China's Online Shopping Interdependence
Online shopping is huge in China. It is the forth most popular online activity and the fastest growing. Every 60-minutes, Chinese consumers make three million purchases just on Taobao, China’s Amazon-cum-eBay-giant. While nearly 200 million Chinese consumers regularly shop online, that accounts for only 38% of China’s 513 million online population. By comparison, North America and Western Europe's online shopping portion is close to 80%, so there’s plenty of room for growth. By 2015, 350 million consumers, half of China’s forecasted 700 million Internet users, are predicted to shop online - more than the US, India, Japan, Indonesia and Russia's online shoppers combined.
But Online shopping doesn't stand alone in China; it has become intertwined with several of China's important sectors such as social media, the luxury segment and offline retail.
Social Media
Another behemoth of China’s online world is Social Media. Services like Sina Weibo and WeChat are now the standard communication method for many of China's young, educated and wealthy. Online shopping and Social Media are becoming increasingly interrelated, with 85% of consumers frequently using Social Media to share their online shopping experiences. They're also using it to give and seek feedback about products both online and offline. 50% of online Chinese believe Weibo is a way to make complaints to a business, and 55% have participated in a conversation on Weibo about a foreign brand. It's important you have an open, integrated and responsive social media accounts to take advantage of the impact this can have on Chinese consumer's decision making for online purchases.
Luxury Goods Online
Chinese online shopper demographics are closely matched to China’s highly-prized luxury consumer segment. A survey of luxury consumers by the China E-Commerce Research Center found 85.4% were willing to buy luxury goods online, with 57.4% intending to do so soon. Although purchasing luxury goods online lacks the tactile experience of a glitzy high end store, consumers purchased online because of the price advantage (67.6%), better range (65.2%) and, predominantly from 2nd Tier and lower tier cities, the unavailability of luxury stores in their city (28.4%). For women, apparel bags and shoes were the top online item attracting 78.2% of shoppers. Cosmetics were the next most popular with 67.9%. 57.2% of men fancy buying electronics online, and 52.9% watches; the two most popular segments. When purchasing luxury goods online, 76.9% believe authenticity and quality assurance is the most important factor, which has helped drive the popularity of TMall. If you are selling luxury goods, it's important that you give a tangible benefit for shoppers to forgo the experience of shopping in a store.
Offline Shopping
While offline retail locations are commonly used to showcase brands and products for consumers, who then buy their goods online, there is an increasing trend for consumers to seek information online before purchasing goods from brick & mortar locations. A recent Ipsos China survey discovered that 37.6% of Chinese consumers regularly increase their brand awareness through websites. A further 47.5% cited official websites increased their purchase intent, significantly more than the 31.3% for newspaper ads, 22.4% for TV and 20.9% for radio commercials. For anyone selling in China, whether online or not, it's important your website is up to date and optimised for China, from translations, to usability, to Chinese search engine optimisation (especially Baidu, China's biggest).
Good and Bad
Chinese consumers shop online because they believe it is cheaper, more convenient and allows them to buy products that are unique or unavailable where they live. It is one of the most effective ways to reach the huge market of Chinese consumers. But with the good, comes the bad. Over 60 million people, almost a third of China’s online shopping population, have been fleeced by cyber criminals. Upwards of $4.8 billion has been stolen through unscrupulous methods, predominantly by selling fakes. I personally paid over US$20 for a photocopied book. It is important to factor Chinese consumer's potential lack of trust when developing your online presence and incorporating things such as transparent, integrated social media communications, an ICP (Internet Content Provider) license for Chinese-based websites operating in China and potentially a tie-in with a TMall account to show your authenticity.
The growth of the Internet and online shopping in China has brought more interdependence with the offline retail world and other elements of Chinese consumer's decision processes. And that growth isn't going to stop. It is important if you're selling, or hoping to sell to Chinese consumers, you have all your web site in order.
Chinese Online Retail Facts
3 million purchases every hour occur on Taobao.com
There are 193 million online shoppers in China
The largest group of online shoppers in China is 24-35 years old
513 million Chinese are online, forecast to grow to 700 million by 2015
38% of connected Chinese shop online, forecast to grow to 50% by 2015
85% of online shoppers frequently share their online shopping experiences on Social Media
Almost a third of online shoppers in China have been subject to fraud worth $4.8 billion
