China Online Market & Shopper Segment
Although some experts question how rapidly e-commerce can spread to China’s inland, the markets still growing and diversifying. Overseas products are popular in a number of bestselling product categories, but mostly form a category in its own right, thanks to separate cross-border channels.
China Online Consumers
Young and urban. The audience which accounts for a majority of online purchases is 20-35 years of age and lives in urban coastal areas. These consumers are constantly in touch with the newest trends and marketing on social media via their smartphones. Alibaba’s famous “Singles Day” sales promotion was initially targeted at this young audience. In 2015 a record 14 billion USD of sales were made on Alibaba group alone on Singles Day (11 November). 68% of these sales were made via mobile devices.
Female. Women are a remarkable majority of the Chinese online shopping audience. In the West women make online purchases slightly more frequently than men, but men generally spend a bit more. In China, female customers account for more than 60% of purchases and a higher total purchasing value, while women only constitute 44% of the Chinese online population. The growth of this so-called she-commerce has in part led to the thriving of platforms with maternity and baby products, fashion accessories and cosmetics.
Another few characteristics of the Chinese online consumer which insiders often mention are: flexible, communicative and increasingly individual. Chinese customers are flexible, because they easily switch between product providers, and often try new brands and products. Chinese customers are communicative, as they prefer frequent contact with the product provider – more than 70% uses customer service before placing an order. Also, they often leave reviews. Finally, Chinese customers are increasingly targeting purchases which reflect their individual identity, which leads to development of brand awareness and diversification of Tastes.
B2C e-commerce takes an especially large share in the sales of a number of core products, such as fashion, electronics and home appliances. These core products account for more than half of all online retail, as can be seen on Percentage of Online Retail Category Graph. Other relatively developed categories are cosmetics, baby products, home goods and media products. In addition,recently a lot of improvements are taking place in the area of food and beverage, such as the possibility to deliver fresh produce fast and internationally, resulting in a quick development of this market.
Overseas Products in China
There is a separate market for overseas products – products which are imported or sent from abroad. Baby and beauty are currently the two largest product segments in the cross-border sales. Customers are specifically looking for imported products in certain categories. Furthermore,customers quite often purchase imported products from multiple categories at the same time. The cross-border e-commerce market is in fact similar to shopping behavior of Chinese tourists abroad.Now that many e-commerce platforms have a section for products from outside Mainland China,overseas products have become a category in its own right.
Popular Brands and Countries of Origin
If we take a closer look at the bestselling overseas products, it becomes clear which brands and countries of origin are the big players. It is for instance striking that milk powder from the Netherlands is most popular, followed by Australia, Germany and the United Kingdom. Dutch Nutrilon (from Danone) and Friso (from Friesland Campina) top the list. The Netherlands has a good name in the area of baby products, and even brands which are not yet well-known in China can profit from this.
In the area of cosmetics and personal care, brands from western market leaders such as L’Oréal and P&G receive a lot of pressure from Korean brands. The popularity of Korean pop culture plays an important role herein, but also for instance their early move in skin care for men. The market is extremely competitive for most cosmetics products, but early adapters of new trends, such as the rise of crème d’escargot recently, can still make a quick profit. Almost all foreign companies compete at the high end of the market.
- Milk powder
- Baby food
- Toys and Maternity Products
- Women’s Apparel
- Men’s Apparel
Cosmetics & Personal Care
- Bath products
Food & Health
- Vitamins, Minerals, Supplements
- Fresh Produce
- Pre-Packaged Health & Snack Foods
- Water Filter
The most popular overseas products in China per category Source: Euromonitor, Payvision, Boston Consulting Group While the big casual “fast fashion” own-brand retailers (such as H&M, Uniqlo, MetersBonwe) have the largest share of the Chinese fashion market, in the cross-border segment it is the slightly higher-end brands which sell well (such as Ralph Lauren, Tommy Hilfiger, Michael Kors). The building of a brand name is very important in this market, while the country of origin is less significant. Therefore, cross-border channels are not sufficient as an entrance strategy for new brands. Where overseas health products are concerned, brand name is an important factor as well– with especially strong dominance from the US, followed by the UK, Germany and Australia. For food on the other hand, country of origin is an important buying motivation, and hence platforms are eager to cooperate with providers from well-known countries of origin for the product. There have for example been successful online promotions of New-Zealand lamb meat, Canadian lobster and fruit from Southeast Asia.
Advertising Online In China
Naturally there are many more marketing channels available, which are relevant for e-commerce. First, social media are an important channel and WeChat offers many new possibilities. Also the video website Youku, the forum Douban and search engine Baidu can come in handy for advertising. Furthermore, email remains a widely used marketing channel that has a more formal character than for instance social media. Finally, also offline advertisement with QR-codes can be an effective strategy in China. Which marketing channel if most feasible for e-commerce in China,depends on the target audience, the target result, the product and other factors such as budget. The most important step is to have a concrete image of these factors.