Mary Meeker, investment banker turned venture capitalist, also known as the Queen of Internet in China, release her annual interpretation of the global internet trend at the Code 2018 conference held in California Thursday.
One of the highlights of the report, is a global trend of slowing growth in internet, whereas China is one of the few exceptions that defies the gravity, thanks to its combination of its innovative new retail strategy and robust entertainment.
The global decline in growth of internet users
According to the report, rapid internet penetration is screeching to a halt. At a global penetration rate of close to 50%, growth is slowing. Global new smartphone shipment and incremental internet users have also been on a decline.
The silver lining amidst the saturated internet industry – people are spending more time on the web. The potential for digital media, sticky and user-friendly apps could be the next ‘hook’.
The battle is now on – for the most entertaining, most convenient, most tailor-made internet services, creating a demand for big data as the foundation for modern business strategies to attract consumers.
Data-driven Economy for the retail consumer
A new era has dawned upon the world now, with the renewed focus on competitive innovation driving product improvement to engage the user, leveraging on predictable human attributes to appeal to the consumers and artificially create new formed addictive habits.
Correspondingly, the value of big data increases even as the internet service industry becomes more prevalent.
Latest technology advancements such as artificial intelligence, facial recognition and machine learning feed on the availability of big data. By leveraging on data with the likes of consumer analytics, services today can become more tailored for the tech savvy 21st century consumers.
Data can improve the machine’s predictive ability.
More accurate predictions allow internet service providers to be laser focus in their strategies to effectively and efficiently capture their targeted crowd.
An example will be how data-driven personalized lifestyle apps have become indispensable to the reigning millenials.
The Case for Big Data
Yet again, like ‘’fiat money’’, big data today has become a double-edged sword – it can be used for good and also for evil.
The Western world became very concerned about the personal privacy of its people and have come up with their unique versions of privacy laws respectively.
The most recent example would be the ‘’General Data Protection Regulation’’ that was passed in Europe, just last week.
The Chinese on the other hand, seemed unperturbed by the privacy issue, with Chinese President, Xi, calling for high speed, mobile, ubiquitous and improved collection of fundamental data.
In line with the meteoric rise of big data in the modern economy, the Chinese economy has also caught up with the world dominant economies.
In the realm of technology companies, Chinese companies also account for close to 50% of the top 20 global tech giants.
It is evident that despite the steep decline in internet user growth, the Chinese has capitalized on latest technology to innovate and upgrade, successfully attract and constantly keeping consumers entertained, resulting in its stellar performance globally.
The Chinese Growth Story
Increasing disposable income in China, with rising domestic consumption has set the backdrop of ready-to-splurge consumerism.
While its internet user growth reflects the falling global trend, the Chinese internet cellular data usage had accelerated at an increasing rate.
It is thus pertinent to look at a breakdown of where do the Chinese spend most of their time on the web.
Social networking activities have fallen sharply from 60% to 47% and the largest corresponding jump was on videos, specifically from 13% to 22%. The time spent on news rose marginally by 4%.
A closer look at the different market segments of the video section might offer a glimpse at what’s most attractive and lethally addictive for the Chinese.
Short-form video enjoyed exponential growth over the past 2 years, accounting for the jump in videos usage in the previous chart. Short videos – are aptly designed to be long enough to make an impact, yet short enough not to bore its users, fitting with the younger crowd.
The two frontrunners – Douyin and Kuaishou, both registered daily time usage of 52 minutes per day.
Other than building on the entertainment aspects with videos and social networking, Chinese e-commerce too, experienced the highest penetration globally.
However, its B2C e-commerce GMV fell exponentially in the recent years, and traditional retail still accounted for 82% of the market.
In the short video industry, notable competitors such as internet giant Tencent has also re-launched Weishi, further saturating the market.
Market saturation seemed to be the common theme across different segments of the market, from ride-hailing, smartphones to entertainment and e-commerce.
China’s Classic Solution
Building on its solid technological foundation, the retail evolution was proposed – to leverage on technology to blend robust entertainment with revolutionary retail experience.
Putting consumers at the center – building an entire ecosystem, offering a digital shopping experience at a store, where consumers pay via mobile wallet and can even book an exclusive shopping tour is the new goal, as illustrated by Hema, Alibaba’s offline store. Consumers can also scan via their phone to get price and product information.
These stores also double on as distribution centers, offering under 30-minutes delivery for people living within a 3km radius.
The end goal was also to add the entertainment element to engage the shopping crowd.
The still low penetration – will be potential for growth for the Chinese giants.