Bai­jiu helps e-com­merce gauge con­sumer pulse

China Daily (Hong Kong) - - BUSINESS - By BLOOMBERG

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 Bei- jing-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 “re­al­time 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.”

/ REUTERS

An em­ployee of a JD.com lo­gis­tics cen­ter in Lang­fang, He­bei prov­ince, pro­cesses cus­tomer or­ders on Nov 10, 2015. Ja­son Lee

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