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Tag: Fung Global Retail & Technology

  • Cross-border eCommerce ‘set to skyrocket’ in China

    Cross-border eCommerce ‘set to skyrocket’ in China

    Cross-border eCommerce (CBEC) is set to skyrocket in China according to a new report from international think tank Fung Global Retail & Technology.

    To capitalise on this, international retailers need to complement their existing expansion strategy with online sales platforms, says Fung Global MD Deborah Weinswig.

    Cross-border eCommerce is the most efficient platform to reach increasingly affluent and sophisticated Chinese shoppers seeking products from overseas, says the report, The International Retailers’ Guide to Cross-Border E-Commerce in China.

    With Chinese authorities relaxing the rules, online purchases of overseas products are expected to increase to US$285 billion in value in 2018, up from US$136 billion last year.

    As well as authenticity being less of a concern, eCommerce purchases attract less taxes so are cheaper for consumers, writes Weinswig. As a result, it is projected that a quarter of the population will shop on foreign sites or through third parties in 2020, up from 15 per cent this year.

    “We expect CBEC will drive the next leg of eCommerce growth as Chinese eCommerce companies and international retailers launch globalised versions of their portals. By selling through CBEC, international retailers can reach Chinese shoppers regardless of whether or not they have a physical presence in China.”

    China is already the largest eCommerce market in the world, with the use of CBEC via such marketplaces as JD Worldwide and Tmall Global being attributed to the continuing rise of the upper middle class with its growing use of the internet and belief that international brands are of higher quality.

    Regulations formalised

    Most shoppers seek items related to wellbeing such as cosmetics and organic foods, expensive or hard to find domestically, says the report. Many foreign eCommerce companies have launched Chinese websites, and since late 2014 authorities have been formalising regulations including tax reforms and expediting customs clearances.

    Japanese companies in particular are targeting Chinese CBEC shoppers, using mobile apps such as Rakuten and China’s Wandou.

    Choosing the right platform is crucial, writes Weinswig. Options include…

    • Online marketplaces such as Alibaba’s Tmall Global, a third-party eCommerce platform that lets brands open a storefront. International distributors using this platform include Macy’s, Metro, Shiseido and Uniqlo.
    • Online direct sales such as Amazon.cn, Jumei Global Store, Kaola.com (for smaller brands) and Vipshop. Distributors buy from the retailers to resell to consumers.
    • Hybrid eCommerce platforms such as JD Worldwide that combine elements of an online marketplace and online direct sales. JD Worldwide partners include eBay, Lotte, Rakuten and Unilever.
    • Overseas shopping platforms.

    “To succeed in the Chinese market, international retailers are advised to have a strategic plan for CBEC that complements their China strategy,” writes Weinswig. “International retailers will need to decide which cross-border channels to sell on, driven by considerations of each platform’s targeted clientele and product category, costs, track record and suite of value-added services.”

    Fung Global Retail & Technology is based in Hong Kong, London and New York.

  • Introducing the tech-savvy Generation Z

    Introducing the tech-savvy Generation Z

    Meet Generation Z. The next big consumer retail power has grown up with social media and assuming instant access to almost all things digital, from music to video to information.

    They’re today’s image-savvy teens and tweens and they want it all – and they want it now as they acquire apparel, cosmetics and experiences.

    That’s the conclusion of a new report Gen Z: Get Ready for the Most Self-Conscious, Demanding Consumer Segment, from Fung Global Retail & Technology.

    “Retailers, restaurants and leisure companies will have to adapt to the wants and needs of Gen Zers, who have not all even been born yet and so possess substantial growth potential as a demographic group”, explains Deborah Weinswig, MD of the think tank.

    Born in 2001 and later, and the first generation to grow up “in public” online, Gen Zers attach great importance to their physical appearance. Their presence on social media also pressures them and those who support them to spend on travel and events, Weinswig writes, a phenomenon she dubs “the Instagram effect.”

    “The new technology products and services have broadened consumers’ range of choice and quickened the pace of life,” Weinswig observes. “It is hard not to see these creating a more demanding, image-conscious consumer.”

    Fung Global Retail & Technology estimates that consumers in the US spent $829.5 billion on Gen Zers last year, and that approximately $66 billion of that was spent on discretionary categories. Generation Z comprises 19 per cent of the US population, and will rise to 25 per cent in 2020. In the EU, the generation accounts for 16 per cent of the population, and is forecast to peak at 21 per cent in five years. Across Asia, that percentage is higher in most markets.

    The influence of technology on these consumers’ habits cannot be underestimated. The first members of Generation Z are only a few months older than the Apple iPod, which debuted in 2001. The generation is typified by three dominant characteristics related to its relationship with tech:

    • The importance of self-image, with their vanity influenced by social media, dating apps and video chat.
    • The demand for experiences, and a change in consumption habits shaped by booking and delivery apps as well as social media; and
    • The demand for immediacy, propelled by Amazon Prime Now, among other delivery apps.

    Social media and selfies have spurred Gen Zers to be more concerned with personal appearance than any other previous generations, boosting sales of cosmetics, skincare and hair products among boys and girls, the report notes. New brands are even emerging from social media stars such as Kylie Jenner from the US and British blogger Zoella.

    This generation’s habit of documenting interesting and fun experiences on social media means they are spending more on events, dining out and travel. Mobile connectivity makes it ever easier to book these activities, and in 2015 UK consumers increased their spending on recreational services by 15.9 per cent and their spending on cultural services by 6.7 per cent, while retail sales rose just 1.9 per cent. In the US, restaurant and hotel spending rose by 7.4 per cent and 7.3 per cent, respectively, in 2015, while retail sales rose just by 3.5 per cent.

    “While these figures reflect all consumer spending, not just Gen Z’s spending, we think that the forces driving leisure spending are likely to be stronger for Gen Z than they will be for older age groups,” Weinswig writes. “Gen Zers are, and will almost certainly continue to be, the heaviest users of technologies, including apps that allow users to find and book leisure services.”

    The only generation to grow up with the on-demand economy, Gen Zers likely will continue to be highly demanding consumers, whether they are requesting instant access to video, ride-hailing apps or delivery services.

    “Exposure to near-infinite choice and access to near-endless information makes this generation more demanding than any of its predecessors. As Generation Z matures, it will become more discerning, but its demanding nature is unlikely to be diluted,” Weinswig says. “We think brands and retailers will be the ones that need to change, because Generation Z looks unlikely to compromise on its high expectations.”

    Fung Global Retail & Technology is a think tank whose research team, based in New York, London and Hong Kong, follows emerging retail and tech trends, specialising in the ways retail and technology intersect, and in building collaborative communities.

    Led by Deborah Weinswig, a former Wall Street and retail tech analyst and startup advisor, the team publishes ongoing thematic and global market research on topics such as the Internet of Things, digital payments, omni-channel retail, luxury and fashion trends and disruptive technologies.

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