Sichuan tea e-commerce sales surge: can the road ahead get wider and wider?
28-year-old Song Juan is an office worker at a university in Sichuan. Like many young people, she enjoys online shopping in her spare time. Recently she has become hooked on buying tea online and often visits the Sichuan Hong Tea flagship store on Tmall. "They have every kind of tea here. Besides traditional black tea and green tea, there are also flower and fruit teas aimed at women, and the taste is light and elegant. Most are priced under 100 yuan. I have bought them many times, sometimes to give to other colleagues in the office to drink, and everyone thinks they taste good."
As they grow older, many young people born after 1980, like Song Juan, are saying goodbye to bottled drinks and falling in love with drinking tea. The reporter learned that for them, online shopping has become deeply embedded in their lives. Even for buying tea, a non-daily consumer product, they choose to shop online.
Sichuan tea e-commerce platform sales surge
The reporter's attention to Sichuan tea e-commerce channels began during the 3rd China (Sichuan) International Tea Expo held in May this year. When exchanging views with He Bin, marketing director of the Sichuan Hong Tea Group, about this year's changes in the tea industry, he said something that drew the attention of industry insiders: "Our e-commerce channel sales have been very good over the past two years, accounting for 40% of the company's total sales in 2013." More recently, when the reporter interviewed at the Ya'an Tea Exchange, a relevant person in charge of Mingshan Weiduzhen Tea Co., Ltd. also said, "E-commerce platform sales have already accounted for more than 30% of the company's total sales."
Is Sichuan tea's use of e-commerce marketing an accidental achievement, or has it already become a common choice for Sichuan tea enterprises? The heads of several tea enterprises gave almost identical answers: "Our growth rate on e-commerce channels is very fast, beyond what I expected. In the first quarter of this year, e-commerce sales reached 30 times the full-year total of last year." Speaking of e-commerce channels, Zhang Bo, general manager of Ya'an Yuehua Tea, was somewhat excited. "In the first half of this year, our e-commerce channel sales accounted for more than 30% of total sales. We believe the second half will be even better, and this proportion will increase further. The company's e-commerce channel sales staff has already increased from 3 people at the end of 2012 to 13 people. At present, the company's chairman is personally overseeing this channel." Manager Jing, head of the e-commerce center of the Sichuan Hong Tea Group, told the reporter. "On our e-commerce channels, the current average daily sales are more than 10,000 yuan. More importantly, from the e-commerce performance chart, sales performance shows a continuously growing trend. For this reason, we specially established an e-commerce sales company for independent operation." said Li Jingbo of the planning department of Emei Xueya Group.
Enterprises make strategic arrangements for e-commerce channels
In parallel with sales growth, various tea enterprises are also advancing their e-commerce channel arrangements very quickly. The reporter learned during interviews that most Sichuan tea enterprises began arranging e-commerce channels around 2013, but in 2014 the strategic arrangements continued to expand.
What caused some Sichuan tea enterprises' arrangements for e-commerce channels to enter a strategic stage?
The reporter interviewed many Sichuan tea enterprises and found that since last year, because of the broader environment, almost all Sichuan tea enterprises adjusted their product structures this year. Among the new products launched, mid-priced products stood out in particular. For example, some high-end Sichuan tea brands changed their main product structure from more than 1,000 yuan to more than 3,000 yuan per 500 grams, and this year focused product prices mainly on more than 200 yuan to more than 500 yuan per 500 grams. At the same time, in packaging they almost all abandoned the luxurious style and widely adopted environmentally friendly packaging materials. Changes in the market and changes in product structure have driven changes in channels. Tea merchant Mr. Zhou told the reporter that tea merchants are now in a period of confusion about tea sales. For higher-priced products, the group-buying market is becoming increasingly difficult. For mid- and low-priced products, not only is competition fierce, but profits are not high.
As channels such as group buying, distribution and specialty stores are undergoing adjustment and transformation, the rapidly growing e-commerce channel seems to have given Sichuan tea enterprises a new way out. Manager Jing believes that after years of cultivation by Sichuan tea enterprises, the market on traditional channels is mostly in Sichuan and Chongqing, and it is difficult to expand much further, while the internet shows Sichuan tea enterprises a larger market space. Li Jingbo found that mid- and low-priced products, which tea merchants find tasteless yet too costly to abandon, are widely recognized online.
The outlook for e-commerce must be observed as it develops
The rapidly growing figures are indeed a bright spot against the backdrop of strong downward economic pressure. However, has Sichuan tea's move to e-commerce really found a development model, and can the road get wider and wider? In fact, some problems remain unresolved.
First, there is no doubt that profit is the core of enterprise and industry development. When talking about the profitability of e-commerce channels, most enterprise heads told the reporter that they are optimistic about future profitability. Manager Jing, head of the e-commerce center of the Sichuan Hong Tea Group, told the reporter that in 2013, although the sales volume of Sichuan Hong's e-commerce channels grew rapidly, it did not make a profit, and this year it is expected to be profitable. "In order to guide consumers to enter our flagship store on the vast e-commerce platform, we spent a great deal on promotion, while our product prices cannot be high." However, Manager Jing believes that early promotion investment is necessary. Once consumers are converted into regular members, promotion costs can be reduced.
Second, some industry insiders said that for Sichuan tea enterprises on e-commerce channels, their target consumers are not infinitely expanding. People who love drinking tea are generally over 35 years old and have relatively high requirements for tea quality. They generally buy only after tasting, and this habit is difficult for e-commerce channels to satisfy. Young consumers around 25 years old, who most like online shopping, prefer to buy beverages and other drinks. Enthusiasts of tea e-commerce should be locked onto office workers with a certain amount of life experience. Experts believe that consumer research should be more refined, and one should not assume that e-commerce channels have infinite consumers.
Furthermore, what kind of products e-commerce channels need is also a question enterprises must consider. The reporter clicked on almost all Tmall flagship stores of Sichuan tea enterprises and found that a large number of enterprises still put offline products online for sale, with packaging, prices and so on all identical, only choosing lower-priced products. However, these flagship stores appear deserted. Some enterprises, by contrast, have developed products for this channel with smaller specifications and fashionable, simple packaging, and have continuous promotional activities to stimulate purchases. Obviously, such stores are markedly more active.