Name: China Is at The Beginning of an E-Commerce Boom
Uploaded: 2017-12-05
Duration: 6 min 32 s
Description: It has more than 300 million middle-class consumers with rising disposable incomes.

One of the most exciting spaces in China tech at the moment, which is e- commerce, the future of shopping. And no better people to weigh in on this subject than Jonathan Wessel, Senior Director at McKinsey, who has been at the forefront of so much great research, insight and analysis about what's happening in the e- commerce space, in the Internet space. Jonathan, let's start with you. Can you give us a little bit of an overview of the landscape in e- commerce? Some of the metrics that you kind of use to talk to people about the size of what's happening here. Well sure, I mean it's easy to get started 730 million internet users, 40 % of global retail ecommerce. 11 X mobile payments versus the united states in china versus US. A third of the global unicorns so I mean whether we're talking about transactions, technology or money you know China really stands out and any in the technology broadly and specifically in retail and [ UNKNOWN ] Those are really amazing numbers each one of them. You have to kind of stop and get your head around. I mean to say 40 % of the global e- commerce market from a single country is quite a thing. How much longer can this continue with getting these incredible growth rates? Has it peaked or can it still run for many years? We're pretty bullish on that. I mean there's a couple of things, two things. First of all we are still in the great early days of the Chinese middle class income boom, so you know we've got a lot more. Lot more people getting a lot more rich over the next decade or two, which is great, and of course we've got all of the catch up to do on the industry side. I mean the top electronic retailers in China, the top 5 account for something like 20 % of market share whereas in the US the top 5 account for 70. It just shows you kind of how early and how fragmented most Chinese industries are. So it's both things, it's more demand Lots of it and more catch up and more efficiency on the supply side so the both of those things turned into lots of loss of opportunity. Let me ask you about this trend that Allan metioned at the top here which is this shift of not just pure online commerce but this kind of blending of online to offline We've seen a little bit of that obviously in the United States with Amazon and their acquisition of whole foods. How would you compare where China is to that trend relative to say the United States. Well I'm sure this is gonna come up a lot, but whether you call it Omnichannel or online, offline or Unichannel- Yeah. I think there isn't really anybody today who buys only online. And there really isn't anybody today who buys only offline. It's a 100 % no one or the other in an urban middle- class consumer context, so it's really an integrated channel. That holds for brands. That holds for retailers. That holds, obviously, for consumers. They have to think in an integrated way. So now let me turn to you because you're right in the middle of all these trends obviously. Your company [ UNKNOWN ] is a kind of clever play on the Chinese phrase for. Food delivery. Yeah food delivery are you hungry right. So you're in food delivery. You are a fascinating case study of what's going on right now because you are this year, what? You had $ 1 billion from Molly Brother. Framini, is that correct? Yeah, yeah, yeah. Clement? So that was the second biggest financial fundraising event in China. As I understand it after DD, which is huge and makes you now, the last ranking that I saw Said that you were about a $ 6 billion company, so you're a unicorn and then some. And maybe the 13th- Over $ 6 billion a year. Is that right? Yeah. Bigger than that. Yeah. So I saw that you were something like 13 on one ranking of global unicorns. So that makes you a very big player. Now food delivery is an intresting one because in the United States, a lot of other markets People haven't figured out how to make that profitable. Are you profitable, and what are your expectations? Right now I think here some cities in China, its possible. And I think the I think the pricing strategy is very clear linked with the delivery, because we can charge the money from the restaurant side and we can also charge the user fee from the user side. So the model is very clear. Also I think, the marketplace and the. Especially in China, the Alibaba can get a lot of money from the merchants, so I think it still have a lot of potential in the restaurant side. We can get money because we give them lot of the online users, and also we expand to say on the The Billionaries area cause we share the logistic ability in order to reach more and more users over 3 mile or 4 mile because if you have only a restaurant and without the deliver ability, if you do not have a ability to reach

It has more than 300 million middle-class consumers with rising disposable incomes.