Western Firms Caught Off Guard as Chinese Shoppers Flock to Web

Wall Street Journal ^ | June 14, 2015 5:30 a.m. | Laurie Burkitt, Peter Evans

[Cronos]

After enjoying nearly three decades of steady growth in its China business, Unilever PLC last year watched sales fall off a cliff.

The maker of Dove soap, Lux shampoo and Comfort fabric softener warned in October of a 20% drop in its third-quarter China sales. The next quarter, the company announced another 20% fall.

Unilever blamed a slowing Chinese economy and a pullback by shoppers. But a close look at retailing trends in China suggests Unilever was also feeling the pain of the migration of hundreds of millions of Chinese consumers to online shopping.

Unilever wasn’t the only Western company overestimating brick-and-mortar. Swiss food company Nestlé SA has been burning instant coffee it couldn’t sell in stores. It recently told The Wall Street Journal it failed to fathom the extent of how quickly and broadly retail was changing in China. Colgate-Palmolive Co. and Germany’s Beiersdorf AG , which makes Nivea skin cream, have also cited problems with overstocking.

...The exodus from stores has disrupted retailers world-wide, with global e-commerce topping $1.3 trillion last year. But in China, the move online happened with greater force, partly because of the speed of smartphone penetration.

An estimated 461 million Chinese consumers, a third of the population, are now shopping online, up from 46 million in 2007, when e-commerce started gaining momentum. China’s e-commerce market increased 49% last year—after gains in the prior three years of 59%, 51% and 70%, respectively. In 2013, China overtook the U.S. as the world’s biggest e-commerce market, and last year the country rang up $453 billion in sales online, 11% of all retail sales.

Nearly half of Chinese consumers are already buying groceries online, compared with just a quarter of global consumers, according to Nielsen survey of 30,000 consumers. Last year, 42% of skin-care sales were online

[cynwoody]

Ted cruises. Protectionists lose!

[MarchonDC09122009]

“Is there a Chinese Amazon?”

Yes, it’s Alibaba - one of the largest companies there.
Alibaba has excellent customer service, and let’s you talk and work directly with the merchandise distributor / factory dealer to negotiate and customize orders.
I’ve used them for a few specialty outdoor sports items I could not find in the states.
I’ve had no trouble getting very good prices, free shipping, package tracking, and so far unique quality goods.
Alibaba’s website is a bit clunky in design compared to Amazon.

China does have a version of FedEx, but so far I’ve always chosen free shipping and have used their regular Chinese parcel service. Typically I have to wait 7 to 14 days for an order delivery to the states.
Note: I’d gladly order the products from a USA mfg if they existed here.
There’s some notable innovation happening by domestic Chinese manufacturers.

[Halgr]

Thank You for the Information!!!

[Justa]

Don’t knock the instant coffee it’s a bugout bag item.

[woodbutcher1963]

Maybe they just discovered Amazon or EBAY. There is no product made that you can not buy on either of these sites with a click of a button. Many are now shipped directly from places all over the world.

For example, I purchased a carburetor for my 1976 Simplicity snow blower on EBAY. It was shipped directly from Hong Kong to my house in NH. Secondly, I just bought a set of 800 thread count Egyptian cotton sheets in California King size which is a size difficult to find on the east coast. They company shipped them from Mumbai, India to my house in NH.

Both of these products were substantially less expensive than buying from a brick and mortar store here in NH. The sheet manufacture also had a selection of 15 different colors all for under $50 delivered. That is less expensive than Marshalls or TJMax and a better selection.