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Home / News

Baijiu helps e-commerce gauge consumer pulse

Updated: 2016-12-05 (China Daily)
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Baijiu helps e-commerce gauge consumer pulse

An employee of a JD.com logistics center in Langfang, Hebei province, processes customer orders on Nov 10, 2015. [Photo/Agencies]

Predicting the changing tastes of China's consumers is becoming easier, thanks to the country's e-commerce giants, who monitor sales that can exceed $17 billion in a single day.

JD.com Inc, the country's second-biggest web-based retail platform, already has dozens of new indexes tracking sales of products from liquor to appliances. Larger rival Alibaba Group Holding Ltd plans to publish its own spending gauges in coming months.

Their data is vital to large global companies like Starbucks Corp and Wal-Mart Stores Inc that are looking for insights into what's hot among China's billion-plus consumers. Online shopping indexes reflect millions of transactions daily, whereas traditional consumer surveys can only test a tiny sample.

"The ability to analyze and understand trends in online consumption has never been more important or more valuable," said James Huang, big-data analytics director for the finance unit of Beijing-based JD.

One bellwether is the pricey Chinese hard liquor baijiu, often given as a gift, which endured a sales funk amid slower economic growth and President Xi Jinping's four-year crackdown on official corruption. Huang said JD's indicators show prices of the strong spirit began rebounding in May.

E-commerce accounts for 11 percent of total consumption in the country, Huang estimates. China's online retail sales rose 25.7 percent year-on-year last month, compared with a 10 percent increase in all retail transactions, official statistics show.

Jack Ma's Alibaba reported a whopping $17.8 billion of business during its Singles Day shopping frenzy on Nov 11.

That growth reflects rising wealth. By 2020, about 100 million households will be rich or middle-class and 61 million high-end online consumers will dominate consumption, according to estimates by the Ali Research Institute, a unit of Hangzhou-based Alibaba.

"Everybody's talking about the consumption upgrade," said Xie Zhoupei, director of consumption and macroeconomy research at Ali Research in Beijing. "We want to hear the rhythm of that upgrade. Is it accelerating? Is it decelerating? What forces are driving it?"

Academics are looking for those answers in the expanding universe of e-commerce data. Researchers at Tsinghua University in Beijing have created a consumer price index proxy called iCPI, which scrapes data from major e-commerce sites.

It's in the vein of Massachusetts Institute of Technology economist Alberto Cavallo's Billion Prices Project that collects prices from hundreds of online retailers around the world to produce high-frequency price data, such as a daily inflation index for the US. Alibaba also has a CPI gauge based on online purchases.

Tsinghua's CPI is "real-time with no lags", said Liu Taoxiong, director of the Institute of Economics at the School of Social Sciences. "That's more meaningful to policy-making."

 

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