Growth of E-Commerce in China
Rising incomes and populations across Asia are creating a growth in consumers with disposable income. A significant amount of growth comes from China, a country with considerable purchasing power, with large sums of money being spent online through e-commerce sites.
From technology, media, electronic goods, travel, gaming, clothes, beauty and health products, and entertainment, China’s rising middle-class are driving demand for online consumer sales. In 2007, about 46 million people in China purchased goods online. In 2015, that figure increased to 413 million (Statistica). In 2015, e-commerce shares of the FMCG markets grew 37% in China (Kantar Worldpanel).
Digital Opportunity
Many global consumer brands are looking to develop an online presence in China or establish partnerships with online marketplaces, such as the Chinese e-commerce company Alibaba. It is often cited as the largest e-tailer in the world.
A growth in connectivity and purchases initiated by social media sites, such as WeChat, has also increased the number of e-commerce transactions. An estimated 41% of WeChat shoppers purchase personal care goods via the WeChat payment platform (McKinsey & Company).
Although China is the world’s largest and fastest growing e-commerce market, with an estimated $650 billion sales in 2015, consumer companies have to act fast and embrace a number of business opportunities to penetrate the Chinese market. Developing accurate content in Chinese for all e-commerce related content is one area that global brands must consider to take advantage of the growing market.
In Common Sense Advisory’s report, Digital Opportunity: Top 100 Online Languages for 2016, Simplified Chinese is ranked second and Traditional Chinese is ranked 13th in terms of digital opportunity. We know the business opportunities are there; however, global brands also need the knowledge and expertise to create content to reach and influence Chinese shoppers.
Growth in Online-to-Offline
In certain product areas in China, there has been a growth in online-to-offline (O2O) services. O2O is where companies create awareness online with digital advertising, then entice the customer into a physical store to make a purchase. Full e-commerce and O2O are two business models that complement each other, as consumers prefer to see goods and sample items in a storefront before purchase, rather than wait for a package to be delivered and then possibly make a return. This indicates that certain brands may still need an investment into bricks and mortar stores.
Both O2O and full e-commerce models make it clear that digital marketing to local Chinese markets is at the very foundation of brand awareness and reaching new customers. Any digital marketing materials must be developed in the right writing style and dialect to suit the Chinese culture. The same applies to product and brand images and detailed considerations, such as humor and use of color. E-commerce and digital content must be culturally adapted to target the right preferences and tastes for Chinese populations.
China is Not One Market
The profile and habits of Chinese shoppers are continuously evolving. China is not one market. Digital shoppers in urban areas and cities are the main target as they have the most spending power. This has to be represented in any digital marketing content, product placement and distribution system. Cities in China are classified by “tiers,” with the top tiers being Beijing, Shanghai, Guangzhou and Shenzhen.
According to a survey by McKinsey & Company, e-commerce activity of low-tier cities (tier three and below) now rival or surpasses high-tier cities. Low-tier total spending on e-commerce matched high-tier cities for the first time in 2015. For savvy e-commerce brands, cities such as Beihai, Changzhou, Dongguan and Foshan may provide significant future growth.
Mobile Population
China’s digital shoppers are more likely to use their mobile devices than their PC. Sometimes the path to purchase involves multiple devices, PC’s and smart phones. Analysys International Enfodesk reported that nearly two-thirds of retail and C2C e-commerce sales in China in Q4 2015 took place via mobile, up from 55.5% the previous quarter. This rise in mobile as a purchasing platform is ongoing. For any e-commerce retailer, content must be developed to format in each platform. From banners ads through to UI, Chinese digital shoppers must be able to research and purchase from their mobile device.
On a final note, one key component in any e-commerce strategy must be discover-ability. How will China’s 413 million online shoppers find you? The main Chinese search engine providers are Baidu, 360 Search and Sogou, with Baidu taking up about 71% market share. Plugging into these search engines with the right search terms will help e-commerce operations be found by the target digital shoppers.
China’s e-commerce market is a growth opportunity and a marketplace that will soon become crowded, so if you are going to grow, go now!
