High-tech Special: A happiness chain that connects consumers, retailers, and suppliers
By Zhao Lei (China Daily)
Updated: 2011-04-25 07:57
Nasdaq-listed eFuture, a leading provider of software and services for China's consumer goods industries, has the idea of creating one big, happy consumer world. Provided to China Daily
Social networking services (SNS), such as Sina Weibo, Renren, Twitter, and Facebook will most likely dominate online shopping in the future, according to one expert in the field.
Adam Yan, chairman of Nasdaq-listed eFuture Information Technology Inc, has explained, "SNS is now an indispensable part of hundreds of millions of Chinese people's lives. This latest development in virtual space will bring tremendous changes to the world and the lives of people everywhere."
Yan's company is a leading provider of software and services for China's consumer goods industries.
Its clients include global corporations such as Procter & Gamble, Pepsi, L'Oreal, Kimberly-Clark, Gucci and B&Q, as well as more than 30 companies that are among China's top 100 retailers in 2010. These include Suning, Shanghai Bailian-Lianhua, China Resources Vanguard and Beijing Wangfujing.
"So, anyone who wants to keep up with the shifting moods of consumers and get a fair share of future markets should pay more attention to the SNS' online market," he said.
Yan also holds several influential positions in China's commercial associations including the China General Chamber of Commerce, China Chain Store and Franchise Association, and the China Commerce Association for General Merchandize.
China has seen a surge in the number of SNS users over the past three years, and website administrators have been galvanized by the exponential growth of new registrations, Yan said.
Given the evolution in the retail sector, consumers have gradually gained domination over the market, which was previously controlled powerful retailers, so SNS is bringing the dawn of a new consumer age, he noted.
Rapid growth
Society now faces total transparency and the SNS allow consumers around the world to communicate with others whom they may never meet face-to-face in their entire lifetime.
"This means that, rather than information being provided by manufacturers and sellers, consumers will tend to believe comments from online friends more," Yan continued.
According to a survey by the consumer electronics magazine Wired, nearly 90 percent of online shopping is influenced by SNS websites.
China's online retail sales amounted to 520 billion yuan ($79.7 billion), in 2010, almost double 2009's figure, according to China's E-commerce Research Center.
Yan predicts that China's retail market will top the global retail battlefield as early as 2020, and will be worth as much as 100 trillion yuan by 2030.
China already has the world's biggest Internet population, at more than 457 million users. Many of these folks are willing to purchase things online, the China Internet Network Information Center said in January.
Yan suggests that Chinese manufacturers and retailers seize the opportunities that the SNS website boom offers.
The first thing, in doing this, according to Yan, is to draft a feasible online market plan and make your website links accessible on the SNS for potential customers.
As for the shocking phenomenon of an army of Chinese throwing their money around overseas in shopping malls because of the cheaper prices, this comes in part from the inefficiency and underdevelopment of China's distribution system, Yan commented.
Commerce Minister Chen Deming has said that, "The government is researchingmethods for cutting distribution costs across the nation, since current commodities expenses are relatively high."
Chen made the remark during this year's National People's Congress and Chinese People's Political Consultative Conference National Committee sessions.
Yan had this to add,"For example, spoilage of farm produce during the distribution process sometimes amount to more than 25 percent of an entire shipment, putting an extra burden on buyers.
"The domestic supply chain has long had separation and fragmentation problems, with every place having its own tycoon who dominates the local supply chain."
To solve this, he said we need, "administrative measures by authorities, but, from my perspective, government measures (in lowering distribution costs) have their limit and should not be randomly applied. For instance, farm produce subsidies are understandable, but, in other fields, it is better to let the market rule itself.
"For the market players, we suggest that they remove supply chain barriers by increasing cooperation between businesses that handle different part of the industry and by utilizing IT."
Business essence
Yan said his company has tried to help its clients improve their supply chain and cut distribution costs.
But, "The essence of success in the retail sector is in liquidity - this is what we try to offer to clients. The retail business has five aspects, which I refer to as five types of flow". These are the flows of order, goods, finance, consumers, and information. Yan cited some success stories about how his company has been able to help clients with these flows.
One case involved the Shenzhen logistics center of China Resources Vanguard, a supermarket giant. By using eFuture's supply chain management and logistics solutions, that company was able to increase its daily cross-docking rate to 70 percent.
Cross-docking is a logistics term that refers to the unloading of materials from an incoming vehicle and loading them directly onto an outbound vehicle, with little or no storage in between.
"This shows how our approach helps clients increase efficiency in the flow of goods" said Yan.
Another case involved Suning, one of China's biggest retailers and a consumer electronics giant.
Before 2005, each Suning outlet had its own information system, which was not connected to any other. This left the company headquarters with no other choice than to employ a lot of engineers and facilities to maintain the various systems and analyze an immense amount of data, at considerable cost.
With eFuture's help, Suning was able to overhaul its IT system and now benefits from the use of cloud computing technology that uses fewer apparatuses and less time to accomplish more tasks.
"Our centralized POS (point of sale) and store solutions for information flow allow Suning to solve its information distortion problem and respond more quickly to market changes," Yan commented.
His company also has a customer relationship management (CRM) system for clients, which allows them to hold onto the customers they have; locate, attract, and win new customers and clients; and even bring former clients back into the fold, while reducing marketing and client service costs.
"Fourteen years have passed since eFuture was founded," Yan said, "But, long ago, our management already saw that we would never achieve our goal if we only stuck to software and solutions. Our executives reached a consensus that we needed to share our experience with others and change eFuture from a software and solution provider to a service provider."
At present, the company has a new mission, and a big one at that: to create a happy consumer world. It wants to build a consulting business that creates value for the client, Yan said.
His final thoughts were, "Our company is dedicated to creating an all-round, happy, highly interactive shopping environment for Chinese consumers, by providing cloud computing services to clients and SNS-based social shopping driven by social CRM, for their consumers. We're going to build a happiness chain that connects consumers, retailers, suppliers, and workers."
