The retail industry encompasses all shops that directly sell industrial or agricultural products to consumers for common life consumption or for public use. However, it is important to distinguish retail goods from whole-sale and other types of goods. Retail goods must be sold to the final end user. Retailing can take a lot of unconventional forms that may not come to mind at first. It includes services, goods sold outside of common retail outlets such as grocery stores, and retail consumers need not always be individuals. They can be organizations.
Four large impacts that the Internet has on Chinese retail
Recently, E-commerce has been developing at a rapid pace in China. The information era has made a big impact on the retail industry in the Chinese market. For example, internet retail giants such as Taobao(淘宝网) are becoming more and more common in China. The Internet brings four major impacts:
- The Internet allows customers to purchase goods and services without having to go to physical retail locations. Location choice used to be very important for retailers, since it is highly correlated to the amount of foot traffic the shop receives. But in the information era, a retailer opens its sales to consumers who normally would not have access to the shop. As a result, the market becomes more internationalized, and the competition becomes fiercer. This increased competition forces retailers to rely more on improvements and innovations in administration.
- Retailers have changed the way they conduct business. Consumers used to go to the shops themselves, but now they can sit at home and click a mouse to access the information they need and purchase the products they desire. This saves time for consumers, and gives them a larger sample space to choose from.
- Retailers have re-organized their staff. Many retailers are reducing their number of physical retail outlets and need fewer business personnel and sales people. This motivates enterprises to make adjustments to their usual way of operation and motivates the staff to learn new knowledge.
- The operational fee, profits, rental costs, and storage fees have all dropped. With access to the Internet, people can use search engines to find the lowest price, which makes it harder for retailers to make profits.
Rapid growth in internet retail in China
According to industry insiders, China is soon going to experience a boom in e-commerce. According to statistics, there were 24,620 online retail enterprises in China in 2012. The total turnover of online retailing was 511.9 billion yuan, a year on year growth of 46.6%.
Today, many big enterprises have created websites solely used for retail such as Taobao(淘宝) Suning, Gome, Dazhong, 360buy, Dangdang, Xidan Shangchang(西单商场), Vancl(凡客), and Tencent(腾讯). It has been predicted that by the end of the twelfth ‘five-year plan’, online retail will account for 10% of all products sold to Chinese consumers.
Daxue Consulting China
Picture Source: Verynetwin