This report starts from the consumer market of China's digital economy and specifically introduces the business digital resource service industry, which plays an important role in this market. It describes the business model, key success factors, drivers, and future development trends of this industry. The report further introduces the application and key success factors of digital resource services in core scenarios such as consumer goods, white goods, home furnishings, and communication operations.
"01 There are development limitations in the traditional Chinese economic consumer market, and the empowerment of digital economy consumption has seen rapid growth accordingly.
With the increase in national income, domestic market demand is currently growing rapidly. The trend of consumption upgrading is irreversible, and this upgrade has also led to stricter requirements from consumers on products/services. In traditional economic consumption markets, the interconnection of the entire supply chain mainly relies on offline channels. Against the backdrop of the pandemic, personnel cannot circulate, production and processing cannot be connected, and logistics transportation is difficult to execute. The supply chain problem has been fully exposed under the impact of the pandemic.
From the supply side, since market feedback from the consumer end needs to be transmitted through the supply chain to various nodes, the process is lengthy and there is a certain degree of latency.Delayed responses can lead to insufficient supply-side capabilities to quickly adapt to changes in customer demand. As a result, the supply side cannot adjust production plans or resource investments based on market feedback well, often resulting in overcapacity or undercapacity, which in turn increases costs.
At the same time, given the obvious regional characteristics of offline traditional consumption,Consumers who live far away need to weigh the cost of travel against the benefits of consumption before they will visit physical stores for shopping. Cross-regional consumption is a significant obstacle for price-sensitive consumers. Geographical characteristics have, to some extent, hindered the sales volume on the supply side and curbed the development of the consumer economy.
Furthermore, the offline traditional consumer supply side faces low efficiency issues in both daily operations and sales due to a lack of technical support.For example, the lack of real-time monitoring and market feedback reception through platform technology leads to slow production and operational adjustments; the absence of internal digital process management results in a lengthy decision-making chain, high execution costs, and low collaboration efficiency; the lack of customer relationship management platform technology makes it difficult to retain customers, etc.Traditional consumption is limited to making profits from natural traffic, which is in a saturated state with high traffic acquisition costs.Unable to build a private domain traffic pool, thus encountering bottlenecks in distribution and conversion.
Against this industry backdrop, the digital economy's characteristics have brought tremendous value to society.
Firstly, from the production side, digitization enables enterprises to improve their responsiveness to the market and reduce costs while increasing efficiency.Digital consumption involves online consumer platforms and backend operation systems. The supply side can always keep track of product sales in the market, receive feedback on products and services more quickly, and thus make production and product adjustments faster and more flexibly. On one hand, production is determined by sales to reduce resource waste and thereby lower production and operating costs; on the other hand, market opportunities are seized based on feedback, laying a good foundation for business success.
Secondly, from the client perspective, digitalization enhances customer loyalty and increases the repurchase rate.Consumers generate a large amount of data when shopping online and form data assets. Merchants analyze these data assets through digital economy technologies to gain insights into consumers' preferences and behaviors, enabling them to carry out precise marketing. This greatly increases the number of interactions between consumers and merchants, enhancing sales conversion rates while achieving strong interactions with consumers, effectively managing relationships, and thus promoting the development of consumer behavior towards sustainable and long-term actions.
Furthermore, from a technical perspective, the technological innovation brought about by digitization has greatly improved operational efficiency of enterprises.The supply side utilizes IT technology services such as ERP, SCM, and CRM to achieve efficient internal management and external marketing, thereby improving the production, operation, and management efficiency of enterprises.
Moreover, from the sales perspective, the advantage of digitization lies in breaking down time, space, and channel limitations, which has led to a surge in consumer volume; at the same time, the innovative model of online and offline collaboration will raise the ceiling for revenue.Online digital consumption has broken through time, space, and channel limitations. It has synergized with the express delivery industry, providing products and services to all consumers within the coverage of the express network, and the potential volume of consumption has undergone a qualitative leap.
Source: Analysis by Frost & Sullivan
"The commercial space for China's digital economy consumer market is vast, with infinite potential for the future
With the increase in residents' income, the proportion of online consumption is gradually expanding. People are also more inclined to shop online and spend on service-related expenses. In the future, the consumer market of the digital economy has broad development prospects.
Firstly, the total retail sales in Chinese society have grown steadily.With the growth of national GDP, residents' disposable income has increased, enhancing their purchasing power and thus stimulating an increase in consumer spending. China's total retail sales from 2018's 3.78 trillion yuan increased to 4.4 trillion yuan in 2022, and it is predicted that this will continue to grow in the future.Secondly, the market for China's digital economy is continuously expanding.The growth in the number of nationals and the rise of the internet industry have provided a natural fertile ground for the digital consumer economy. According to the 'China Internet Development Report', the scale of China's digital economy market has grown from 3.13 trillion yuan in 2018 to 5.18 trillion yuan in 2022.Furthermore, the per capita disposable income in our country continues to rise.China's per capita disposable income increased from 28,228 yuan in 2018 to 36,883 yuan in 2022. Rapid growth in residents' income will lead to higher demands for living standards among residents.
At the same time, as the country has gone through three historical stages: standing up, becoming prosperous, and becoming strong, Chinese families have shifted from addressing basic needs such as food and clothing to upgrading consumption and service-oriented demands. Correspondingly, there have been significant changes in the consumption structure.
Compared with 2018, the consumption expenditure of Chinese residents on food, tobacco, and alcohol in 2022 has basically remained unchanged, while expenditures on transportation and communication have decreased slightly. At the same time, the expenditure of residents on service-oriented consumption such as culture and entertainment increased from 9.7% in 2018 to 10.8% in 2022. The increase in culture and entertainment indicates an increase in the proportion of spiritual consumption among Chinese residents, suggesting that their consumption is shifting from material to spiritual aspects. In the future, with the continuous deepening of economic reforms in China and against the backdrop of the modernization process, the proportion of China's tertiary industry will continue to grow, and expenditures on service-oriented consumption will continue to increase, providing good development opportunities for the digital economy consumer market.
Chinese household consumption is gradually shifting from offline channels to online channels.Currently, consumption channels in our country are mainly offline, but the growth rate of online channels is rapid. In the post-pandemic era, Chinese people have developed the habit of shopping online. The total retail sales of online consumer goods increased from 9,065 billion yuan in 2018 to 13,785 billion yuan in 2022. As companies continue to shift their sales focus online, more and more families will choose online shopping in the future.
Source: Analysis by Frost & Sullivan
"03 The commercial digital resource solution service under the consumer market of China's digital economy has seen development due to its business empowerment services
From the perspective of service content, China's commercial digital resource solution services provide enterprises with business empowerment services centered on digital marketing business transformation.
(1) Provides various sales-side business supports for enterprises, including private domain traffic management, business traffic distribution, integration of business resources and content, digital marketing, and promotion.
From the perspective of private domain traffic management, service providers first convert effective traffic into customers through live streaming, communities, and other methods, enabling them to purchase products or services. Secondly, they help enterprises establish a customer contact matrix, linking personal accounts, corporate accounts, official accounts, mini-programs, and other traffic entry points to better manage private domain traffic.
From the perspective of traffic distribution, business traffic distribution is a process of allocating traffic to various channels for value maximization. There are two modes of traffic distribution: one is decentralized traffic distribution, where the platform does not provide an entry point for traffic distribution, and each node is independently responsible for acquiring traffic. The placement of digital equity vouchers falls under this type of distribution method; the other is centralized traffic distribution. The platform provides an entry point for traffic distribution, sets traffic distribution rules, and distributes traffic to various channels and nodes according to these rules. The advertising traffic promotion and distribution on major e-commerce platforms are typical examples of centralized traffic distribution.
From the perspective of digital marketing and promotion, service providers help enterprises make rational use of digital media and tools to interact with target audiences, promoting brand or product information to them. This stimulates the target audience's interest in purchasing and thereby increases the sales conversion rate. Service providers assist enterprises in selecting the most suitable marketing methods, observing marketing data in real-time, conducting data analysis, and outputting user profiles. Enterprises then adjust their marketing strategies promptly based on different user tags and real-time information.
(2) Provide technical needs for enterprises during the digital transformation of marketing.
Platform setup: The service provider helps enterprises build the technical capabilities required for digital platforms, including the ability to connect databases in advance, integrate data, analyze data across multiple dimensions, and design the platform later on.
Digital products: In response to customers' demand for expanding their online product portfolio, service providers assist clients in transitioning from single offline products to digital ones. For instance, if the customer base for physical cards and vouchers is not large enough, with the help of service providers, customers can create digital benefit cards and distribute them on online platforms to more consumers.
Underlying elements: The digital transformation of marketing cannot be separated from the empowerment of artificial intelligence and machine learning. Therefore, efficient algorithms, high-quality data, and powerful computing power are essential underlying elements for marketing data analysis, marketing plan design, and prediction. Algorithm modules, data assets, and computing resources are important technical foundations.
"04 Chinese commercial digital resource solution providers offer diverse service models, and comprehensive players can achieve greater success
The Business Digital Resource Solutions company mainly targets B2B enterprises, providing services including internet precision marketing and business growth.
Source: Analysis by Frost & Sullivan
Digital resource solution providers can flexibly choose their billing model based on customer type.Currently, the commercial digital resource solution service industry is in its infancy, and there is no unified standard for charging and pricing models among players within the industry. Based on customer types, it can be divided into four categories: pay-as-you-go by traffic effect, subscription-based recurring payments, support technical advisor fees, and project-based service fees.
Source: Analysis by Frost & Sullivan
The main players in the commercial digital resource solutions service market are divided into the following three categories:
Based on welfare services, we only provide digital services to downstream enterprise customers. Our main focus is on digital welfare platforms, with traditional welfare enterprises such as CareLink and Oriental Welfare Network being our key clients.
Players in the welfare platform category generally have a low level of digitization, weak digital technology, and low supply chain efficiency. However, with the advent of the digital wave, welfare platform companies are gradually expanding their digital business, with CareLink as a representative that provides digital welfare solutions. In the future, the digital business of such players may become widespread.
Based on technical solutions, we only provide digital services to downstream customers. Represented by Qianjiang Network, we focus on digital marketing and offer enterprises digital services for all aspects of the supply chain, including procurement, sales, distribution, and retail.
Such players generally lack commercial resources, and in the future, they may invest resources in commercial links to closely connect upstream and downstream operations. They may also start with digital marketing as a foundation, providing comprehensive digitization for enterprise customer operations and management.
Digital services are provided to both upstream and downstream customers. Such players usually have a significant competitive advantage, offering digital marketing for upstream customers and digital welfare platforms and CRM systems for downstream customers, thereby providing full value to both sides.
Source: Analysis by Frost & Sullivan
Among the major players, Jiangsu Tongka Digital Technology Co., Ltd. (referred to as 'Tongka Digital'), a typical leading player founded in 2021, serves as a digital SaaS service output base to assist traditional enterprises in their digital transformation. By helping customers build their own SaaS technology platforms, with 'full-service support' and 'scenario-driven' at its core, and 'Internet + innovation' as its driving force, it provides customers with 'one-stop' digital equity product-related services and value-added services, such as digital equity product sales, integration and operation, online sales platform construction and management. Based on 'digital, business, vertical, traffic', it specializes in customized research and development for enterprises, and based on multi-application digital platforms, it outputs complete digital overall technical support services and provides integrated all-round solutions to build a leading domestic digital enterprise service platform.
Tongkai Digital Rights provides enterprises with one-stop services related to digital rights products and value-added services, offering users a full consumption scenario from store to home. By integrating resources, it breaks down barriers in various vertical fields of internet services. As the ecological services continue to expand, Tongkai Digital Rights will also cover all aspects of users' life scenarios, including 'eating, drinking, entertainment, clothing, food, housing, transportation, entertainment, and health', all within one step. Users will enjoy a fast and convenient digital consumption experience. In the future, Tongkai Digital Rights will strive to become a leader in the platform economy of digital consumption, working hand in hand with a wide range of partners to stimulate new digital consumption momentum and connect to a beautiful new future of digital life.
Source: Analysis by Frost & Sullivan
