Data-driven e-commerce

COVID has accelerated online shopping penetration and the overall shift to online. Data based e-commerce solutions deliver 360-degree customer experience across all the channels. Growth in consumer data will drive incremental sales (e.g., conversion, order frequency, basket values), reduce waste and cut supply chain costs (e.g., demand forecasting), and enable more informed customer acquisition with lifetime value modelling. The scope to improve economics and data monetization for the leading players is significant, and in our view has only just begun. Internet retailers that can convert data into real customer insights will win. Huge volumes of 1st party data (data about a company’s customers that is collected and owned by that company) can be leveraged. Personalization of price at scale is the first step in data monetization, with a customized, seamless experience online and off driving sales. Shared insights with suppliers can drive product innovation and speed to market. The final, most valuable step is advertising income from suppliers via sponsored search. Retailers will turn into media providers, selling ads alongside consumer products. In food delivery, data monetization is in its infancy. Only the tech savvy, with advanced data capture and sufficient data maturity, will access this profitable revenue stream.

Overall, e-commerce has attractive long-term growth prospects: we project 15%–20% annual addressable market growth in the 2021-2030 period. We expect margin expansion for e-commerce platform companies to continue, after the COVID-19-related activity boost in 2020.

Pinduoduo is a nimble innovator in the Chinese community group purchase market. It offers everyday low prices. The platform, which has 800 million active e-commerce buyers, has a dynamic and competitive pricing mechanism. Suppliers must bid for product listings on a daily basis and in general the one that offers the best price is selected. The platform attracts consumers who are pursuing value-for-money products.

JD Health is a key leader in the China online pharmacy industry, ranking 1st in total revenues generated in the online pharmacy sector. JD Health is one of the first movers in the industry with its focus on both online retail pharmacy and medical service businesses. The company has been resolutely investing in the online medical service business by expanding its in-house medical team, cooperating with external renowned doctors, and setting up health management platforms.