But how does this translate to automotive logistics? Executives at the recent Automotive Logistics China conference in Shanghai discussed the potential to develop e-commerce and how it could be utilised more effectively by the automotive industry, which currently lags behind.
Jacky Wang, president of United Capital (and former vice president of the Alibaba Group), summed it up when he said, “e-commerce is not possible without the logistics industry.”
Many companies have now established e-business platforms, with traditional businesses and industries getting on board too. Wang said, “iPhones are now an extension of our physical body and mobile business will become a bigger ground for e-business in the future.”
The internet is now changing many traditional industries, including automotive, as online purchasing begins to overtake offline. Wang said that this year marks the first year of the development of Chinese automotive industries and e-businesses together. Alibaba is now working with OEMs to create a fund to enable successful automotive e-business, and more investment is expected in this venture.
The e-commerce giant already has its business-to-consumer platform Tmall.com, which offers more than 30 new cars for sale. Alibaba, WeChat messaging app provider Tencent, and video streaming platform Letv, have all also announced that they plan to build cars of the future, drawing on digital entertainment, e-commerce, navigation and communication services. So integration between the tech world and the automotive world is beginning to happen.
In addition to working with Alibaba, the automotive industry is trying to create a centralised online system. So far around 50 automotive companies have integrated more than 10,000 dealerships and nearly 20,000 aftersales outlets according to Wang. These services include new and secondhand vehicles, and parts. While many e-businesses are currently managing their own logistics, integration and express deliveries are becoming increasingly common, and this will become a trend going forward.
Wang said that a recent survey revealed that 77% of potential vehicle buyers are looking online before purchasing. However, despite this figure, in the automotive industry e-commerce is still very small, and last year only 300,000 cars were sold through online channels, all or most of them second hand.
The era of 'Internet Plus'
China’s ‘Internet Plus’ action plan was revealed earlier this year. Official government sources said “the plan aims to integrate mobile internet, cloud computing, big data and the Internet of Things with modern manufacturing, to encourage the healthy development of e-commerce, industrial networks and internet banking, and to help internet companies increase international presence.”
Zhu Tiazhou, deputy director strategic development department, Changan Minsheng APLL Logistics, explained what this could mean for the automotive industry: in addition to the internet and networking applications, the Internet Plus of the automotive industry should also include motor vehicle sales, auto parts sales, vehicle repair and maintenance, car finance and insurance, used cars, car rentals, production supply chain, and many other areas of internet operations. Every major change in the field will have a profound impact on the existing automotive logistics service mode and content. “You could even provide online tyre changes. Someone orders the service online and the company sends someone over,” he said.
While there is obviously a lot of potential to develop China’s e-commerce industry across all sectors, there is also a long way to go, and this is especially true for automotive companies. More integration between technology firms and OEMs – like Alibaba is currently doing with OEMs – will be needed to form strong online marketplaces to sell vehicles and parts, and looking a few more years ahead, perhaps even services.