How Interactive E-commerce in China Drives the Next Phase of E-commerce

E-commerce has come a long way from the old catalogs with a fax number to the one-click, same-day delivery to which consumers in some markets have become accustomed.

It is in China, home to the world’s most advanced e-commerce industry, that the move away from the legacy search-based model of e-commerce continues at an accelerated pace. Replacing the old is a new interactive experience that more faithfully represents how people shop in the physical world, offering a fun experience for the shopper along with improved value for money. The Chinese e-commerce market has changed a lot over the years, revolutionizing the traditional model through the development of cutting-edge technologies. Meanwhile, platforms have developed as well, improving to adapt to the demanding and ever-changing needs of consumers including cheaper products, diversity of merchandise and more online entertainment functions.

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The market research agency China Channel has launched an in-depth whitepaper profiling how the broader trend of “interactive e-commerce” is reshaping the digital economy both in China and around the world through the case of Pinduoduo.

(An online “bazaar” or “carnival” was a popular metaphor to conceptualize social e-commerce. Source: China Channel)

The report examines how the integration of AI-enabled recommendation algorithms, entertainment, and community features into the online shopping experience has not only driven Pinduoduo’s growth over the past five years, but is also changing how brands, internet platforms, and shoppers think of e-commerce.

Interactive e-commerce humanizes the online shopping experience. It is an approach that recreates the enjoyable experience of shopping in the physical world for the digital age. It can be viewed as an extension of the popular “Disney and Costco” characterization: “Disney,” as it provides an entertaining, engaging, and socially connected user experience. “Costco” in that it can leverage insights drawn from users and direct relationships with manufacturers to achieve efficient economies of scale, and thus superior value for money.

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In the physical world, a wide diversity of successful business models has risen to meet such broader human needs. Shopping malls serve as weekend family destinations not simply for their stores, but movie theaters, gaming arcades, and children’s playgrounds. Farmer’s markets and bazaars attract shoppers as much for their lively environments as for the goods they sell. Tupperware or Mary Kay parties provide opportunities for friends to connect. Luxury boutiques on Rodeo Drive don’t simply sell expensive clothing but offer an environment of sophistication and prestige that transcend their products.

(The elements of interactive e-commerce. Source: China Channel)

Interactive e-commerce can be understood as a philosophy toward online shopping that humanizes the online shopping experience, applying insights and design approaches that have been more traditionally associated with gaming, social media, or entertainment platforms.

In traditional e-commerce, platforms are often designed under the assumption that shopping is a task to be crossed off a to-do list, that what ultimately motivates the user is efficiency, price, and convenience. In contrast, interactive e-commerce platforms are designed with the notion that online shopping can itself be a leisure activity, as offline shopping has often been.

This approach has led to an integration of tools from elsewhere in the digital economy: recommendation, community, and entertainment together with one core proposition: value for money.

Recommendation Analogy

(Source: China Channel)

Entertainment Analogy

(Source: China Channel)

Community Analogy

(Source: China Channel)

The full version of the report can be accessed here.