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By Charlotte McEleny |

January 31, 2019 | 8 min read

While perhaps not the new religion in China, consumerism is certainly gaining many millions of devoted followers with plenty of disposable income to spend. And coupled with a lack of payment friction, the sky’s the limit for businesses prepared to think big. The Drum heads to China for the 10th annual Singles Day to find out more.

Brands the world over are striving for a state of retail nirvana. Some call it omnichannel, others ‘new retail’ or even ‘boundaryless retail’. One thing is clear, however – China is closer to this nirvana than any other market. And the reasons why are very hard to imitate.

A key difference is, of course, the size of the market, which, coupled with a rapid rate of adoption, creates a scale that’s hard to fathom. In 2018, Alibaba’s Singles Day festival generated $30bn of sales in just one day, while took $23bn in the same 24 hours.’s Lori Chao, director of international corporate affairs at the Chinese e-commerce giant, says China has undergone “such rapid change that consumers of all ages are more willing to embrace new technology and services”.

She adds: “We already see that e-commerce penetration is higher here than in more developed markets, with over 15% of consumption happening online compared with less than 9% in the US. Our partnership with Tencent gives us the ability to reach a billion customers through WeChat, which also speaks to the rate of adoption for new technology.”

Even the way brands approach e-commerce in China differs from the west, as VMLY&R Asia co-chief executive Yi-Chung Tay explains: “You have to think, ‘How can I work with the giants of e-commerce?’ You may have noticed, but there are no brand sites in China. It’s not like in the US or Europe. Other than maybe Nike and some of the luxury brands, by and large everyone builds their own e-commerce site on Tmall or So the strategy becomes, ‘How do I work with that? How do I engage in a joint business?’ That’s the e-commerce strategy.”

Alongside technology, key social factors have helped accelerate the speed of e-commerce adoption in China, including a sizable cohort of young consumers with cash to spare.

According to Alibaba, years of supercharged growth in the Chinese economy has created a new middle class with demands for premium goods and services. Data from McKinsey & Co shows that by 2020, more than three-quarters of China’s urban consumers will earn ¥60,000-¥229,000 ($9,000-$34,000) a year. That translates into nearly 400 million people who are considered middle class by the consultancy’s metrics. A spokesperson at Alibaba tells The Drum that this growth in spending power, allied to a new cultural acceptance of consumerism, is unprecedented in China and has generated tremendous opportunities for businesses who can satisfy consumer needs.

Alibaba Singles Day

John Steere, experience agency Imagination’s managing director in China, says young millennial Chinese are ripe for disruption because of the affordability of technology. “The evolution of their consumer habits is continuing to the point where, I think, they’ve now crossed off all the basics that other countries are still experiencing. In China, consumers are now past the ‘badge factor’ of wearing Louis Vuitton. It’s now generally about the experience.”

Steere goes on to say that because many Chinese millennials live with their parents, there is a lot of disposable income. “They’re willing to pay a little extra for things. I still struggle with the idea of paying that money for a coffee at a Starbucks, but they don’t blink twice because they think, ‘This is what all my friends do.’”

PHD China’s chief strategy officer Mark Bowling says this level of disposable income, while mainly true of first-tier city types, is a huge draw for brands.

“Disposable income is a huge percentage of take-home payment. As an estimate, in 1983 the average household saw about 97% of its income spent on basics and necessities (rent, utilities, food, clothing, etc). Now it’s something like 13%. It’s phenomenally different for the 30-year-old working city adults. That’s not to say people are rich – GDP per capita is so much lower than in other countries – but the ability to spend means everyone eats out all the time.”

This fluidity in spending is also matched with a frictionless payment infrastructure, with China light years ahead in mobile payments through WeChat’s mobile wallet in particular. Both Bowling and Steere joke that they have to remind themselves to bring their wallets when they travel outside China.

“It makes so much difference,” says Steere. “I try to explain it to my friends outside of China and they just can’t conceptualize it, but I really don’t carry cash. I don’t even carry a wallet any more. I can pay for everything with my phone.”

The lack of payment friction is a key factor in China extending its omnichannel lead. With easy payment solutions in everyone’s pockets, offline experiences can be reimagined. Starbuck’s Roastery store in Shanghai is entirely based on a system of ordering and seamlessly picking up, using technology to remove customer stress. The net result is that experience design takes over, with special stations provided for alcohol, tea, AR experiences and more.

Steere adds: “It comes down to how you create that connection between offline and online environments so it’s as seamless as possible, because that’s how the consumer thinks.”

Meanwhile, Alibaba tells The Drum new retail starts with its core commerce platform because of the very solid user base that can help retail partners engage with, acquire and manage customers. The company claims new retail is accelerating the digital transformation of retailers as they embrace new technologies.

Alibaba Singles Day 2’s Chao explains how the company thinks about the trend: “The future of retail isn’t exclusively a question of online versus offline. believes there is value in all forms of interaction between brands and consumers, and we are developing the technology needed to make buying online and offline equally convenient – or, as we call it, ‘boundaryless’.

“Consumers should be able to buy whatever they want, whenever and wherever they want it. is achieving this by modernizing supply chains with AI, big data and robotics, and developing new tools such as AR and VR shopping so customers can test products virtually before they make purchases.

“We are also creating better methods of offline interaction with consumers, including luxury white-glove delivery services, smart stores and special pop-up retail experiences.”

The equality of convenience between online and offline is key to this trend, says PHD’s Bowling. “I can order something on my phone and it can be delivered to my house in 45 minutes for $1. That’s convenient. So what is convenience for a physical location? The only thing, really, is location. Is it near me or near where I’m going to be?

“So the Hemas and the pop-up shops can only be as successful as the neighborhood they’re in, or as great as the desire of the population to use them.”

Upping the ante on convenience for offline retail will be about technology, and China’s e-commerce giants are already on the case. As Chao explains, is rolling out “a drone delivery program, blockchain for tracing ingredients of products back to their origin, smart inventory management systems, warehouse robotics and much more”.

“The next development from here, aside from growing these programs, will be to see’s technology play a part in enabling traditional retailers around the world and revolutionizing global commerce.”

But what does this mean for brands? VMLY&R’s Tay says that, despite the opportunity, competition is big and that means brands need to be brave. “In China you have to gamble, you have to bat big to earn big, you have to be prepared to spend the money. That’s a given. That’s the case in most large markets around the world. But now in China, e-commerce is part of the marketing suite in a portfolio of things you can do.

“Creative innovation really counts and it is driving business results. We have a team of people who are both creative and business-minded – that’s the most fun time you can have because you can really see the impact of what you do.”

There may be big opportunities in China, but the strategy needed to cut through needs to be bigger.

This feature first appeared in the February issue of The Drum which focuses on the opportunities and challenges to be found in China. From its increasingly sophisticated ad environment to its highly developed e-commerce scene and fast-paced tech sector, the world's most populous country holds temptations and obstacles for the marketing industry.

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