E-commerce on cusp of transition from scale to quality

China's e-commerce sector, which is entering a stage of moderate expansion, is undergoing a transformation away from scale to quality that will help brands rely on sustainable growth, a senior industry expert said.

"The Chinese e-commerce evolution can be regarded as a miracle in the history of business," said Qiu Wenbin, chairman and chief executive officer of Baozun Inc, a Shanghai-based provider of brand ecommerce services.

"In the past two decades, the sector experienced robust development, and many fundamental changes in business have taken place. For brands, China's e-commerce market will continue to play an irreplaceable and important role," the top executive of the Nasdaq- and Hong Kong-listed company said.

Currently, as the industry witnesses moderate growth, brands have earned a precious opportunity to carefully plan their business strategies and consolidate their quality push.

"Now, brands can lay emphasis on many things that they previously in their rapidly growing stage did not have enough time to do, including building up an integrated ecosystem and making long-term supply chain reforms. This way, their e-commerce businesses can be of higher quality, more efficient and more innovative. These are the future trends we have observed," Qiu said.

China remains the world's largest online retail market.

Data from the Ministry of Commerce showed that in 2023, China's online retail sales totaled 15.42 trillion yuan ($2.1 trillion), 11 percent more than the year before and ranking first among the world's online retail markets for 11 consecutive years.

Meanwhile, physical online retail sales took up 27.6 percent of total retail sales of consumer goods, a record high.

Green, healthy, smart, and homegrown products are gaining in popularity, with sales of domestic products taking up more than 65 percent of the total, the ministry said.

"China's e-commerce market is poised for a bright future in 2024," Qiu said.

In the coming years, he said, growth opportunities for retail brands will come from optimization of channel layouts, online-offline integration and supply chain innovations, as well as coordinated work with all business partners across the value chain.

"In the past, brands used to rely on one or two online marketplaces to achieve high-performance growth. However, in 2023, as channels became more isolated, brands shifted to some emerging interest-based platforms, which helped lift their revenues to some extent and won more target audiences," he said.

To integrate the upstream and downstream supply chain, Qiu said that front-end sales data will help brands make better decisions on their back-end production, if their operations are nimble and they adjust to customer requirements quickly.

As a key player in China's e-commerce industry, Baozun said it has strong technology solutions and operational capabilities.

To seek sustainable growth and better enable brand partners, Baozun completed the acquisition of GAP Shanghai last year and upgraded into three major business lines — Baozun E-Commerce, Baozun Brand Management and Baozun International.

"Since our founding in 2007, Baozun has been constantly evolving on its own. The biggest change is that Baozun now not only offers e-commerce services, but is also building its own brand," Qiu noted.

Take Baozun's revamp efforts of GAP Shanghai, for instance. Since the takeover, GAP China has been seeing increased brand marketing and visibility thanks to new product offerings and new store openings as well as the upgraded digitalization empowered by Baozun.

"Our strategic transformation is progressing smoothly and we are full of confidence for future development," he said.

Baozun will continue to help brands enhance their omnichannel commerce and empower their business decisions by deploying its 17-year expertise in brand e-commerce services and technological prowess, he said.

A recent report from iResearch Consulting Group, a Chinese market research firm, showed that brands need more refined operations given the dilemma of peak traffic and less incremental growth of online channels.

The good news is that livestreaming e-commerce is injecting new vitality into the industry. With strong interactivity and infectiousness, it had grown at a compound annual growth rate of 182 percent between 2017 and 2022, the report said.