Skip to comments.Western Firms Caught Off Guard as Chinese Shoppers Flock to Web
Posted on 06/16/2015 12:30:35 AM PDT by Cronos
After enjoying nearly three decades of steady growth in its China business, Unilever PLC last year watched sales fall off a cliff.
The maker of Dove soap, Lux shampoo and Comfort fabric softener warned in October of a 20% drop in its third-quarter China sales. The next quarter, the company announced another 20% fall.
Unilever blamed a slowing Chinese economy and a pullback by shoppers. But a close look at retailing trends in China suggests Unilever was also feeling the pain of the migration of hundreds of millions of Chinese consumers to online shopping.
Unilever wasnt the only Western company overestimating brick-and-mortar. Swiss food company Nestlé SA has been burning instant coffee it couldnt sell in stores. It recently told The Wall Street Journal it failed to fathom the extent of how quickly and broadly retail was changing in China. Colgate-Palmolive Co. and Germanys Beiersdorf AG , which makes Nivea skin cream, have also cited problems with overstocking.
...The exodus from stores has disrupted retailers world-wide, with global e-commerce topping $1.3 trillion last year. But in China, the move online happened with greater force, partly because of the speed of smartphone penetration.
An estimated 461 million Chinese consumers, a third of the population, are now shopping online, up from 46 million in 2007, when e-commerce started gaining momentum. Chinas e-commerce market increased 49% last yearafter gains in the prior three years of 59%, 51% and 70%, respectively. In 2013, China overtook the U.S. as the worlds biggest e-commerce market, and last year the country rang up $453 billion in sales online, 11% of all retail sales.
Nearly half of Chinese consumers are already buying groceries online, compared with just a quarter of global consumers, according to Nielsen survey of 30,000 consumers. Last year, 42% of skin-care sales were online
(Excerpt) Read more at wsj.com ...
Now why wouldn’t these same companies with their Chinese brick and mortar sales being adversely impacted not start to market their products through on-line shopping sites extant in China?
Yeah, now that they have over four million new Social Security numbers to use.
They have access to more competitive products through the Net and might be buying in bulk.
So what are they buying online? A change in how does not necessarily translate to a change in what, just the distribution method. Are these companies misreading the tea leaves? I’m thinking massive counterfeiting enabled by the web
yeah. Wouldn’t that be the obvious thing to do? internet shopping has been around a while guys. Wake up.
My bet is those are a closely guarded asset of the PLA, not to be used for anything as trivial as credit card fraud.
Been there. Done that.
E.g., my favorite brand of shampoo, which costs $11 at Whole Paycheck but is only $4 online (plus shipping, ugh!). So, what to do? Obviously, buy several years' supply, hitting the free-shipping threshold and then some, and evading the sales tax for good measure!
Out of the shampoo market until the Cruz Administration!
Perhaps, except for highly favored Politburo members, apparatchiks, billionaires, wives, adult children, PLA, PLAN and PLAAF senior officers and hangers on.
They are doing so, but it takes time and money to create the software and infrastructure to do mass retail on the Internet — and it is quite another and harder thing to do it profitably. Meanwhile, the routine demands of investment and management of bricks and mortar stores must be attended to.
Making deliveries must be a b*tch; I DON’T envy those poor Chinese drivers for UPS/Fedex.
Uber needs to hurry to China (if they are not already there).
“Im thinking massive counterfeiting enabled by the web.”
Yep. I made the mistake of buying “Apple” earbuds off the net. My kids broke the originals in three months. The ones I got off the net (from Hong Kong) lasted three weeks.
The Panasonics (RadioShack!) they have now are over a year old now!
On the Internet and commerce, we have around 100 million American adults out of work. Migrant workers from around the world have been bringing word of impending world slavery and possible genocide for over a decade. We simply can’t buy as much as before. Some people in many parts of the world are sharing knowledge and collaborating on small design projects to try to become more self-sufficient and help each other with everything from radios to tractors. Anti-competition plutocrats and the over-regulating governments owned by them have failed us.
Sorry, I wasn’t very clear with the first reply. Chinese consumers probably have access to more competitive products through the Net than older established companies can afford. And some of them might be buying in bulk.
But on second thought, I remember working in retail for others. It’s not necessarily the producers of those products who are not competitive. It’s more likely the local retail stores marking things up too much. The old key-stoning (100% markup) by local merchants is becoming a thing of the past.
Off topic, but it's probably appropriate to burn instant coffee. Personal bias..
Who are their suppliers....is there a Chinese Amazon?
Is there a chinese fedex?
Using American online retailers to buy products in their country. A bit or irony.
You need to get more shampoo as Cruz has shot his wad on this election. Cruz has just shown himself to be another D.C. hack (I’ll take your money for my vote) insider.
The web is where smart people make money.
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