Looking at the habits of China’s online shoppers can tell us a lot about the consumer culture that has developed in the country.
Chinese e-commerce is still blossoming; more than half of China’s online shoppers shoppers have only made their first digital purchase in the past four years. Yet the intensity and rapidity of growth for such a young sector of the market is remarkable. At the beginning of this year, there were around 300 million online shoppers in China, “a group so large that if it were its own country, it would be the world’s fourth largest,” according to Multichannel Merchant. This figure is expected to nearly double in size within the next few years. Chinese consumers also shop online frequently; 75 percent of them make digital purchases on a weekly basis, compared with a global average of just 21 percent.
Chinese consumers also enjoy the experience of shopping considerably more than their British and American counterparts. A study from research firm Millward Brown reported that 68 percent of Chinese respondents were “happy or overjoyed” with their shopping experience, but only 48 percent of Americans and 41 percent of British consumers surveyed answered the same way.
This passion for consumption may help explain the incredible success of the 11.11 Shopping Festival. This yearly 24-hour sale period is hosted by e-commerce giant Alibaba, and coincides with Singles Day, a Chinese holiday. During last year’s festival, consumers spent a whopping $5.8 billion on the Alibaba websites Taobao Marketplace and Tmall.com. By contrast, sales during the biggest annual shopping days in the United States — Black Friday, and Cyber Monday — amounted to just $3.64 billion.
International companies who would take advantage of China’s booming retail opportunities will have more success if they understand the nuances of consumer behavior. Here are several significant ways in which Chinese consumers differ from their Western counterparts:
Brand-Conscious, but Not Brand Loyal
Brands are an important consideration for Chinese shoppers. Affluent Chinese consumers are drawn to luxury brands as status symbols, and shoppers tend to “seek out imported brands for several reasons including better quality, product safety, lack of domestic availability, and lower prices.” But brands are a relatively new concept to Chinese consumers, so establishing brand loyalty presents a challenge for companies. Multichannel Merchant suggests that “intelligent, diligent and culturally sensitive merchandising and marketing” will ultimately establish deep brand loyalties in the Chinese market.
More Digital, Less Brick-and-Mortar
Chinese consumers value e-retailing more and brick-and-mortar retail less than shoppers in the West. The Chinese shopping experience often includes tablets, PCs, smartphones, and social media, not only to make purchases but also to educate consumers about the products they are purchasing. Shopping on mobile devices, or m-commerce, is particularly gaining steam in China; more than three out of four Chinese consumers reported using a mobile phone for online shopping, compared with a global average of 43 percent. One in four consumers also reported shopping with a mobile phone at least once a week, compared with a global average of only 9 percent.
Bargain-Hunters, But Price No Longer Paramount
In the recent past, consumers in China “usually cited cheaper prices as the main reason they shopped online.” But a recent study by Oracle suggests that that attitude has changed. In the report, 82 percent of Chinese consumers ranked product availability as a higher purchasing factor than price, and almost all of them “said it was important that retailers adopt new technologies to improve their shopping experiences.”
The individual shopping experience is also a priority for the Chinese e-shopper; nine out of 10 of them say that online service should be tailored to fit their particular needs. Chinese consumers “need more hand-holding and assurances during the shopping process” and are “comparatively demanding” partially because counterfeit and low-quality products abound in China’s online market. The government estimates that almost a third of regular online shoppers have fallen victim to online scams. E-commerce platforms like Taobao Marketplace and Tmall.com now offer instant-messaging services and escrow-based e-payment that let consumers communicate easily with merchants and alleviate concerns of reliability and quality.
Online Marketplace Wins Over Single Store Shopping Websites
Most e-commerce transactions in the West take place on pure-play sites that carry their own inventory or “clicks and bricks” websites established by traditional retailers. Consumers in China prefer online marketplaces, “vast collections of the virtual shops of thousands of independent merchants supported by third-party service providers such as parcel-delivery companies,” are where 90 percent of e-commerce in the country takes place.
Online Chatter Matters
Consumer feedback is integral to the Chinese shopping experience. Seventy-five percent of Internet users in China post online feedback on products they have purchased at least once a month, compared with less than 20 percent in the United States. Consumers take their peers’ opinions into account, and greatly depend on recommendations during the decision-making process.
image source: flickr/samyuen1