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Gate2Asia Digest: How Chinese eCommerce is Coping with the Lockdown

April 7, 2020
Alexander Pestana
Head of Business Development APAC & Gate2Asia Expert

The world is in crisis, but who is finding the solutions? Let’s consider the case of China and its rapid implementation of innovative technologies to manage the situation, thereby drastically altering consumer behaviour.

How has Chinese eCommerce responded?

Every two weeks, we’ll ask our experts to share their opinions on hot topics in fintech. This week, Alexander Pestana offers insight into how Chinese eCommerce is handling the global crisis with innovative technologies.

Innovation in times of crisis

The World Health Organisation (WHO) released a statement on March 9th, stating that cashless transactions needed to be used to fight the spread of COVID-19. China destroyed thousands of banknotes and other countries quickly followed suit, liquidating or quarantining vast sums of cash.

As global organisations and national authorities sought to stop the spread of the virus, businesses likewise adapted, making immediate changes to their business processes.

Alibaba leverages its network

Chinese eCommerce giant Alibaba was one of the first companies to offer its assistance. According to Harvard Business Review, in addition to identifying manufacturing partners to begin the production of N95 masks, Alibaba was heavily involved in the distribution of supplies.

It also relied on its affiliate company – the digital payment system Alipay, which controls 55.32% of the third-party payment market in China – to push vital information on COVID-19 to Chinese consumers. This was a lifeline not only for the health workers in Wuhan, but also the population at large, which was still in desperate need of supplies.

Alipay helps retailers and consumers alike comply to WHO recommendations. The alternative payment method enables businesses to continue accepting payments through contactless means, while those confined to their homes can use it to pay for online purchases. Additionally, Alipay was used to collect donations for relief efforts. The charitable initiative raised over $1m in the first eight hours.

MTDP expands food delivery service to include essentials

Meituan-Dianping, also known as MTDP, is a collective buying service offering local food delivery, consumer products, and retail services. When the virus hit Wuhan, MTDP immediately began expanding its services to include necessities. Partnering with thousands of brick and mortar supermarkets, the Chinese eCommerce giant directed its efforts into getting goods to where they were needed most.

The nature of deliveries has also shifted. All orders were paid online and 80% of customers requested delivery without physical contact. In Wuhan, MTDP reports, that number was 95.1%.

The message is clear. Digital transformation is taking place at unprecedented speeds. Retailers who did not previously have an online presence are rushing to partake in eCommerce. To ensure their survival, they are turning to aggregators, such as marketplaces, who can offer a steady stream of customers.

Older users embrace Chinese eCommerce

One last thing. The crisis has also changed consumer demographics. If the older generation was still resisting online payments, that’s no longer the case. The pandemic has forced them to adapt. As the most vulnerable members of society, older consumers are buying online due to necessity.

Payment service providers must meet the changing demands of their eCommerce clients. If Chinese eCommerce requires the simplification of the payment process for the older generation,ECOMMPAY has developed a frictionless checkout experience though one click payments which can be used through many platforms.

Despite the hardships presented by the pandemic, new opportunities do arise. eCommerce companies, as well as their payment service providers, must have the ability, agility, and resources to pivot quickly. More than ever, businesses require an omnichannel approach to ensure seamless, digital checkout and distribution via different payment channels.

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