Having the world’s largest number of Internet users, China’s e-commerce industry is performing particularly well and is witnessing strong double-digit year-over-year sales growth in online consumption of consumables.
The Nielsen’s latest Global Connected Commerce report found that in the 52 weeks ending June 2015, Chinese consumers spent the most on buying groceries and foods, with online sales of household products in China growing 86%, beverage sales increasing 72% and food sales climbing 52%, indicating the country is experiencing an online shopping boom. In addition to surging online spending, a prevalent 98% of respondents have made purchases online, suggesting that Chinese people’s purchasing habits are rapidly going digital.
The survey polled 13,000 respondents in 26 countries to determine how and why consumers are approaching e-commerce. It reveals the trend that as technology adoption and infrastructure improvements bring more consumers online and familiarity and comfort with digital platforms increase, the continued growth of connected commerce is inevitable.
China’s online retail ecosystem is evolving quickly. Today, it’s not just people’s purchasing habits that are going digital: The whole retail experience is changing. Digital touch points are incorporated along shoppers’ entire path to purchase, from reviewing products online at home to using smartphones as personal shopping assistants in the store. The purchasing behavior of Chinese consumers is fast evolving with the advent of new technology.
According to the report, most Chinese consumers still prefer using their computers to make online purchases. Online deals of 76% percent of travel products and services, 59% of video game related products, 72% of fashion related products, 76% of furniture, decor and tools, 70% of wine and beverages, 77% percent of fresh groceries, as well as 72% of consumer electronics, were made online via those big screens.
In the meantime, e-commerce is increasingly going mobile in China. The use of mobile devices to make purchases is significantly higher than average in surveyed countries. Consumers are using mobile devices to purchase certain categories at a higher rate than on computers. For example, in China, over half of the respondents who ordered restaurant and meal deliveries or purchased events tickets online by using their smartphone (71% and 51%, respectively). In addition, more than four-in-ten Chinese respondents who made online purchases said they purchased beauty products (46%) or packaged groceries (45%) via smartphone.
Chinese dependence on mobile phone apps to place orders is far higher than in other surveyed countries, with 98% meal delivery services, 95% baby and children products, 91% IT and mobile goods and 90% packaged grocery food, were made via apps on smartphones.
“As more consumers turn to mobile devices to shop, a coherent mobile strategy should be a key innovation pillar for retailers,” says Patrick Dodd, president of Nielsen global retailer vertical. “The most successful strategies will be those that optimize and differentiate their mobile experience and improve the integration of their in-store and mobile services specific to the realities in each market.”
As the difference between online and offline shopping for retailers is gradually blurring in China, shoppers seamlessly switch between on and offline channels with ease. This rapid evolvement of retail landscape has also changed Chinese payment practice.
Over the past couple of years, China has seen increasing innovation in digital payments via a variety of methods, including QR-codes, mobile-payments and so on. The use of digital payment systems in China is extremely popular today. In the report, 86% of respondents said they paid for some online purchases during the past six months via digital payment systems, far higher than all the 26 surveyed countries’ average of 43%. Fifty-three percent of respondents said they shopped online during the past six months with direct debit from bank account, 49% paid cash on delivery and 46% of respondents shopped with credit card.
The popularity of digital payments in China has far exceeded other methods of payments, which is a unique scene only found in China among those surveyed countries in this report.
"Chinese consumers have more payment choices for products and services than ever, while digital payment will continue to win over more Chinese consumers due to its convenient nature," says KiKi Fan, managing director of Nielsen China.
With the world at your fingertips, why only shop domestically? The improving living standards of Chinese shoppers boost their demand for high-quality foreign branded products. Consumers are increasingly expanding their shopping to online retailers outside their region, as more than half of the respondents in the study who made an online purchase in the past six months say they bought from an overseas retailer (58%). Fourteen percent of respondents said 10 - 19% of their online purchases over the past 6 months was spent on overseas retailer websites.
“Retail has been one of the last globalization holdouts, but technology is giving consumers access to a world of products previously unavailable,” said Patrick Dodd, president of Nielsen global retailer vertical. “Choice is greatly enhanced by cross-border e-commerce. In many developing markets, the growing middle class is trading up and demanding greater assortment not found at their domestic retailer. Consequently, these consumers are looking overseas to purchase authentic foreign brands, often at lower prices than they can find in their home country. Meanwhile, developed-market consumers gain access to a range of goods directly from foreign companies at often significant discounts to what they would pay domestically.”
The findings in this survey are based on an online survey in 24 countries and a face-to-face survey in two countries. While an online survey methodology allows for tremendous scale and global reach, it provides a perspective only on the habits of existing Internet users, not total populations. In developing markets where online penetration is still growing, audiences may be younger and more affluent than the general population of that country.
Face-to-face interviews were conducted in Saudi Arabia and the United Arab Emirates. Given the differences in methodologies used, results from these two countries are not included in the global average.
Survey responses are based on claimed behavior rather than actual metered data. Cultural differences in reporting sentiment are likely factors in the measurement of outlook across countries. The reported results do not attempt to control or correct for these differences. Therefore, caution should be exercised when comparing across countries and regions, particularly across regional boundaries.