4. Analysing successful factors of grocery home shopping in UK

After understanding what current state and development of China's e-commerce market. In order to acknowledge what factors adverse China's grocery online shopping, it is important that analysing successful factors of grocery home shopping with typical grocery retailers in UK. With comparison between UK and China, I will easily find the difference and problems. And before that, the following intresting vedio can show how Chinese people shopping in the China's supermarket or retailer and what is local Chinese supermarket look like?

(Chinese supermarket in China)

In UK, it is common phenomenon that consumers buying food in online grocery like Tesco famous grocery in daily life. UK Market Synopsis has been estimated (2009) that the online food market was worth £3.2 billion in 2008, and is growing by an average 4% every year.  Let's see the following BBC news reports vedio to understand current grocery online shopping market in UK. 

Tesco: Tesco is a famous food retail in UK and it also has own online retail market (Tesco.com， 2015). And Tesco.com was just established in 2000 with high speed to develop. “Company’s annual online sales exceeded $5 billion and Tesco.com is recognized as the world’s largest online grocery, with a customer base of little less than 1 million and more than 250,000 orders completed a week.”(Sumyla, 2011) The main reason is that Tesco provides a mature online grocery platform to bring lots of benefits for customer involved saving time, money and energy, due to it can reduce the transportation costs and staffs fee.

ASDA: it was founded in 1999, also has online food stores. “ASDA owned by US corporation Wal-Mart since 1999, is the only supermarket with the potential to become a thorn in the side for Tesco. Wal-Mart is the biggest food chain in the world and has annual sales eight times bigger than Tesco’s” (Sumyla, 2011). Certainly, not just only Tesco and ASDA two online food retailers successfully developed, Sainsbury’s or Otto group has advanced achievement in the world as well.

What successful factors enable to promote its sales growth every year? There are two aspects one being ‘the value price’ which involve both lower price and the quality of product and the second being “The principle is really very simple - nobody will sell the equivalent product of the same quality for less money. And further, we guarantee that if a customer can buy the same item cheaper from a competitor, within a three mile radius of their Tesco store, we will refund twice the difference and drop our price accordingly.”  (Tesco.com, 2015a). And also Tesco.com (2015b) states that we work closely with our suppliers to ensure that products are always of the highest quality and that they are delivered to our stores in the best possible condition. That means online retailer not only provide the lower prices for products, but also the business must give a good quality to their customers at the same time. If a customer purchases a product with a discount online, but the product is in bad quality when they receive it making the consumer lose trust. And one more thing is worth mentioning that Tesco always treats customer with high loyalty. In my opinion, loyalty is most important part of customer service, as it is a key to maintain business development. Therefore, the lower price with high quality could be positive influencing customer intention to purchase food online.

The second point is well -customer services. Customer service could cover many areas. Different business strategies are able to improve capacity of customer services. “Last year we held 115 customer question times where we met nearly 9,000 customers. Talking to customers and finding out what they expect from Tesco is vital to the continued growth of the business.” (Tesco.com, 2015c). Regard to technology as aspect of customer services, it has an advanced information system like club card membership. “We now have in place highly sophisticated computer systems with which we are able to analysis the information we receive through Club card.”(Tesco.com, 2015d). “Everything we do is aimed at encouraging our customers, new and old, to stay with us and maintain their loyalty” (Tesco.com, 2015e). These business strategy will immensely improve customer services, due to Tesco takes the aim of client groups face to different kinds of level of customer.And the following video can show how the Tesco grocery online shopping operate their market and customer services.

(Tesco online shopping launch & introduction, Source: Youtube)

The above two points might strongly enhance the online business competitiveness. Providing lower prices with high quality to attract more customers which providing much more discount for their customer by cutting the labour cost and transport cost to make up loss of discount. Tesco capture an important point which customers want to use club card to help them reduce budget. Vijayasarathy and jones (2000) find that savings in transaction costs that lead to better deals on price can positively influence consumers’ attitudes on the intention to shop online. And offer club cards to enlarge membership at the same time let customers stay with their business for long time. And the important is that Tesco maintain friendly relationship with each level of age for customers which enlarge consumer scope. Furthermore, they have advanced computer system and management of network to promote them to analyse information from their customers'feedback.

Reference:

• Sumyla.G, 2011, Tesco Case-study. [Online] Available at: [http://www.slideshare.net/vinuthna25/tesco-casestudy ] [Accesses 1^st February].

• Tesco, 2015, Tesco PLC, [Online] Available at: [http://www.tesco.com/investorInformation/report97/review/page5.html] [Accesses 16^th February].

• Vijayasarathy and jones, 2000, SHopping orientations, product types and internet shopping intentions. [Online ] Avilable at: [ http://aws.iwi.uni-leipzig.de/em/fileadmin/user_upload/doc/Issues/Volume_13/Issue_01/V13I1_Shopping_Orientations__Product_Types_and_Internet_Shopping_Intentions.pdf] [Accesses 29th February]

• BBC news Online food shopping what is a 'dark' supermarket, 2014, [Video] Youtobe. 

• Tesco online shopping launch & introduction, 2013, [Video] Tesco malaysia, Youtobe

3. Analysing China’s E-commerce market from data 2 --- Alibaba group

The Alibaba group was established in 1999. It is one of the world's premier e-commerce brands and the number one online marketplace for global and domestic China trade. Alibaba group provide an efficient, trusted platform connecting small and medium-sized buyers and suppliers from around the world. “Today the company and its related companies operate leading wholesale and retail online marketplaces as well as Internet-based businesses offering advertising and marketing services, electronic payment, cloud-based computing and network services and mobile solutions, among others”. (Alibaba.com, 2015)

(80% of Chinese online shopping dominated by Alibaba. Source: Youtobe)

The Alibaba established the first singles’ globe shopping festival is on 11^th November 2009, which is similar with Black Friday. Whole of goods will be more than 50% discount in T-mall and Taobao on that day. From the statistics given in the graph it can be seen that the online spending of China’s e-shopping festival grew rapidly form 2011 to 2014.  

(Chinese retailers bombared by 'Singles Day' shoppers. Source: Youtobe)

Reference:

• Alibaba Group, 2015, Sustainability. [Online] Available at: <http://www.alibabagroup.com/en/about/sustainability> [Accessed 15^th November, 2015]

• 80% of Chinese online shopping dominated by Alibaba. 2014 [Video] China:CCTVnews. Youtobe.

•  Chinese retailers bombared by 'Singles Day' shoppers.2015[Video] Youtobe.

2: Analysing China’s E-commerce market from data

Before talking about what marjor factors influncing Chinese fresh food online shopping market. I am going to give some details about current statement of China's e-commerce as the background.  

As we know, China is not country which found E-commerce, and also the definition of e-commerce was accepted by Chinese people which later than other western countries and U.S. But in the following figures show a series of data about the development of e-commerce in China which is composed of three aspects: online buyers, online shoppers and retail e-commerce sales. These figures illustrated that the rate of growth of China’s e-commerce market is faster than western countries where e-commerce originated in the recent years. Internet World stats, 2010 notes that by the end of June, 2010, internet users in china reached 420 million, a 9.36% increase from the end of 2009 and the number of user is predicted to increase during the next decade. As result of the growing ability of internet access, increasing quantities of Chinese customers are willing to use the internet to purchase variety of goods from many countries through online retails.

Online buyers in China, 2010-2016 eMarketer.com

As the right picture demonstrates that online buyers (millions) from 2010 to 2016. Chinese people become more intresting and enjoying with online shopping. the number pf online buyers on the mianland will rise to nearly 424 million in 2016. Moreover, eMarketer forecasted there will 423.4 million people in China. The fast growth rate in China's B2C ecommerce sales will be able to take its market far ahead of other contries. And according to eMarketr's forecast period data,  China can lead the globlal ecommerce growing .

We can see from the left two figtures, the first one shows that retail e-commerce sales and growth since 2008 to 2006. Obviously, quantities of China sales is just 20 Billion USD, dramatically raised up around five hundred Billion USD within 6years which increase about 25 times equally. In 2009, China year – on year growth rate reached the peak point 105.2%.

In the second figure, China online shopper penetration increased gradually from 2009. And in 2015, it reached top around 51.8%. The number of china online shoppers has occupied a half quantities of China internet users. It seems to me that the number of internet users are proportional to online shoppers and online buyers, because network provides merchants a potential market to be exploited without limited and buyers could find anything they want to buy. “Many traditional retailers are developing E-commerce platforms that are driving B2C online retailing market growth and attracting more consumer interest in purchasing products online” (zhu,2013). Due to a huge potential business chance in B2C market, a large proportion of traditional retailers have changed over their retail shop into e-commerce market in order to attain more profit. Therefore they prefer to pay more attention and expenses to their retail online. “Online shoppers have a very usable website and launch 50 new stock keeping units (SKU) every day and refresh all their products on a three-day cycle, hence their inventory is always fresh and exciting, which helps to draw in more interest from potential buyers”(Radovic, 2014).  

From the above staitis, we could know online shopping market in China has adequate online users and online shoppers. That means that Chinese people are interesting and familiar with geting sources from internet. Therefore there are some other reasons lead to food online shopping become a barrier in China's e-commerce. Shopping online for Chinese, Alibaba group company is playing an important role in China's e-commerce market. So  it is essential stage that analysing Alibaba group development. In the next post I will give Alibaba group  in detail. 

Reference:

• eMarketer, 2016, An evolving online shopping marketplace in China, [Online] Available at: [http://www.emarketer.com/] [Accessed 16th February 2016].  

• Internet World, 2016, internet usage stats and population report, [Online] Available at: [http://www.internetworldstats.com/asia/cn.htm] [Accessed 13th February].  

• Radovic.A, 2014, E-commerce in china: Alibaba is just the beginning. [Online] Available at: [http://www.clickz.com/clickz/column/2373776/e-commerce-in-china-alibaba-is-just-the-beginning] [Accessed 13^th February].

• Weijing.zhu, 2013, China's luxury e-commerce trends, [Online] Avaibable at: [http://www.theworldofchinese.com/2013/07/chinas-luxury-e-commerce-trend/] [Accessed 20th February]

1.Fresh food is a big barrier in online shopping market in China

  (Chinese people buy fresh food in market. Source: TimeOut Beijing)

As the rapid growth of online population in china, B2C market has become most popular in China. Indeed, since economic reforms and improved policy in the late 1970s, the Chinese e-commerce has a breakthrough achievement over the past three decades. “Recent data reveal that China had 87.88 million users on the Internet compared to 74 million the previous year” (CNNIC, 2009). 

When I first come to United Kingdom, I think out a question that when you want to buy some fresh meat and vegetables for cooking a meal, but there is nothing meat or vegetables in your refrigerator, will you prefer using online food shopping to purchase fresh food you like, or to go a retail store like the nearest supermarket by foot for ten minutes? Which one would you like to choose? However, there is a strange phenomenon that most of people who lived in China are not willing to purchase fresh food online, so that less online food retailers would like to sell fresh food online. Even there have not online fresh food online shopping service in some areas in China. On the contrary of that, I found that people who lived in UK are able to purchase fresh food from several online food retailers. For example, Tesco, ASDA, and Sainsbury.  And their orders will be delivered in their home on time. 

I think the culture issue is the main factor of influncing Chinese online shopping behaviours. Raven (2007) pointed that China’s cultural preference for face to face business interactions as well as regulatory issues as factors that may inhibit the development of online shopping.

In order to acknowledge a deep understanding of China’s e-commerce market statement and Chinese customer online food shopping behaviours and intention. Therefore, in the following posts, I will research online articles and journals which relate to China's e-commerce market and Chinese customer online shopping adoption to think over what factors influencing current Chinese online shopping market, how to face and deal with these issues. 

References:

• CNNIC Statistical Survey, 2009, Number of Mobile Phone Internet Users. [Image online]. Available at: [http: //www.renesas.eu/edge_ol/global/09/index.jsp ] [Accessed 19^th February 2016].

• China Internet Network Information Centre, 2013, Number of Online Shoppers in China 2009-2015E (in Millions). [Image online] Available at: [http: //www.tmogroup.asia/for-luxury-e-commerce-matters-3-facts-about-china-e-commerce/] [Accessed 6^th April 2015].

• Raven, P.V., Huang, X. and Kim, B.B., 2007, E-Business in Developing Countries: A Comparison of China and India. [E-journal] Available through: Anglia Ruskin University library website< http://libweb.anglia.ac.uk > [Accessed 19^th February 2016]