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China's E-commerce Industry: the Next Wave
added: 2007-10-02

During the course of development of China's Internet industry, there have been some twists and turns, but we can also see greater and greater successes: portals using SINA, as the representative, lead the first wave of Internet development which lead to the gradual change in the life style of Chinese people and the media industry's advertising trend.

CCID Consulting releases its article on the next wave of China's e-commerce industry.

After a brief period of calm, Internet games dominated the second wave of China's Internet industry, this wave integrated with search engines, C2C, E-payment and other services; not only re-lighted the "Gold Rush" for many people, but also let the circle to see the huge wealth of the Internet. From 2005 to 2006, web2.0 and risk investors generated another wave of Internet investments; the investments were not in web2.0. The "user maximization" concept, including UGC, brought forward by web2.0, influenced the whole Internet industry, and even entered the minds of management of enterprises in many traditional industries.

With wave after wave of Internet upsurge, today, it is hard to generalize or define the Internet with such words as technical means, media platform, network, market and so on because the Internet is no longer a virtual network; it has materially penetrated into our daily life, working manner and even an enterprise's operation. With the gradual strengthening of the Internet, it is difficult to determine what the next wave of changes to the Internet will bring.

For a long time, the focus was on portals that scrambled for market share with traditional media or individual service with ceaseless dispute. While the Internet enterprise user group was quietly growing, it was sometimes neglected. Actually, the user groups are the main body of Internet. Judging from the income structure of Internet service enterprises, advertisements and marketing from enterprises is the main source of income for Internet enterprises. From the perspective of the Internet industry itself, the trillions of transactions from e-commerce greatly exceeds the value of any other kind of Internet service. The core of E-commerce is concentrated on B2B services.

During the past few years, the B2B transaction platform has been dominated by Alibaba, which attracted lots of small and medium size businesses (SMBs). The Company's scale was large enough, but not its vigor. Currently, B2B has entered the high speed development period. Not only SMBs, but also large enterprises have entered this field. The original B2B service model cannot meet the increasingly individualized demand by enterprises. The specialized work division of B2B E-commerce platform and the construction of complete service system will be the general trend. The development of the e-commerce industry will sure to become the main body for the development of Internet and E-commerce within a period of time in the future. Thus, next wave of Internet development will consequentially be conducted.

At present, great importance has been given to the e-commerce industry by the government, service and application enterprises and carriers. The six development modes for the e-commerce industry are as follows:

1. Industrialized mode of a comprehensive e-commerce platform with Alibaba as the representative.

Because of the pressure from market competition, from its massive, original comprehensive e-commerce platform, Alibaba is beginning to expand its penetration into industry-specific fields. The advantage of this kind of platform is its huge e-commerce information resource network; with enterprise users able get lots of supply-and-demand information. But as the lack of a deeper understanding about the industry and the integration of industrial resources becomes a defect in making information precise, the realization of e-commerce as an enduring stronghold becomes more distant, as it becomes more apparent that the flow of information is shallow. The proportion of successful deals is rather low.

2. Professional industry e-commerce platform mode with Zhejiang Netsun Co., Ltd. as the representative.

The e-commerce service platform in this mode is dedicated to e-commerce development in a certain specific field. The precision of supply-and-demand information is improved through the full integration of industry resources, thus the efficiency of transaction realization is increased. But the construction mode of split vertical platforms causes the relation between supply-and-demand to not be wide enough. It cannot make full use of the e- commerce platform to enlarge the resource configuration range, and to realize the full E flow of the transaction process. It is hard to meet the long-term demand of enterprises.

3. The mode of e-commerce platform that is built by leading enterprises in traditional industries.

Leading enterprises that enjoy dominant positions in different industries build e-commerce platforms based on their supply chain management and IT application construction. Upstream and downstream enterprises of the supply chain realize communications and transactions with the leading enterprises through these platforms. Currently, the proportion of transactions using this mode in e-commerce is the greatest. It is helpful to improve the operational efficiency of enterprises. However, the system is closed and the transactions lack transparency. Besides, its resource integration capability is sub-par, and it cannot adapt to the demands of market development in the future.

4. The mode of the e-commerce platform constructed by resource-oriented enterprises.

Certain categories of resources-oriented enterprises can control the upstream and downstream resources of a certain industry through their inherent advantages. Through building the e-commerce platform, resources-oriented enterprises can help the realization of transactions among industrial enterprises, and help to finish the whole process of transactions. For example, a large-scale logistics enterprise with monopolistic resource advantages in a certain province, not only provides services for raw material suppliers in the building materials industry, but also provides services for processing plants and sales enterprises. Therefore, it has sufficient customer resource advantages to build an e-commerce platform to serve local enterprises in the building materials industry. In this way, it can help enterprises to realize the full e-flow.

5. The industry e-commerce mode dominated by regional government.

This kind of mode applies to a specific region with rather good industry- matching capabilities. The e-commerce platform built by the local government can help enterprises improve their operational efficiency, and it is good for standardizing the competitive environment in the region. Besides, it can improve the whole enterprise competitiveness and the regional economic strength.

6. The mode of the e-commerce platform built by carriers.

Carriers have the advantage in basic network and communications services. Therefore, during the process of transforming to comprehensive service providers, they can make full use of these advantages to expand the enterprise user value-added service market. Operators usually adopt the following strategy: provide enterprise users with a full set of e-commerce services ranging from network, equipment, integration, solution, maintenance and support services.

The existing six modes are only the exploration of multiple industries' e- commerce development modes. During the gradual maturation process of industry e-commerce applications, the active cooperation among government, service providers, operators and enterprise users will promote the application of e- commerce to gradually shift from the network platform layer to the core operation of enterprises, and even to the economic base construction of the whole society.

Therefore, we can predict that industry e-commerce will be sure to become the most magnificent "next wave" for the Internet industry.


Source: PR Newswire

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