In the past year, what has driven the growth of the e-commerce market?

Comprehensive e-commerce platforms continue to be on the front line. Taobao and Tmall have introduced free New Year goods and red envelope subsidies in addition to mainstream promotion policies. Jingdong, which is the main logistics brand, resumed normal services on the fourth day of the Lunar New Year. the way. Major live broadcast platforms have also joined this year’s battle. Douyin’s activity time covers the entire January, and the “front” of Kuaishou has stretched to February and has given out billions of cash and tens of billions of traffic as incentives.

Different from previous years, the e-commerce market during the Spring Festival this year has undertaken the strong growth of the past year. In 2020, the new crown epidemic has affected out-of-home consumption, and the development of FMCG online and offline shows a completely opposite trend. In the first half of the year, the monthly sales growth rate of online channels that demonstrated the ability to resist risks exceeded 25% year-on-year. Although the growth rate fell slightly in the second half of the year, it still far exceeded the negative growth of offline channels.

According to Nielsen IQ’s research, 65% of the respondents said that the frequency of online shopping has increased after the epidemic. During this period, e-commerce has become the most common purchase channel for consumers with a penetration rate of 45%, surpassing hypermarkets, small supermarkets and convenience stores.

In the recently released “Decoding the 2020 E-commerce Market Growth Engine” report, Nielsen IQ summarized the four main engines driving the continued growth of the e-commerce market in 2020: crowd expansion, consumption boost, diversified scenarios and demand segmentation.

Among them, the expansion of the population represents the increase of new users brought by the epidemic, and the promotion of consumption, the diversification of scenes and the segmentation of demand have promoted the vitality of the stock market. Under the combined forces of many factors, the focus of e-commerce platforms has gradually shifted from seeking new users to activating existing users, and consumer brands have seen many segmented needs stimulated by consumers.

New people and new identities
The epidemic’s restrictions on consumption scenarios have forced a considerable number of consumers to shift their consumption behavior to online channels, and maintain this habit until the epidemic, forming an increase in the e-commerce market. Among them, “silver-haired people” over 50 are the main force of new users. In addition to the stimulus of emergencies, this is also closely related to the general trend of changes in the structure of netizens. According to data from the China Internet Network Information Center (CNNIC), the proportion of netizens over the age of 50 has increased from 16.9% in March 2020 to 26.3% in December 2020, surpassing other age groups.

These trendy “silver-haired people” have spending power and leisure time, and maintain a thrifty and pragmatic lifestyle. Therefore, they tend to buy practical products such as household cleaning products, packaged food, and fresh food online. Promotional information, including discounts, is also more sensitive. At the same time, convenient services such as door-to-door delivery alleviate the physical burden of middle-aged and elderly people.

The Internet not only eliminates generations, but also eliminates the information gap between cities. In the past, users in lower-tier cities could not quickly enjoy brands and products from offline channels in first-tier cities, but now they can get them instantly through e-commerce. This has allowed the Internet penetration rate in the sinking market to maintain rapid growth, while users in lower-tier cities and first-tier cities have little difference in their preferences for online shopping categories.

At the same time, as aborigines of the Internet, users born in the 1990s account for about 40% of the total Internet users, and they have always been the backbone of the e-commerce market. As these users enter the society and start a family, the transformation of social identities brings changes in lifestyles, which in turn drives the increase in the penetration rate of more categories of e-commerce. In addition to the personal care products and clothes/accessories that have always been used, the proportion of fresh products and maternal and child products in the shopping carts of young users has also increased.

In modern society, young consumers have a diversified and personalized lifestyle that is completely different from their elders in their growth and living environment, leading the trend of the mass consumer market. The popularity of niche consumer labels such as the home economy, single economy, and trend economy has enabled a number of new consumer brands to find market entry points for entrepreneurship, and also guided traditional consumer brands to upgrade accordingly.

Retain old users with refined operations
In 2020, the e-commerce market has gained many new users due to the epidemic, and as the proportion of online shopping users in all netizens is approaching the upper limit, the flow of e-commerce platforms is gradually saturated. The emergence of more new channels and new scenarios has reduced the loyalty of users to a single e-commerce platform and has higher requirements for consumer experience. Correspondingly, the cost of e-commerce platforms to obtain traffic has risen.

“Under this situation, the operation of e-commerce platforms is no longer a single model.” Yang Ying, vice president of Nielsen IQ China, told CBN Magazine that e-commerce platforms are beginning to consider how to improve consumer experience and participation Degree, in different social scenarios, with various forms of content such as graphics, short videos, and live broadcasts. “The ultimate goal of this is to increase the duration and frequency of users’ use, as well as their stickiness to the platform.”

Before Double 11 in 2020, Taobao has successively completed the revision of its homepage, allowing content forms such as graphics, short videos, and live broadcasts to enter the homepage. Its weapon at the content level is also a live broadcast e-commerce company that started in 2015 and became the outlet of various platforms in 2020. The content represented by live broadcast e-commerce expands the consumption scene to a new form, increases the touch points that stimulate shopping, and then gradually penetrates into the daily life of consumers.

According to data released by Nielsen IQ, 17% of consumers have watched and purchased live broadcasts, and 40% of users said that they will continue to increase live broadcast purchases in the future. Consumers are favored by categories that have a high penetration rate of e-commerce and are prone to impulse consumption, such as apparel, shoes and hats, casual snacks, and beauty care.

2020 online and omni-channel category sales growth chart (January to September)

Data source: Nielsen Retail Research

Starting from the quarantine in early 2020 that led to a sharp increase in demand, emerging online channels such as community group buying and O2O have rapidly emerged and expanded with the help of private domain traffic operations. Although there are certain controversies in the innovation of business models, it is undeniable that these new channels give users a variety of shopping choices and a different consumption experience.

“Scenario diversification is driven by more and more subdivided social circles, and the power of social sharing has become more and more influential.” Yang Ying said. While online scenes emerge endlessly, the meaning of offline channels has been discovered again in practice. Plant grass online, experience offline, and return to online sharing. The multi-channel integrated social gameplay allows different platforms to play their respective values ​​and achieve the effect of 1+1>2.

However, compared to complex gameplay, direct discounts are obviously a relatively quick consumption boost. In 2019, Pinduoduo took the lead in calling out “10 billion subsidies”, and e-commerce giants such as JD.com and Taobao followed suit. Vertical channels such as Ele.me and Fliggy will follow this simple and rude subsidy magic. , 618, Black Friday and other fixed-term preferential festivals have verified the attractiveness of the “festival” methodology to consumers. Subsidy policies and promotional festivals on e-commerce platforms have subsequently become more normalized and simplified.

A special situation in 2020 is that the operation strategy of the e-commerce platform is further superimposed with external force. In order to stimulate consumption and boost market confidence, local governments have jointly launched shopping festivals and issued shopping vouchers with major e-commerce platforms many times last year. For example, the “Five-five Shopping Festival” led by the Shanghai Municipal Government has united e-commerce companies such as Alibaba, Pinduoduo, Suning Tesco, Meituan Dianping, Dingdong Maicai, etc. 24 hours after its launch on May 4, 2020, The total consumption payment in Shanghai reached 15.68 billion yuan. The “National Online New Year’s Festival” in 2021 is actually guided by the Ministry of Commerce, the State Administration of Market Supervision, and the Central Cyberspace Administration of China. It clearly proposes the use of “coupons, full discounts, spikes, and direct drops”. buckle”.

The potential behind segmented demand
Driven by new people, new identities, and new scenarios, consumer segmentation needs are constantly being stimulated and unearthed, driving the growth of online sales of emerging categories, and allowing traditional products to iterate new versions of functional segments.

On the one hand, the outbreak of diseases has prompted consumers to pay special attention to the health of themselves and their families, and their focus has expanded from ordinary diet to various health and cleaning products related to immunity, disinfection and hygiene. Nielsen IQ’s retail research data shows that online sales of dairy products, nutrition products and other food categories have increased. As of September 2020, online sales of ready-to-drink soy milk increased by 177% year-on-year, and vitamins increased by 40% year-on-year. In the non-food category, online sales of household cleaning products increased by 49.3% year-on-year, and laundry detergents increased by 16.9%.

“Health elements” are regarded as new growth points by keen consumer brands. Last summer, “zero sugar”, “zero card” and “zero fat” have almost become the must-have labels for many food and beverage brands in the season’s new products. Yang Ying observed that cleaning brands such as clothing disinfectant and alcohol disinfectant wipes have introduced single-piece or less than 60ml mini disposable alcohol and disinfectant in order to facilitate consumers to carry them with them. Even products that are not directly related to personal health are welcomed because of the addition of some functions, such as chopstick holders with killing functions.

On the other hand, some consumer products adapted to the home consumption scene have accelerated the online process. Due to active or passive dining at home, 76% of the respondents said they would use fresh ingredients for cooking, and 44% of the respondents chose to buy semi-finished processed foods and simply cook them at home. Therefore, the online sales of various packaged foods and condiments have grown rapidly. The online sales of instant noodles increased by 23% year-on-year, packaged rice increased by 53% year-on-year, soy sauce and oyster sauce increased by 63% year-on-year, online and omni-channel The growth rate is above the average.

In response to this phenomenon, fresh food e-commerce platforms, food brands and catering brands whose performance has been hit have developed semi-finished and clean dishes through cooperation or independent research and development. The technology of packaging food has improved under the pressure of demand. “For example, self-heating products heated by lime, ready-to-eat foods that are opened in aluminum vacuum packaging, and premium instant coffees that are ready-to-drink.” Yang Ying said.

However, after the epidemic prevention and control is stabilized, China’s consumption trend will also return to normal, and emergency consumption behavior will return to rationality. The growth rate of some emerging categories has gradually slowed down. As of the third quarter of 2020, the year-on-year growth rate of instant noodle online sales has slowed to 6.8%, and the growth rate of vitamins has dropped to 19.7%. When the short-term growth dividend slowly fades, the general trend of consumers focusing on health has come. Whether it can successfully retain new users and continue their temporarily changed consumption habits is the test that consumer brands are facing.