China's cross-border e-commerce is growing as young Chinese consumers spend more than their elders to raise their quality of life. Alibaba's Tmall Global and Kaola Global have conquered more than half of the market.
Kaola Global, acquired from gaming giant NetEase for 2 billion U.S. dollars last September, was transformed into a membership-based model in late August in a bid to become China's online Costco.
The platform's CEO Alvin Liu, who is one of Alibaba's vice presidents, sat down with CGTN to talk about how post-pandemic e-commerce will develop.
Q: What pushed Kaola to transform to a membership-based e-commerce platform?
A: Membership-based e-commerce is not a new concept. To be accurate, [its appearance] is related to a new group of people in China – the "new middle class." The reason we add "new" before "middle class" is because we have seen that the spending power and outlook of younger generations, including those born in the 80s and 90s, is very different to the traditional middle class. They believe the world belongs to them. They like goods from everywhere in the world and hope to find joy from them.
For example, inside the new middle class, there is a group of people that we call "the new white-collar workers."
The traditional white-collar worker may prefer to buy luxury goods, such as handbags and some luxury brands' [products]. But for "new-white collar workers," some might take good care of their pets and they want to spend a lot of money on their pets as they don't have a family yet. Some would like to spend [a lot] on their beauty, [I think] there are a lot of women who want to spend a lot of money on beauty. They are willing to do cosmetic procedures. They are willing to try new high-tech skincare products.
Q: Is the COVID-19 pandemic related to Kaola's transformation into membership-based e-commerce?
A: Yes, it is.
Firstly, we have seen that the pandemic has accelerated the shift to online shopping, so more and more consumers, especially young consumers, can buy everything online.
Secondly, we found that because a lot of young people have not been able to go abroad due to COVID-19, they badly want to know the new trends of products all over the world and enjoy the fun of shopping. And these can be better served through the membership-based model and online businesses.
Q: What is the future of membership-based e-commerce?
A: I think it is possible that a new membership-based e-commerce model for different groups of people will appear. Generally speaking, Chinese people's consumption and shopping will ultimately be a daily and normal behavior. But as different groups of people have different spending behaviors, there will be a lot of diversified membership-based models in e-commerce.
Just because in terms of our future, that we are facing consumption from younger generations and a "new middle class," the opportunities that we've seen are what I just talked about.