10 Nov 2015

Beijing, November 11 , 2015 – The ''11.11'' festival saw exceptional smartphone sales in 2014. Tmall alone posted USD 9.1 billion in smartphone sales on November 11, 2014, with Xiaomi's Redmi 1S claiming the No. 1 spot, followed by Huawei Honor's 3C, Meizu, Apple, and finally Samsung for second to fifth place. For this year's festival, Huawei and Xiaomi will remain in intense competition, with Huawei's marketing focusing on gift-giving and Xiaomi on promotional price cuts. This stems primarily from their differing brand and product positioning. Xiaomi mainly offers low-end products such as Redmi, while Huawei Honor's catalogue is dominated by middle-end products. For this year, both Xiaomi and Huawei have extended their ''11. 11'' campaign by offering various promotions beginning as early as November 1 in order to alleviate supply pressure and increase overall sales. From the perspective of PC vendors, the focus of marketing and promotions have shifted from competitive pricing to targeting the high-end gaming market.

IDC's China smart devices market data shows that shipments of smart devices (PCs, tablets & smart phones) in the E-commerce market have already reached 49.52 million units in the first half of 2015, representing a 67.3% increase over the same period in 2014. E-commerce accounted for 20.2% of gross shipments in China's smart devices market.

Figure 1

In this constantly expanding market, the friction between e-commerce and traditional channels is reaching a crescendo for companies in the smart device industry. Everyone is wondering what surprises e-commerce has in store for them next year and what further impacts it will produce on the traditional IT model. Fiona Wu, A ssociate R esearch D irector of IDC China believes that the IT market in smart device e-commerce will take on the following three major trends in the future:

1. Diversified Internet Branding: In its research, IDC has found that future brands sold through E-commerce channels will be more segmented than traditional brands. Because the main demographic of the e-commerce market is dominated by consumers born in the 1980s and 1990s, they are not attracted to conventional big brands. Instead, they prefer flashier brand images like MECHREVO, MAIBENBEN and Mayn, which are all selling extremely well in the online market. IDC believes that more and more merchants will start to adopt a multi-brand strategy to differentiate themselves from conventional IT brands and e-commerce brands.

2. Commercial IT sourcing products from e-commerce suppliers : More and more small- and medium-sized enterprise customers have begun to purchase IT products from e-commerce suppliers. Compared with the same period of last year, online sales of desktops and printers grew by 17.8% and 28.3% respectively. IT vendors have also gradually expanded their commercial products online, welcoming servers, workstations and other commercial products onto the e-commerce stage. IDC predicts that online sales of commercial products will increase more significantly in 2016.

3. Price will no longer be the main reason customers choose e-commerce. IDC believes that although price and convenience were the main factors behind customers' preference for e-commerce in the past, as the e-commerce market is further optimized and the industry environment changes, price will lose its place as a leading factor drawing sales. On one hand, as vendors gradually solidify the relationship between online and offline sales and online goods are better price controlled, the price advantage of e-commerce will gradually weaken. On the other hand, the e-commerce market is maturing and becoming more diversified through ecommerce reaching rural areas, new sales models like O2O, and installment-based payment plans.

IDC predicts that overall sales during the 2015 ''11. 11'' Online Shopping Festival will increase by more than 40% over the last year, with a double-digit growth in sales of IT products. In order to tap the rural market, Alibaba announced that the rural channel of Taobao.com will feature online to offline interactions to attract users. Smart device manufacturers will take advantage of this opportunity to display and advertise their brand and products in rural areas to attract consumers while expanding understanding of rural market demand.