The Impact of E-Commerce on the Clothing Retailers: Studies on Chinese Companies

The Impact of E-Commerce on the Clothing Retailers: Studies on Chinese Companies

Tianlong Ge (Xi'an Jiaotong-Liverpool University, China), Zheng Liu (Xi'an Jiaotong-Liverpool University, China) and Lei Ma (Nanjing University of Science & Technology, China)
DOI: 10.4018/978-1-5225-0110-7.ch024
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Abstract

In the past 10 years, e-commerce has developed rapidly in the clothing industry. Many companies seek strategies to expand, innovate, and restructure, and the traditional impact from manufacturing is gradually replaced by customer relationship. E-commerce provides opportunities for both large clothing companies and small retailers. In China, the largest emerging country, there is also a trend for clothing companies to market and establish customer relationship online. This chapter focuses on how Chinese clothing retailers compete through e-commerce platform. It starts with an introduction of clothing industry, supply chain and e-commerce practice from literature perspectives. Then, there are industry review and cases studies into five Chinese clothing companies with a highlight on their management in the context of e-commerce and customer relationship. Discussion will be made to address the critical issues, followed by a summary of the chapter.
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Introduction

With the world economic integration and rapid growth of information technology, companies are seeking new approaches to meet the ever changing customers’ need (Chakravarty et al., 2014). The concept of e-commerce which shortens the distance between retailers and customers has emerged, radically changing the structure of traditional offline market. Companies can reduce the operation and transaction costs, while improving productivity through e-platform (Goswami, 2014). E-commerce is also recognized for its ability to help them break the geographic barriers to communicate and conduct transaction with distant customers. The power of e-commerce creates an environment of almost instantaneous feedback, making global consumers and businesses become the potential customers and suppliers (Jeffcoate et.al, 2002). Meanwhile, e-commerce can offer a large number of product contents by quick search and online transaction, and thus meet customers’ requirements (Evans & Wurster, 1997).

China’s e-commerce first emerged in 2008, followed by a huge growth. By 2012, e-commerce sales volume in China reached 202 billion USD, with the annual growth rate of 55% (China E-commerce Research Center, 2013). Based on the large customer market and enormous production capacity, China has shown a great potential to further develop e-business. In the current China e-commerce market, the most popular sector is apparel, accounting for 35% of total market share and electronic products rank second, accounting for 20% of that (McKinsey Global Institute Analysis, 2013). The rest are far behind them. It is also significant that most products, especially clothing products, nowadays get more shares in e-commerce market than in traditional offline retail market which represents 20% of the entire market (compared with 35% online market share). This means that currently purchasing fashion products online has been well-accepted by customers. In the Chinese market, Taobao is the most dominant e-business company. According to McKinsey Report (2013), Taobao accounted for about 69.5% of the whole China e-commerce market in 2011, followed by Tmall which represented 11.9%. Other influential companies are 360buy, Suning and Dangdang.

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