Date
24 October 2017
John Lin says volume play allows merchants to realize good profit despite lower margin. Photo: eBay
John Lin says volume play allows merchants to realize good profit despite lower margin. Photo: eBay

E-commerce sharpens ‘Made in China’ edge, eBay says

China’s role as the world’s factory is not yet coming to an end, but it is being performed in another field that cuts through the costs and cumbersome infrastructure of traditional distribution channels, said a senior official of global internet marketplace eBay Inc.

“EBay has always been a disrupter of the traditional, offline import-export model by simplifying the flow and cutting out the middlemen,” John Lin, vice president of eBay Inc. and chief executive officer of eBay Greater China, told the Hong Kong Economic Journal’s EJ Insight. “We offer sellers a much cheaper and more efficient channel to reach the consumers. The traditional barrier is still there, and it is where we can bring most of the value.

“Chinese merchants have managed to save substantial operating costs by leveraging on better infrastructure and going into scale, which is a factor that is very often overlooked.

“Volume play is a very unique characteristic of Chinese merchants, who have been able to optimize operation and cut overhead costs. If you have scale, even with lower margin, you can still make a pretty good profit,” Lin said.

As the only global online auction site, eBay offers Chinese merchants the opportunity to make strides in overseas markets. Many of them have raised their sales to tens of millions of dollars and have to build overseas warehouses to provide their foreign customers the same shopping experience offered by local retailers.

As competition intensifies, newcomers will find it harder to gain market share, particularly in traditional categories such as electronics, accessories and low-priced clothing, Lin said. New entrants have to explore untapped areas such as wireless surveillance equipment and other technology products.

China’s eastern coastal regions, the nation’s traditional export hubs, continue to lead the growth in cross-border e-commerce shipments. According to the latest eBay report, Fujian saw its e-commerce exports grow 76.1 percent last November from a year earlier, followed by Zhejiang with 56.1 percent growth and Jiangsu, up 52 percent. 

Electronics, fashion and home and garden are the three largest e-retail export categories by gross merchandise volume in China, the report shows.

The nation’s cross-border e-commerce already exceeded 48 billion yuan (US$7.93 billion) in 2012, according to one industry estimate. Globally, cross-border trade accounts for around 20 percent of eBay’s revenue.

Big data

As one of the world’s largest online marketplaces with 128 million active users, eBay has been tapping into big data to improve customer satisfaction and optimize selling prices.

“EBay has always been into big data even before big data became a sexy buzzword. We have always been deep into analytics, which provides insights to customers – whether they be sellers or buyers,” Lin said.

The company is currently building a live big data “ecosystem” to provide sellers with a clearer picture of the so-called velocity of their products and a better understanding of the competition. For example, a Chinese bicycle seller would be able to calculate how many bicycles they can sell in the United States next year and how many competitors are offering similar products in the market.

“For a business trying to grow in scale, big data is like a map or GPS,” he said. “The infrastructure investment would help all associated players scale and fend off competitors. If you operate a business platform like we do, doing it without the help of data would be impossible.”

Most of eBay’s data centers are based in North America, while it has operations centers in the US and China that crunch vast amounts of data around the clock.

– Contact the reporter at [email protected]

CG

Freelance journalist

EJI Weekly Newsletter

Please click here to unsubscribe