years earlier.
Maimaibao doesn’t operate a site designed for personal computers, instead selling products mainly through its mobile site, mmb.cn. More than 40 million Chinese consumers have registered with the site and unique visitors exceed 8 million per day, the company says. The average ticket price ranges from $30 to $40.
The company sells 100,000 products in 20 categories, such as clothing, bags and electronics to farmers and migrant workers through their handsets. Products are priced to be affordable for workers with low incomes. For example, most T-shirts are priced at around 30 yuan ($4.90).
Maimaibao targets its service at the more than 230 million migrant workers in China’s cities and the 350 million consumers in the countryside and small towns. “Before we launched our service, they didn’t have choices. Maimaibao is providing a fair shopping opportunity to people who really need them,” Xiaowei Zhang, founder and CEO, tells Internet Retailer.
Zhang says the consumers he targets typically earn 2000 yuan ($327) to 3000 yuan ($490) per month and spend 900 yuan per month on such items as clothing, bags or shoes. “Unlike the middle class, migrant workers have no heavy burdens, such as mortgages for a house and cars, so their disposable income level may higher than those who reside in large cities, even though the income level of laborers is lower. It’s a hidden gem and a trillion yuan (hundreds billions of dollars) market.”
These laborers and farmers often know how to use the Internet, but likely don’t have a computer at home or ready access to the Internet, Zhang says. “The mobile phone is the only tool they have for shopping and can be easily access all the time,” he says.
But they don’t necessarily have smartphones designed to display rich images and video, nor the money to afford the wireless data plans required to download lots of data. That’s why Maimaibao uses a technology largely abandoned in the U.S. and other advanced countries, WAP (Wireless Application Protocol), that works with 2G networks that transmit data much slower than newer 3G and 4G networks. The retailer’s mobile site relies mainly on text and simple images that a feature phone—the predecessor to the smartphone—can access through a relatively slow 2G connection.
About half of the retailer's traffic comes from feature phones and about half from smartphones, all accessing the WAP site. Seeing that many of its customers are upgrading to smartphones, Maimaibao last year introduced an Android application based on the mobile software developed by Google Inc. 1 million consumers have downloaded the app. In addition, the retailer plans to develop a conventional web site as inexpensive “net book” laptops and tablets are now priced low enough to be within the reach of many laborers.
Cash on delivery—a common way to pay for online orders in China—is the predominant way Maimaibao customers pay. Only 2% pay for their orders online, Zhang says. The e-retailer works with China Post to deliver orders, enabling it to serve consumers in rural areas. Customers have up to 30 days to return items for refunds.
About half of the company’s 2,000 employees work in its call center, and they play an important role in helping customers buy, Maimaibao executives say. When a consumer clicks to buy an item, an agent sends a text response. If the consumer is already a registered Maimaibao customer, the agent confirms the shipping address and the order. If the consumer is not registered—and that’s the case with 65% of orders—the agent can obtain the needed information to fulfill the order.
To know its customers better, Maimaibao conducts research into the behaviors of its target customers. Moreover, managers must travel to rural areas to understand the real life and potential needs of farmers and laborers. Furthermore, Maimaibao emphasizes data analysis and customizing pages for customers based on location. Its merchandising system can automatically analyze a user’s behavior on the site and present products and services accordingly.
Zhang says only 2% of orders paid through online because most of its users don’t accustom to online payment. In order to make customers more comfortable to place the order, Maimaibao allows them to pay by delivering and free to return in 30 days if they change mind after purchasing.
The retailer sells many products under its own label, including 50% of the apparel it sells. Zhang says most of his customers are not brand-conscious, and selling under the Maimaibao label enhances profitability.
More information on the top online retailers in China is available in Internet Retailer’s Asia 500.