Spend some time with Chinese consumers and you quickly realize how different their shopping habits are compared to those of Westerners. Take a closer look, and you’ll find that for a growing number of Chinese people, online shopping has become part of a lifestyle that defines how they get what they want and need.
To America and other countries however, e-commerce is usually just something they do for convenience; but for most of China, it has redefined how they get access to just about everything. In the past decade, everything has shifted—brick and mortar retailers are losing popularity, and online shops such as Taobao and Tmall are taking their place. In fact, management consultancy firms such as Bain & Company say that China’s internet shopping is expected to surpass that of the United States this year to become the world’s largest by total customer spending.
You’ve probably heard of the online site “Alibaba”, and how the company has dominated the e-commerce market in China for over a decade now. Their approach is similar to eBay, offering several online platforms that third-party consumers and businesses can use to buy and sell products—which include Taoboa.com and Tmall.com, who lead the market in new and important niches such as apparel, cosmetics, and houseware.
Taobao, China’s largest online shopping site, has become the fastest growing e-commerce platform—reaching more than 87 million shoppers each year. Taobao means “hunting for treasure” in Chinese, and is owned by The Alibaba Group, which his part of a global e-commerce network. And among the 2 billion packages that are said to be delivered across China this year, 1.2 billion are goods from Taobao. Chinese shoppers are savvy shoppers, and they’re always looking for a great deal—one of the many reasons why Taobao keeps moving forward as one of the go-to places find a great deal online.
Tmall on the other hand, is the more upscale version of the two big internet giants. In 2008, Tmall began as a site that was solely dedicated to upscale stores, attracting a more prestigious consumer base. In apparel for example, top retailers such as Zara, Nike and Calvin Klein are available on the site. Since the demand for high-quality products is increasing all the time, the prospects for the sites success are soaring with it. Tmall greatly simplifies the process for Chinese people to purchase goods from overseas; which is why they rank as the second largest e-commerce site in the East.
Now I bet you’re wondering, who’s going to deliver all these packages?
Naturally, as online sales increased due to the spike in purchases, so did the need for couriers to drop them off and take them where they need to go. Which leads us to the story of Wang Wei and his company SF Express, also known to as “China’s FedEx”.
In 1993, the journey from modest delivery boy to multibillion-dollar boss began for Wang Wei—who back then was a fabric dealer, struggling to get samples to his customers. Seeing a need in the market, he got a small loan from his father and started delivering packages in what he called the business of “black delivery;” a time when (through sanctions) only China’s post office could handle packages. Sending and receiving through the post office was the only way for anyone to do things; which was often slow and costly. The sanction also came with a fine if you were caught carrying parcels between China and Hong Kong. But with just six employees, Wang began to deliver goods from factories in Guangdong to Hong Kong—and quickly grew a reputation for good service as the years passed by.
In a rare interview with Guangzhou Daily he says, “Many Hong Kong people had factories in Guangdong at the time, and they had the demands (for courier service).”
Almost five years after SF Express was founded, Wang expanded out of Hong Kong and set up franchise branches throughout China. After the postal sanction was lifted in 2009, he was able to grow SF Express to the now 80,000 couriers, his own fleet of planes, and nearly 15,000 vehicles that operate all across the globe.
Wang Wei is now worth $27.5 billion, and the third wealthiest person in China.
It’s no secret that the purchasing power of online shoppers has led to greater spending by consumers in cities all around China—which paved the way for courier companies such as SF Express to satisfy the need for fast, and timely package delivery.
Currently, about three out of four online shoppers are urban millennials living in top-tier cities—and it’s estimated that China’s online consumers spend on average $1,300 online every year. And with a wider range of products and more branded goods being sold on the internet each day, it’s expected that the momentum will increase even more for the company in the next few years.
SF Express is in the best position to benefit from this sharp increase in online spending—placing Wang in a prime position to have key advantages in the market.
The billion-dollar man has also proven that his company aims to create new technologies in order to maintain their high customer satisfaction rating. For example, SF Express has a new package-handling hub in Shanghai that is thought to have greatly increased efficiency by replacing labor with expensive European sorting equipment. Not to mention, they already have a fleet of planes that deliver more than 1,000 packages a day to remote areas. SF is also delivering parcels with drones in southern and eastern China, where demands for same-day couriers are high.
SF Express was listed on the Shenzhen Stock Exchange, and as of March 2, Wang had a net worth that put him at the top of the Forbes list—and gave him the title of third richest individual in China. The company also announced it will build its own airport in the central Chinese city of Ezhou, with completion expected by 2020.
Along with the success of their core packaging service, the company also opened 500 convenience stores called “Heike” in 70 cities within China. It’s an innovative idea that the company came up with back in 2014—which lets customers come in and try out products, and then place orders using computers in the store. As the company looks to the future, it is said that they want the Heike’s to focus on high-end imported foods and luxury products.
As China’s online shopping sector continues to mature however, it will be important for Wang not to lose sight of his original values in providing good service and support to his customers. We often see this element slip away when a company experiences rapid growth—so it will be interesting to see if SF Express can uphold this business practice as time moves forward.
Wang started his company from humble beginnings, and the stars seemed to aligned perfectly as his business soared with the onset of China’s online shopping craze. Now that SF has seen such great success within the domestic market of China, it looks like they are slated to become a well-known brand across the globe—and not just to the millions of Chinese consumers that eagerly wait for those black packages to arrive on their doorsteps each day.