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Spirited into the world of e-commerce (2)

(China Daily)

15:15, August 20, 2012

However, Mo considered the move is being made at the right time because "the big picture is that almost all the companies are marching into the e-commerce industry when the traditional market is almost saturated".

She added: "The sales of liquor are fairly good nowadays, with stable consumer groups and steady demand. On top of that, the outlook for e-commerce is equally as good. So it is wise to enter the market as early as possible and seize the opportunity."

Wines imported from overseas entered the Chinese e-commerce industry as soon as they started to arrive in the Chinese market. Wang Jiaqi, business development director of Shanghai Wine Exchange, said she knew little of liquor being distributed online but overseas wine dealers were keen to approach online channels first.

"Costs are added because there are many processes to go through in the traditional distribution methods for wine, resulting ultimately in the soaring price of the drink. With the help of e-commerce, many redundant processes have been eliminated and so the wine prices we see on the websites have come down," said Wang.

"It seems to me that both wine and liquor dealers are now prepared to wave goodbye to the traditional bricks-and-mortar stores, a traditional branding method with the purpose of promoting sales. But unnecessary costs are incurred that way, including labor, maintenance and rent, the last of which accounts for the largest part of the operation of a store," she said.

There are, of course, different costs for online business, most significantly logistics. Special attention will be given to the inventory and delivery of wines and liquors. Nonetheless, Wang calculates the overall cost for e-commerce operators is definitely lower.

"Liquor dealers should note that the operation of their online market should differentiate from that of wine because the profit chains for the two alcohols are quite different on the Chinese mainland. However, the demand for such e-commerce has developed now as this emerging industry makes periodic huge leaps in this country," said Wang.

"Credit is at the core of the online purchase of wines or liquors. People used to be concerned about the integrity of dealers, considering the products have such a high unit price and were little known to the general public. But, over time, this skepticism has waned and customers have come to realize that there are reliable dealers," she said.

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