Moxian, Inc. (NASDAQ: MOXC) is committed to growth in China’s online-to-offline (O2O) retail market, which is predicted by the Chinese to reach $48 billion in 1H17. Social media, an important part of Moxian’s marketing strategy, is playing a growing role in generating e-commerce apparel and dining revenues, research shows. A report by McKinsey & Company finds that the online market is changing retail buying patterns within China. Moxian is a high technology company which is transitioning to paid platforms that offer access to the O2O market and social media sites and away from its initial non-paid business and consumer apps.
The company’s business app is Moxian+ Business, targeted to China’s brick-and-mortar small- and medium-sized business enterprises (SMEs) as they seek to develop social media sites and select from Moxian’s suite of online business tools. The Shenzhen-based company also offers the paid Moxian+ app to consumers in China. Its revenue stream is designed to come from paid mobile advertising, a percentage of all transactions, subscription revenue, and OEM and distribution license fees. The company is focusing on its current 31,600 business users and more than 300,000 consumers. In its initial research report on Moxian (http://nnw.fm/2zcAI), in February 2017, SeeThruEquity acknowledged that company management believes sales can reach $11 million in 2017, making the company cash break even by the end of this year if those sales goals are met, the report said.
The April 2016 report by McKinsey & Company, Consumer China 2016 Survey (http://nnw.fm/QHb20), sees greater penetration by O2O in lower tier cities. E-commerce accounts for 13.5% of all retail spending in China, the survey reports. McKinsey also found that multiple screen users — those that own mobile devices, tablets, and computers — are more intense online shoppers than those who have smart mobile phones alone. Multiple device owners spend 17% more than users who have only mobile phones, and they also shop in 29% more categories. A total of 14% more multi-screen owners interact with businesses through social networks, now using such platforms as WeChat.
Social media is playing a larger role in generating e-commerce sales, the study found. Half of the digital consumers surveyed by McKinsey used social media for product research and recommendations. McKinsey found that social media was not just a background research tool, but an active driver of actual online purchases. McKinsey found that social media was important in impulse buys, such as for apparel and personal care. McKinsey said it sees considerable opportunity for brands and retailers to reach customers on social platforms. In particular, dining and travel are two segments for growth in the O2O marketplace, it said.
The study also found that consumer electronics and small appliances have been basic e-commerce retail sellers in China, generating some 30% of their retail sales online. Apparel needs to grow its entire online experience, from style advice and returns/exchanges, to extend its online value share — now stuck in the low 20s. Food spending online remains at only 5% of total food spending for users. Online remains convenient for food buyers, but the average food basket size, at less than $15, suggests that consumers are still not doing most of their grocery shopping via e-commerce.
Lower tier cities also have a lot of e-commerce potential in China, McKinsey found. There are 74 million more online shoppers there than in high tier cities. Yet, 160 million people in these low tier cities have not even started shopping online. To grow, online markets will need to use data analytics to reach consumer market segments, developing up selling and cross-marketing efforts.
For more information, visit www.Moxian.com
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