Online retail sites: Prepare for a surge in China e-commerce

By Jeff Kim, jeff.kim@cdnetworks.com

As the Chinese New Year approaches, online retailers and the brands they represent are making huge investments in their China-focused websites. But unlike years past, it’s not just the luxury brands that stand to perform well this coming January. Online retailers offering a spectrum of Western brands, luxury or otherwise, have gained market traction among China’s 25-35 year olds. In fact, Western products across a broad range of categories drove the nearly four-fold leap in holiday e-commerce in 2010. According to Taobao.com, China’s largest online retail site, online sales during the New Year’s Spring Festival rose from 280 Yuan in 2009 to 1 billion Yuan (150 million U.S. Dollars) in 2010.  

To prepare their websites for the coming holiday season, online retailers should borrow a page from the playbooks of luxury brand retailers with strong online sales in China. These retailers have succeeded through an ability to both draw consumers to their sites and retain consumers with high-performing, immersive site experiences. Such experiences ensure customer loyalty, and Chinese consumers tend to be far more loyal shoppers than Western consumers.

But delivering immersive website experiences has proven difficult, especially for early entrants into China. The imperfect nature of China’s Internet infrastructure slows the performance of online retail sites. Page load times of thirty seconds to one minute are not uncommon, and this leads to high shopping cart abandonment. Online retailers who have adjusted quickly to the shortcomings of China’s Internet infrastructure improved their website performance and enjoy strong China revenue today.

Aligning site optimization with website performance optimization
Online retailers in China do well to align their investments in search optimization and Web applications with the proper content delivery strategy. Through the use of a distributed content delivery network, or CDN, their website performance stands out among online retailers, particularly during the peak holiday shopping season. By leveraging an in-China CDN, they ensure high website performance and a quality end-user experience ― regardless of traffic volume and fluctuations in demand.

Recognizing that customer loyalty erodes fast in China when a website suffers from poor performance, website performance measurement companies (I.e. Compuware, Keynote, etc.) have established extensive China operations and partnerships to help online retailers measure their performance. It’s an important development, because it underscores the nature of China’s online consumers: They typically come from China’s younger, Internet-savvy generation, and this generation demands both optimal website performance and an immersive brand experience. 

Against this backdrop, online retailers must leave nothing to chance. They’ve spent great time and effort to attract Chinese consumers and wow them with dynamic shopping applications. But shopping cart conversion only comes with strong website performance. Unlike the US and Europe where standard website acceleration techniques prove effective, the same rules do not apply inside the Great Firewall that surrounds mainland China. Mainland China’s internal Internet infrastructure can be hazardous, resulting in drastically reduced website performance. But site managers can take three critical steps to turn China website performance in their favor.

Step 1: Get into mainland China
Many companies have attempted to reach Chinese consumers from data centers in Hong Kong or Singapore. But content originating from outside China must first pass through a filtering process, resulting in partial delivery of web pages or slowed full-page delivery. This drastically reduces the quality of the end-user experience.

After successfully passing through The Great Firewall, content slows as it crosses mainland China. Data centers located outside of mainland China simply lack the visibility and control needed to overcome the network peering issues that arise within the mainland.

Step 2: Navigate the mainland’s networks
China’s Internet is a fragmented network made up of multiple telecommunications networks, with no network dominating in all regions. Moreover, the different networks do not cooperate or inter-connect well. To ensure smooth delivery of website content into China’s various regions, retailers must use website delivery methods that do not rely heavily on a single network operator. The answer for many website managers is to forego the standard data center hosting arrangement in favor of an in-China CDN.

By locating content delivery servers within multiple Chinese networks, CDN service providers help websites to circumvent weak peering between the networks. Additionally, since CDNs can deliver both dynamic applications and static content, website managers have no need to contract with local China data centers.

Step 3: Measure potential for success
Numerous online retailers and other organizations have launched their China websites over the past several years. Some have built out their own infrastructure, while many have leveraged managed hosting service providers and CDN services providers. Thanks to third party site performance measurement tools such as those provided by Gomez and Keynote Systems, IT teams can gather reliable evidence to discover which websites are performing well in China and which have a drastic need to improve.

Conclusion: A little homework goes a long way in China
The ecosystem of Internet infrastructure, service providers, and regulations surrounding China is still evolving today. Rather than committing large budgets, staff resources, and learning curve time to manage China complexities, leading online retailers rely on global CDN service providers with a presence inside mainland China. Such CDNs provide the obvious benefit of navigating China on behalf of online retailers, drastically reducing their operational risk and streamlining time to market. CDNs with a global presence beyond China also enable online retailers to leverage China success and easily replicate it around the world.

Jeff Kim is the COO of U.S. and EMEA at CDNetworks (http://www.cdnetworks.com). He can be reached at jeff.kim@cdnetworks.com.

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