2014 CHINA DIGITAL POWER STUDY

Contents

BRANDRANKINGS

INTRODUCTION eTAILERRANKINGS

02 05 13 34

MANUFACTUREReCOMMERCE

STAGE

02

CHINA’S FIRST-EVER ECOMMERCE INDUSTRY BENCHMARKING STUDY

Kantar Retail: Setting the Standard

With this inaugural Digital Power Study, Kantar Retail establishes a competitive baseline for how eTailers are viewed by their trading partners and established the attributes of best in class performance to strive for.

1st 5 201ECOMMERCE

BENCHMARKING STUDY COMPONENTS PARTICIPANTS

Born out of strong client interest in under-standing who is lead-ing in the digital and eCommerce industry

Identifies those eTail-ers who set the stan-dard of performance as rated by their trad-ing partners in the most important areas of the manufacturer / eTailer relationship.

Commercial StrengthStrategic StrengthOperational StrengthMarketing StrengthOrganization & Capability

201 leading manufacturer participators from different eCommerce related func-tions:

eBusiness Development Marketing Digital Marketing KA Management Channel Development Market and Shopper Insight

04

DIGITAL POWER STUDY HELPS MANUFACTURERS WIN BY PROVIDING INSIGHTS

Paint comprehensive picture of FMCG manufacturers’ eCommerce stages

Pinpoint key areasor capabilities that manufacturers

and eTailers can build and improve on

Identify leaders in digital and online retail across different business areas

Highlight areas of focus for future strategic planning and development

1. Big

Picture

2. Leaders

3. F

ocus A

rea

4. Strengths & Weaknesses

MANUFACTURER eCOMMERCE STAGE

06

<1% 2%-5% 5%-10% >10%

Among all major FMCG categories, the Infant Nutrition and Baby Care categories are the most mature online. 59% of IMF and Baby category manufacturers re-ported that more than 10% of their total sales come from online; 33% report that their online business contributes between 5% and 10% of their total respective sales.

The Household, Personal Care, and Cos-metics categories are the next most mature online, with eCommerce already contributing more than 2% of total sales for 61% of HPC manufacturers.

Food and Beverage are the least mature categories online; 58% of manufacturers report that less than 1% of their total sales come from eCommerce.

SIZE OF eCOMMECE IN YOUR BUSINESSSize of eCommerce as a % of Total Sales

Infant Nutrition and Baby Care

Household, Personal Careand Cosmetics

Non-Food GroceryFoods and Beverage

6%11%

25%

58%

14%

43%

29%

14% 39%

39%

19%

3%

8%

33%59%

12

When asked about their expectations from eTailers, manufacturers ranked Size of Business and Branding as the most im-portant factor, followed by eTailer Busi-ness Growth and Profitability.

Digital Marketing and Online Shopper Mar-keting Capability was ranked as the next important business area that Manufactur-ers expected eTailers to support.

Shopper and Category Insights ranks fourth, followed by Logistics and Delivery Capability, Company Strategy and Supply Chain Management, etc.’

WHAT MATTERS MOST TO MANUFACTURERS?What Matter Most to Manufacturers?(Percent of Manufacturers Ranking 3 of 3 in Importance)

eTailers’ Branding,

Sizeof B

usiness

Digital M

arketing

and Online Shopper Marketing Capability Shopper

and Category Insights Logisti

cs

and Delivery Capability

Website Navigation

and Product Disp

lay

Clear Company Stra

tegy

Supply Chain Management

eTailers’ Busin

ess Growth

and Profitability

Rank1

64.7

2

56.6

3

55.6

5

30.3

7

20.2

6

20.2

811.1

4

41.4

ETAILER RANKINGS

14

eTAILERS WERE EVALUATED IN THE ASPECTS OF

TrafficGrowth Opportunity Profitability

Clearest Company eCommerce StrategyBest Strategic PartnershipPower eTailers

Best Buying Team & Category ManagementBest New Product Launch InitiativesBest Logistics & DeliveryBest Online Shopper Data AnalyticsBest Understanding of Digital Path-to-Purchase

Most Innovative Digital Marketing ApproachBest Use of Mobile & Social NetworkingBest Investment in SEO & Online Advertising

Most Mature & Professional Team Efficient & Flexible Organization

1CommercialStrength

2 StrategicStrength

3OperationalStrength

4 MarketingStrength

5 Organization & Capability

15

Based on its aggregate score, JD.com is the highest-ranked, Best of the Best eTailer in this year’ s inaugural 2014 Digital Power Study. JD was recognized for its compre-hensive product assortment, advanced logistics system, and high-level of website traffic.

Tmall debuted at No. 2 in the Top 10, per-forming strongly in platform operation, marketing, mobile, and data analytics.

Yihaodian secured the No. 3 spot and was recognized by manufacturers as the lead-ing eTailer in food & grocery.

THE BEST OF THE BEST2014 Digital Power Study – Best of the Best(Composite score is an aggregate of metric scores across 5 areas: Business Development, Strategy, Operation, Marketing, and Organization & Structure)

“JD has demonstrated great changes in the past few years, it offers shopper with comprehensive product portfolio and pre-mium product delivery services. The website has huge traffic to boost sales and promotion.”

JD 京东 Tmall 天猫 YHD 一号店 Amazon亚马逊

Womai 我买网Wechat 微信

Rank

Jumei 聚美优品

VIP.com唯品会

Yixun 易迅

1

68.7

2

67.7

3

65.7

5

10.0

7

7.0

6

7.0

8

5.1

9

3.0

10

6.0

Dangdang当当

Suning苏宁易购

4

34.0

16

Although JD, Tmall and YHD are undoubt-edly the leading eTailer across all the eCommerce and digital areas, each of them possessed respective merits in differ-ent territories.

JD is more competitive in Commercial and Operation areas while Tmall is more recog-nized by Manufacturers in its Strategy and Marketing strength. YHD is more outstand-ing in Organization Structure and Capabil-ity. JD

京东

Tmall天猫

YHD一号店

BEST OF THE BEST CommercialStrength

StrategicStrength

OperationalStrength

MarketingStrength

Organization& Capability

Percent of Manufacturers Ranking Among Top 3 eTailers

% % % % % %

65.7 41.4 36.4

67.7 83.8 49.5 35.4

65.7 80.8 62.6 50.5 40.4

68.7 85.9 54.6

66.7 42.4

37.4

Although JD, Tmall and YHD were ranked as the Top 3 eTailers across each of the metrics in the 2014 Digital Power Study, each eTailer possessed its own respective strengths.

Manufacturers recognized JD as more competitive in Commercial and Opera-tional areas, Tmall in Strategy and Mar-keting, and YHD in Organization Structure and Capability.

OVERALL RANKING

17

DIFFERENT eTAILERS HAVE ITS OWN CATEGORY PRIORITIES

Category Distribution across eTailers

Apparel, Shoes,Bags, Jewelry

Household Appliance

3C Products

Cosmetics

Personal Care

Foods

Beverage &Wine

Household Cleaning

Baby Products

Books & Audio

0.1%

-

-

-

-

-

-

0.6%

0.1%

0.1%

-

0.0%

-

-

2.0%

-

0.0%

-

-

-

0.5%

2.6%

0.6%

0.1%

1.6%

-

-

0.0%

-

0.1%

1.0%

0.0%

1.9%

4.6%

0.1%

1.2%

-

0.2%

0.2%

0.2%

2.9%

-

-

-

11.8%

-

-

-

-

-

0.5%

0.0%

9.5%

4.1%

0.2%

0.3%

0.0%

0.2%

0.2%

0.8%

2.0%

0.2%

0.5%

7.4%

0.3%

-

17.6%

0.3%

1.7%

0.4%

0.5%

0.0%

0.8%

1.0%

0.6%

0.0%

35.2%

3.3%

1.2%

0.5%

15.4%

0.2%

1.4%

2.6%

0.8%

26.4%

0.0%

12.4%

18.2%

2.0%

25.6%

2.4%

51.9%

54.8%

7.9%

25.1%

14.2%

5.2%

25.3%

13.0%

22.4%

33.5%

13.1%

10.4%

23.4%

22.9%

21.3%

33.1%

26.0%

34.6%

29.1%

61.0%

20.4%

15.0%

51.3%

24.0%

11.6%

44.7%

27.1%

48.3%

BRAND RANKINGS

35

TOP 10 BRAND RANKING IN PERSONAL CARE CATEGORY

Taobao

Personal CareTmall JD　 YHD

1

2

3

4

5

6

7

8

9

10

KERASTASE / 卡诗

AMWAY / 安利

Shiseido / 资生堂

LUSH / 露诗

CoCo / 可可

L'OREAL / 欧莱雅

Schwarzkopf / 施华蔻

Infinitus / 无限极

Batiste / 碧缇丝

Lion / 狮王

9%

8%

7%

5%

5%

4%

4%

3%

3%

3%

Yunnanbaiyao / 云南白药

VS / 沙宣

Schwarzkopf / 施华蔻

Shiseido / 资生堂

SYOSS / 丝蕴

Head-Shoulders / 海飞丝

Dove / 多芬

Sensodyne / 舒适达

CLEAR / 清扬

Ora2 / 皓乐齿

8%

7%

5%

5%

5%

4%

4%

4%

3%

3%

Head-Shoulders / 海飞丝

VS / 沙宣

Dove / 多芬

PANTENE / 潘婷

Schwarzkopf / 施华蔻

Safeguard / 舒肤佳

AQUAIR / 水之密语

LUX / 力士

Rejoice / 飘柔

L'OREAL / 欧莱雅

12%

9%

7%

6%

6%

5%

4%

4%

3%

3%

Shiseido / 资生堂

Head-Shoulders / 海飞丝

PANTENE / 潘婷

L'OREAL / 欧莱雅

VS / 沙宣

CLEAR / 清扬

Dove / 多芬

Schwarzkopf / 施华蔻

Rejoice / 飘柔

Safeguard / 舒肤佳

15%

10%

6%

6%

6%

5%

5%

5%

4%

3%

*Personal Care category includes Body wash, Shampoo/Conditioner and Toothpaste Data until June, 2014

42

ABOUT KANTAR RETAIL

SHOPPER INSIGHT

How can we motivate shoppers to purchase our brands?

Shopper Dimensions

Shopper Decisions Activator

Purchase Decision Journey

Triggers and Barriers Activators

Shopper Matrix

Shopper Tester

Shopper Activators - Store, Pack, POSM, Assortment

RETAILER & CHANNEL INSIGHTS

How do we capitalise on the evolving retail and channel landscape?

Retail Market and Channel Insight and Intelligence

Syndicated Global Retail Insights Platform - KRiQ

On-site Retail Thought Leadership

Custom and Applied Retail Market Research

Retail Market EducationRetail Market Events, Webinars and Share Groups

eCommerce Intelligence

CATEGORY & SHO

PPER SOLUTIONS

How can we drive long-term growth for categories and brands?

Category Growth Drivers

Shopper Marketing Planning

FIX/BUILD/IMPACT Shopper Choices

Creating a Shopper Centric Organisation

Integrated Business Planning Process

Category Leadership

Perfect Store Definition

Trade Selling Stories

eCommerce Strategy

$$

$

$ $

$ $

ORGANISATION

AL PERFORMANCE

How can we improve the performance of our organisation?

Organisation Develop-ment and Benchmarking

Professional Skills Definition and Assess-ment

Retail and eCommerce Academies

Kantar Academy

HALO - Holistic Learning Platform

Commercial Organisation and Process Design

Capabilities Embedding

GO TO MARKET

How can we optimize oursales strategy?

Revenue Growth Management

Multi-Channel Strategy

eCommerce Channel Strategies

Route to Market Strategy

Customer Business Planning and Collabora-tion

Retail Benchmarking

Trade Terms Design and Optimisation

Field Sales and Distributor Management

RETAIL & PURCGASE DATA ANALYTICS

How do we optimize assortment, promotions and price?

Assortment Optimization - RichMix®

Promotions Optimization – Promo 360°

Category Management

RETAIL VIRTUAL REALITY

How do we make better faster retail decisions?

Retail Environment Design

Virtual Retail content

Virtual Merchandising and Store Planning

Virtual Category Management

Shopper Marketing Program Visualization

eCommerce EnvironmentsRetailer Collaboration and Communication

VR Research and Insights

Kantar Retail is WPP’s retail insights and consulting business. Kantar Retail has been present in China since 2004 and offers retail insights, consulting, retail analytics and capabilities development services to clients. We work with leading FMCG and retailer clients across the below areas:

Contact:Oceanne.Zhang@KantarRetail.comT: +86-21-2321-3239www.kantarretail.com

COPYRIGHT © Kantar Retail 2014This publication is the sole property of Kantar Retail and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Kantar Retail. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accu-racy of this information. We would like to be informed of any inaccuracies so that we may correct them. Kantar Retail does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.Price: RMB 6,000