1. Ecommerce Disparities
Global Marketing
12/7/15
Akilah Daniels
Feng Liu
Tao Chengyi

2. Agenda
• Purpose
• Ecommerce Defined
• Ecommerce Footprint
• Ecommerce in US
• Ecommerce in China
• Top Ecommerce Sites Review
• Amazon Advantage
• Amazon Disadvantage
• Chinese Market Importance
• Solutions
• Ecommerce Future

3. Purpose
Some companies have has success in certain markets, but that success has not
translated in the Chinese market.
• Explore why one company is successful and why they are not as successful in
the Chinese market
• What are some key factors that help an ecommerce company flourish in China.
– Define the ecommerce market for the US vs. China
– Evaluate top ecommerce sites
– Understand Amazon’s advantages
– Understand Amazon’s disadvantages
– Understand China’s impact on ecommerce
– Provide solutions

4. Understand Ecommerce
Activities that relate to the buying and selling of goods and services over the
Internet
- Merriam -Webster Dictionary
Source: http://beta.merriam-webster.com/dictionary/e-commerce

5. Ecommerce Terms
• B2C (Business to Customer) - Business or transactions conducted directly
between a company and consumers who are the end-users of its products
or services. (23)
• B2B (Business To Business) - A type of commerce transaction that exists
between businesses, such as those involving a manufacturer and
wholesaler, or a wholesaler and a retailer.
Source: http://www.investopedia.com/

6. Why E-commerce ?
• To achieve their expectation with a lower price
• Convenience/fast delivery

7. E-Commerce Footprint
• Ecommerce makes a small percentage of the total amount of sales per year
• Growing each year
Source: http://www.marketingcharts.com/traditional/global-retail-and-e-commerce-sales-forecast-2013-2018-49733/attachment/emarketer-global-retail-and-ecommerce-sales-forecast-2013-2018-
jan2015/

8. Ecommerce Statistics
Source: http://www.statista.com/topics/871/online-shopping/
Ecommerce Statistics
E-commerce Worldwide
E-commerce Worldwide Values
B2C e-commerce sales worldwide $1,471bn
B2C e-commerce sales per digital buyer $2,466

9. Top Ecommerce Markets
Source: http://www.adweek.com/socialtimes/top-global-e-commerce-markets-and-trends-infographic/626303

10. World E-Commerce Data
Source: http://www.emarketer.com/Article/Worldwide-Ecommerce-Sales-Increase-Nearly-20-2014/1011039
• Asia- Pacific surpasses North America in sales shares
• Buyer penetration increase at a constant rate with a constant leader

11. United States
• Online Spending by Device
• PC: 72%
• Tablet: 13%
• Smartphone: 15%
• 191.1 million online US buyers
• 28% of small businesses are selling their products online.
• 57.4% US shop online
• 98.9 million Americans have purchased, at least once, on a mobile device.
• US shoppers place a strong value on the ability to check for product availability at
brick-and-mortar stores near them.
U.S. E-commerce Values
B2C e-commerce volume in the U.S. $703.28bn
B2B e-commerce volume in the U.S. $5,294.9bn
Retail e-commerce sales in the U.S. $237bn
Mobile Retail Values
Mobile retail commerce revenue in the U.S. $12bn
Number of mobile buyers in the U.S. 121.7m
B2C m-commerce sales in the U.S. $58.5bn
Source: http://www.remarkety.com/global-ecommerce-sales-trends-and-statistics-2015#C

12. China
• Population contribute to their top
slot
• 600 million internet users
• Shopping is the fastest growing
online activity in China
Source: http://projects.wsj.com/alibaba/
Source: http://www.statista.com/topics/1007/e-commerce-in-china/
General Overview Values
B2C e-commerce sales worldwide $1,471 B
Number of online shoppers in China $361.42 M
Forecasted revenue of e-commerce in China by 2015 $21.95 B
Projected % of global B2C e-commerce sales of China by 2016 23.4%
China's share of B2C e-commerce sales in the Asia Pacific Region 54.73%

13. US vs. China
Source: http://www.adweek.com/socialtimes/top-global-e-commerce-markets-and-trends-infographic/626303

14. Top Company Global Market Reach
Source: http://www.statista.com/statistics/274709/worldwide-audience-reach-of-online-retail-and-auction-sites/

15. Amazon
Founded Founded in 1994 by Jeff Bezos
About First to sell products over internet
First affiliate marketing program - 40% of sales
Differentiation Customer reviews
Global Net Revenue20 $88.99 Billion
Users20 270 million
Employees 20 154,100
Market Cap 17 $315.60 Billion
17Source: http://www.marketwatch.com/investing/stock/amzn/profile
20Source: http://www.statista.com/topics/846/amazon/
Affiliates
Amazon sites

16. Ebay
Founded Online in September 1995
About13 Grown by trial and error.
Differentiation
Trust between strangers
Source of amusement
Global Net Revenue21 $17.9 billion
Users 135 million users worldwide
Employees18 36,500
Market Cap18 $34.94 billion
21Source: http://www.marketwatch.com/investing/stock/ebay
18Source: http://www.statista.com/topics/2181/ebay/
13Source:
Affiliates
Ebay sites

17. Alibaba
Founded April 4, 1999
About Alibaba is the leading international Chinese Internet
company.
24/7 meeting platform for suppliers and buyers
around the world.
Differentiation Pairs buyer with sellers where buyers are free and
sellers pay
Global Net Revenue19 $12.30 billion
Users 4.4 million users
Employees19 34, 985
Market Cap19 204.46 billion
22Source: http://www.statista.com/topics/2187/alibaba-group/
19Source: http://www.marketwatch.com/investing/Stock/BABA/profile?CountryCode=US
Affiliates?
Affiliates
Taobao
Taobao Product Listing
Taobao Homepage
Tmall
Tmall Product Detail

18. JD.com
Founded Online in September 1995
About (12) Largest online direct sales company in China
Differentiation Strong supplier relationships
Global Net Revenue17 18.64 billion
User 47.4 million active customer accounts (2013)
Employees 68,109
Market Capitalization17 40.86 billion
Source: http://www.marketwatch.com/investing/stock/ebay 21
Source: http://www.marketwatch.com/investing/stock/jd/profile 17
12Source:
Affiliates
360 Buy Corp

19. Amazon Advantage
How Amazon Earns Money in US
• The main income is earned through:
– Fulfillment by Amazon products
• Annual fee (customers)
– RBC Mark Mahaney estimated that Prime membership was around $40 to
$50 million.
– In 2016 it will be $85 million
• Order processing fee
• Package fee
• Weighing fee
– Storage Fees

20. Amazon Advantage
How Amazon Earns Money in US
– Prices differ based on volume and season
– Prices differ based on the time stored
– Storage fee will increase at end of each year during Thanks giving or Christmas
Time Based Fees:
Season/Volume:

21. Amazon Advantage
Amazon loses money on the cost of shipping
Amazon Shipping Costs

22. Amazon Advantage
How Amazon Achieves 2 Day Shipping
• 173 large distribution center world wide
• In 2012, Amazon bought Kiva systems which product intelligence robots
• Amazon owns more than 30k kiva intelligence robots
• Called Amazon Robotics

23. Amazon Advantage
Adaptation Strategy in China
• Overseas online shopping platforms
• Used the short and easy to remember domain name Z.cn
• Offer more categories and products to Chinese market in home page
• Free shipping with a certain purchase amount
• No annual fee
• Fast delivery usually 1-2 days to main cities

24. Amazon Advantage
Amazon’s Advantages in China
• Authorized products
– No counterfeit items if sold by Amazon
• Experienced in logistical industry
• Good supply chain management
• Strong brand reputation and awareness

25. Amazon Disadvantage
Amazon Marketing Problem in China
• Too many competitors in China
– Taobao, JD.com, and other strong E-business companies
• Lack of government support
• Limit products categories to satisfy all customer needs
• Less promotions in market
• Free and fast shipping is not unique
• Shipping cost is low in China
• Price is not competitive

26. ￥1700 RMB
$270 Dollar
Taobao
China
$299 Dollars
Amazon
US
￥2680 RMB
$425 Dollars
Amazon
China
Amazon Disadvantage
Amazon Price Difference
Bose ® Quiet Comfort ®
That is a difference of $155!

27. Amazon Disadvantage
Why Prices Are High in China
• The same product has different price in the world (Price Adaptation)
• Taobao sellers usually buy products at a lower price direct
• Sell it to the Chinese market at a discount
• Avoids taxes to Chinese government (Tax?
• Amazon does not have the same relationship
• Forced to list products the same price as the official price
• Additional government taxes and fees are imposed on product
Confirm

28. Amazon Disadvantage
Additional Taxes and Fees
• Duty is around 10%
• Person purchase tax 17%
• Retail rent fee and other promotional fees
• Products sell more than 50% of original US price in China
• Amazon is forced to sell products the same price as the official list price

29. Solutions
Possible Solutions to Increase Amazon Competitiveness
• More freedom to third party to sell products on Amazon
• Build better relationship to hot products (like Xiaomi phone)
• Increase the global shopping channel to increase products categories
– need better handle and public relationship to custom
• More holiday promotions
– Single day
– New year

30. Chinese Market Importance
• The peak shopping day:
– Single day (China) VS Black Friday (US)
• Taobao sales was $14.25 Billion on Single’s Day
2015
• Top 100 US retails sales was $4.47 Billion in Black
Friday
– Retail store sales was $12.1 Billion on
Thursday and Friday 2015
• Chinese is a huge potential market, and the number
of E-commercial customers are still increasing
Source: http://www.reuters.com/article/2015/11/28/us-usa-holidayshopping-idUSKBN0TH0R020151128
Single’s Day

31. Solutions
How to Increase Competitiveness in China
• A vast selection of products at competitive prices
• High-quality international brands and exclusive products
• Fast delivery, convenient service

32. Ecommerce Future
Future Vision of E-marketing
• Going mobile all the way
– Apps
• Less good moves in the supply chain
• Central price website
• Create more base stations
Source: http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/

33. Questions?

34. Sources

35. Sources:
12. 12
13. 13
14. http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-
marketing-statistics/
15. http://www.reuters.com/article/2015/11/28/us-usa-holidayshopping-
idUSKBN0TH0R020151128
16. http://www.marketwatch.com/investing/stock/amzn/profile
17. http://www.marketwatch.com/investing/stock/jd/profile
18. http://www.statista.com/topics/2181/ebay/
19. http://www.marketwatch.com/investing/Stock/BABA/profile?CountryCode=US
20. http://www.statista.com/topics/846/amazon/
21. http://www.marketwatch.com/investing/stock/ebay
22. http://www.statista.com/topics/2187/alibaba-group/
23. http://beta.merriam-webster.com/dictionary/e-commerce

36. Sources:
1. http://www.miva.com/blog/the-history-of-ecommerce-how-did-it-all-begin
2. http://www.ecommerce-land.com/history_ecommerce.html
3. Source: http://www.statista.com/topics/871/online-shopping/
4. Source: http://www.statista.com/topics/1007/e-commerce-in-china/
5. Source: http://www.adweek.com/socialtimes/top-global-e-commerce-markets-and-trends-
infographic/626303
6. Source: http://projects.wsj.com/alibaba/
7. Source: http://www.adweek.com/socialtimes/top-global-e-commerce-markets-and-trends-
infographic/626303
8. Source: http://www.statista.com/statistics/274709/worldwide-audience-reach-of-online-retail-
and-auction-sites/
9. http://www.remarkety.com/global-ecommerce-sales-trends-and-statistics-2015#C
10. http://www.emarketer.com/Article/Worldwide-Ecommerce-Sales-Increase-Nearly-20-
2014/1011039
11. Source: http://www.reuters.com/article/2015/11/28/us-usa-holidayshopping-
idUSKBN0TH0R020151128