New Delhi, Jan 27 (IANS) From cops on duty to young lads in small-town India, Chinese short-video making app TikTok has become a rising phenomenon, owing to a strong local network while providing marketers with a platform to reach millions of untapped users.
TikTok has 700 million users globally, out of which over 200 million are now in India, and growing exponentially. Despite being pulled by the law enforcement agencies for vitiating the digital atmosphere in the country, TikTok has created its own fan following and US players like Facebook and its apps WhatsApp and Instagram are a worried lot.
Global market research firm Forrester estimates that short video ad spending for the key Asia Pacific markets of Australia, China, India, Japan and South Korea is likely to hit $4.7 billion in 2019.
“TikTok's success among non-Chinese consumers is partly due to its ability to adapt to domestic markets from a content and cultural point of view. In India, TikTok has its own local team that plans and monitors content specifically for younger demographics. This has attracted a high number of active users on its platform,” explains Meenakshi Tiwari, Forecast Analyst at Forrester.
Alibaba-backed Paytm has shown how Chinese bigwigs create space in a country, without actually being physically present there. China's financial services company Ant Financial, an affiliate of e-commerce giant Alibaba Group Holdings, owns nearly 38 per cent in One97 Communications, which is the parent company of Paytm which has over 200 million users.
After failing to create an impact in the ecommerce space while burning cash in Paytm Mall, Alibaba has now launched Yoli app which is an aggregator platform where users can find the best deals being offered on Amazon, Flipkart, Myntra, Paytm Mall, Tata Cliq, Bigbasket, Snapdeal and more. The app has been downloaded over a million times on Google Play Store.
Chinese B2B e-commerce platform Club Factory last week surpassed 100 million monthly active users (MAUs) in India — mostly from Uttar Pradesh, Bihar and Telangana.
According to Vincent Lou, Founder and CEO, Club Factory, the company managed to reduce delivery time by as much as 30 per cent with average positive product rating going up by 40 per cent in 2019. “Returns or product exchange on the platform have dropped by almost 25 per cent, said Lou.
As of December 2019, Club Factory's registered local seller base stands close to 30,000.
The aim, like TikTok, is clear: Create a niche space especially in small-town India and stay afloat.
According to Satish Meena, Senior Forecast Analyst with Forrester, round one of the Indian ecommerce battle went to Amazon and Flipkart but round two definitely belongs to the Chinese companies.
“Things are different when it comes to the Chinese way of doing business. They are competing to win new customers in India in the ecommerce space which are not yet on Amazon or Flipkart, by offering heavy discounts and selling cheap. Club Factory is exactly doing this and gaining users fast,” Meena told IANS.
“The upcoming battle will happen in the social ecommerce and content space in India and Chinese are too good at that, by offering different products at affordable prices and targeting tier II and III towns where they can easily sell such products,” Meena elaborated.
The challenge, however, is a seamless logistics chain for the cross-border ecommerce.
“Logistics is a big hurdle for them as these costs have to be low in order to make profits. Chinese ecommerce players like Club Factory, Shein and JollyC have created an initial buzz, but it is to be seen how serious they are and what value addition they would eventually bring to the country,” Meena noted.
In December, the government came down heavily on the Chinese cross-border e-commerce firms for using the “gift” route to export orders and avoid paying customs duty.
The Directorate General of Foreign Trade (DGFT) banned import of goods under the “gift” route in a notification, saying these companies will now have to pay the duty, even on “gifts and samples” valued at under Rs 5,000.
According to a latest report by the E-Commerce Council of India (TECI) and ChannelPlay, fueled by low data tariffs, affordable smartphones and growing Internet usage, the size of the Indian e-commerce market is likely to reach $230 billion in a decade.
Another 40-50 crore shoppers are expected to come online in 10 years, joining the nearly 10 crore online shoppers in India.
Chinese ecommerce giants know this well that aspirational India is the next fertile ground for their growth and before US giants win them over, the Dragon has set the ball rolling.