Europe Next Battleground for Chinese E-Commerce Giants
NUREMBERG, Germany – As Chinese e-commerce giants are well positioned in the area of m-commerce (online sales through mobile devices) market researcher GfK reports that they will turn to Europe for their next battleground. In particular as online sales continues to grow rapidly in the EU, but is still lagging behind global sales of technical consumer goods, including (electric) bikes and bike products.
Currently e-commerce accounts globally for approximately a third of the total sales value of technical consumer goods. Across 18 European countries, online sales shares are still below that mark at currently 25 percent but up from 21 percent in 2015, is reported by GfK.
Radical strategy change
An ever growing online sales results for the global bicycle sector in a radical strategy change. Companies are switching from a dealer to a consumers approach related to omni-channel distribution strategies.
According to the GfK report not only suppliers are radically changing their operations; the same goes for the retail sector across Europe. European e-commerce retailers have been able to steadily increase their shares over the past years. They have seen their online sales growing from 21 percent in 2015 to 25 percent in the first half of this year. At IFA 2018 which is ‘The Global Innovations Show’ held in Berlin, Germany from 31 August to 5 September, GfK will report more significant findings on the global technical consumer goods retail markets.
China driving global online sales
The market researcher concludes that on a regional level the Asian Pacific countries and foremost China are driving global online sales. “Chinese e-commerce retailers have enjoyed significant double-digit growth at nearly 23 percent in the first half of 2018. Online share of technical consumer goods sales in China have reached over 30 percent. Unlike the US and Europe, where internet penetration levels are at 80 percent or higher in most countries, China’s internet penetration is still low at 55 percent as much of its population is located rurally.”
“However, further investments into China’s infrastructure will set the ground for further growth of internet usage and thus online sales. As much as internet adoption in China is a great challenge, at the same time it reveals a huge growth potential for China’s e-commerce giants. China today already has the biggest internet community with 773 million internet users in a total population of 1.4 billion – growing year by year. This growth will open doors to new money for Chinese online retailers – increasing their global power for investments and expansion into the European market.”
European e-commerce market accelerates
Furthermore, GfK reports “In Europe, at least for the start, Chinese e-commerce giants are expected to be focusing on product categories where other competitors have left space or where product categories are lagging behind for online sales. Today’s consumers in the 18 observed European countries are feeling most comfortable buying IT products online (online share: 38 percent) over other product types. However, less popular online category sectors such as Telecommunication (online share: 21 percent), Consumer Electronics (online share: 22 percent) and Small Domestic Appliances (online share: 28 percent) are again showing high levels of online growth in the first half year 2018 – making these the product sectors to watch for increasing levels of online sales activities.”
Spurring further growth
GfK also points out that “For a growing number of tech-savvy, time-poor consumers, shopping from a smartphone or tablet is becoming an increasingly popular way to buy online. For more than every second technical durable goods shopper in 2018, their mobile device is becoming their most important shopping tool with a significant upward trend (2015: 40 percent). Again, the Chinese e-commerce giants are well positioned in the area of m-commerce through many years of experience in their home markets. Buying mobile is already mainstream in China, and for more than 80 percent of all technical durable goods shoppers in China, their smartphone or tablet is the preferred shopping device.”
Importance of physical stores unchanged
The GfK report also states that “Strong alliances amongst key players in Europe will be able to address these new challenges in the retail sector. Partnering retailers will take competitive advantage of their unique omni-channel selling propositions – allowing them to bring the best on- and offline shopping experience to their customers through new technologies, joint innovation activities, and co-investments into big data analytics. As much as the ongoing changes in Europe can be seen as most disruptive for technical consumer goods retailing, ‘traditional’ retail has not lost its attraction: The percentage of consumers who believe that physical stores today are less important than a few years ago has not changed over time (2015: 43 percent vs 2018: 43 percent).”