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Despite the slowdown in the economy, Chinese consumers are not cutting back online spending. This could indicate a strong second half for e-commerce companies in the world's second-largest economy, an analyst said.
The story back. The annual festival of 618 shops
JD.com
(ticker: JD) finished it is not long ago. The event, which runs from June 1 to June 18, is one of the largest online purchases in China, as Alibaba's sale of singles in November. Transactions made on JD.com during the 18 days of the festival set a record $ 29.2 billion, up 27% from the previous year.
rivals
Ali Baba
(Baba) and
Pinduoduo
(DPs) had their own promotional campaigns and sales events around the same time. according to JP Morgan The volume of gross merchandise of Alibaba Tmall is estimated to have increased by 38.5% year-on-year, while that of Pinduoduo has grown by 300%.
What's up. KeyBanc Capital Markets analyst Hans Chung gave another affirmative vote to Chinese e-commerce in a Tuesday note. Although online sales have been weaker than expected since the events of June, Chung thinks that this is due to seasonality rather than weakening fundamentals. It expects solid growth in the second half of most e-commerce companies in China.
Moving forward. E-commerce needs to be monitored in two ways. One of these is the increased purchasing power of consumers in lower-tier Chinese cities, which has not been fully integrated, as e-commerce companies have focused on larger markets, such as than Beijing and Shanghai. Half of Alibaba's recent customers in Tmall were located in smaller cities. And its flash sales network, Juhuasuan, which targets lower-ranked and budget-sensitive customers, has added more than 300 million customers.
Advertising campaign channels, such as live streaming and short videos of popular online personalities, are another key trend in e-commerce. "We believe content-based e-commerce has been a growth driver for the industry … resulting in more impulse buying and higher conversion rates," wrote Chung.
On Taobao, for example, out of 5 customers who click to view the landing page of a streaming product, 1 ends up buying: a conversion rate of 20%. For users who view a product page via short video platforms, the rate is between 1 and 5. Taobao's more traditional traffic channels, such as online search, display a typical conversion rate between 1 and 2 digits
Write to Evie Liu at [email protected]
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