Bringing E-Commerce Up to Speed: What the US Can Learn From China’s Successes

With the global e-commerce market value expected to top $1.39 trillion in 2023 and $1.64 trillion by 2027, it’s no wonder a worldwide battle for a piece of the pie is underway. Although the United States is generally regarded as the creator of e-commerce as we now know it, its status as an originator hasn't guaranteed market domination.

Over the past decade, China’s booming e-commerce sector has emerged as a frontrunner in the global race for the market. The country has far outpaced the U.S. and other economic powerhouses to capture a significant share of total economic activity in the space in record time. In 2011, World Economic Forum data showed that China’s e-commerce activity accounted for less than 1 percent of the total market. By 2021, China had captured 45 percent of the market, while the U.S. only accounted for 24 percent (an 11 percent decrease from 2005).

This growth was, of course, the result of a few key factors that worked together to support the sector’s success. China’s advanced manufacturing infrastructure contributed to falling commodity prices and rising wages over the past decade, driving demand in consumer markets. At the same time, the country’s topography, population distribution, and laws supported simpler and cheaper delivery options with fewer trade barriers than other markets.

However, there are some key business strategies Chinese e-commerce businesses leverage that can lay the groundwork for growth in the U.S. and other markets.

1. Develop better omnichannel shopping experiences.

American consumers have been using e-commerce platforms for some time, but these platforms haven’t taken the necessary steps to cultivate consumer habits that support continued and expanded use. Chinese e-commerce platforms have more diversified categories with more promotions and prioritize consumer habit analysis and insights to build more successful experiences. They've managed to become a significant part of the shoppers’ lifestyle. American companies should strive to do the same.

2. Avoid commodity information overload and high transaction costs.

China's e-commerce platforms were purpose-built to avoid commodity information overload and high transaction costs. China’s industry transitioned from a dominant company model to a more specialized one under which each player operates within its own specific arena. This clear categorization helps companies work in tandem to reduce transaction costs across the board while supporting more reliable and clear-cut customer journeys. Adopting a similar approach in the U.S. could help facilitate similar benefits to both businesses and consumers.

3. Expand incentives and promotional activities.

China's ecosystem regularly exchanges traffic for festivals for massive subsidies to incentivize ongoing merchant investments and operations, forming a closed loop of interests. To mirror China’s market, the U.S. will need to find ways to create ongoing incentives for two-way investments to support a similar closed-loop ecosystem.

4. Construct a strong user experience.

Online shopping in the U.S. is a fundamentally independent experience. American merchants have relatively limited customer service options, and most lack easily accessible human representatives altogether. Chinese platforms are more interactive, offering access to robust live customer service agents that can both address concerns and facilitate transactions. This feature is key to China’s market dominance as it enhances customer experiences and improves conversion rates.

Like many economic booms, the rapid expansion of e-commerce in China was a product of time and place. It cannot be replicated elsewhere. That said, American companies can take cues from the way the Chinese ecosystem operates. By developing omnichannel systems, mitigating costs, expanding incentives, and focusing on curating better user experiences, the U.S. e-commerce market may be better positioned to capture a bigger slice of the market in the coming years.

Hank Lin is a sales director at Majorel China, a leading global provider of next-generation end-to-end customer experience (CX) solutions for digital-native and vertical-leading brands.