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Nielsen: China Leads in “E-commerce” Maturity Around the World

Contact:
Sue Feng, sue.feng@nielsen.com, 010-5912-9195

 

SHANGHAI – August 27, 2014 – While online purchase intentions around the world have doubled in 14 out of 22 product categories over the past three years, China is the key leader in the Asia Pacific region, and therefore the world, according to a new study conducted by Nielsen, a leading global provider of information and insights about what consumers watch and buy.

China on the Cutting Edge

In online shopping and purchasing, China exceeds the global average in all product categories, often by a large margin.  For 18 out of the 22 categories, China sees the highest percentage of respondents who are willing to buy online compared with the remaining 59 countries and regions covered in the survey. For categories including clothing, cosmetics, personal care, toys and alcohol drinks, China sees the highest intent for both online-shopping and online-purchase.

“By one account, China has more than 600 million Internet users and an annual E-commerce growth rate of 120% – making it the fastest growing, and soon to be the largest, E-commerce market in the world,” says Patrick Dodd, Managing Director of Nielsen China.  “The deep penetration of smartphones and internet, combined with the comprehensive build-up of shipping logistics infrastructure, are quickly transforming the shopping habits and mindsets of Chinese consumers on E-commerce.”

In 13 out of 22 different product categories, more than half of Chinese respondents said they intend to make an online purchase within the next six months. These categories are primarily durable and entertainment-related categories like clothing (74% vs. 64% in 2011), airline tickets (69% vs. 47% in 2011) and hardcopy books (64% vs. 50% in 2011).

Online purchase intention for categories like E-books (51% vs. 26% in 2011), computer software (38% vs. 11% in 2011), toys/dolls (54% vs. 21% in 2011), doubled or even tripled over the past three years.

The Nielsen Global Survey of E-commerce polled more than 30,000 internet respondents in 60 countries to examine the online shopping and purchasing intentions of consumers worldwide. The study provides clarity about global consumers’ buying intentions for both consumable and non-consumable categories in the growing e-commerce landscape.

Purchase Intent for Consumable Goods is Catching-up

The online purchase intent for consumable products like groceries and baby supplies, while still not as strong as non-consumable categories, are gaining traction quickly. Since 2011, Chinese online purchase intentions for baby supplies jumped 25 percentage points to 38 percent, and both cosmetic and food & beverage categories increased 14 percentage points to 56 and 57 percent respectively, and alcoholic drinks rose 20 percentage points to 34 percent. 

Meanwhile, the top-tier cities are seeing stronger growth for online sales. Looking closer within the food category, offline channels remain very important with sales value of approximately 60 billion yuan compared with online sales of 2.5 billion by May 2014 in tier one cities. However, online value sales saw an impressive 37 percent growth rate from November of 2013 to May of 2014 vs. the same period last year, indicating the strong future of online channels for food products.

White liquor (baijiu) is a good example of a food product with impressive online growth.Despite the slight downtrend of offline sales during the Spring Festival season in 2014 compared with 2013, the percentage of Chinese consumers that purchased baijiu during the period increased from 0.3 percent to 1.2 percent. Additionally, the average per capita spending online for baijiu was 422 yuan, nearly twice that of offline channels.

 “The elevated purchase intent for consumable goods signals great timing for retailers to start creating an omni-channel experience for consumers who are actively using both digital and physical platforms to research and purchase,” said Dodd. “From offline to online, brand performance, even within the same category, could be very different due to different market environment and shopper demographic. Finding the right balance between meeting shopper needs for assortment and quality is vital for the continued and sustainable growth of consumable goods. Additionally, building trust and overcoming negative perceptions, such as a high risk of receiving fake products, is essential if fast moving consumer goods, like alcoholic drinks, are to succeed within online channels,” said Dodd.

Online Buying or Online Browsing?

According to Nielsen’s study, consumer appetite for online browsing/shopping and online buying vary for different categories in different markets. Unlike many countries, especially those in Latin America , where consumers prefer to browse online but shop offline, China is seeing a reverse trend.

For more than half of the 22 categories surveyed, online buying rates among Chinese respondents well exceed browsing rates, especially in the categories like clothing (57% browse online vs. 74% buy online), airline tickets (48% browse online vs. 69% buy online), hardcopy books (45% browse online vs. 64% buy online) and even cosmetics (45% browse online vs. 56% buy online). 

Even for some products that are more conducive to online browsing than buying, such as those that carry a high price tag or often require a try-before-you-buy test run, Chinese consumers are enthusiastic about both browsing and buying online. Electronics, mobile phones and sporting goods are examples of categories that Chinese consumers often purchase online, while many other consumers around the globe prefer to buy offline.

“The higher percentage of online buying versus browsing in China tells us that more Chinese respondents are going for the actual transaction rather than research only. Online has become a strong retail channel for Chinese respondents,” Dodd said.  “In this regard, out of the countries surveyed, China is one of the furthest along on the E-commerce maturity curve. When tech-savvy Chinese consumers have already embraced the convenience of both online shopping and purchasing, it shows their confidence in the channel.”

The category that sees the largest surplus of online browsing versus online purchasing is car, motorcycle and accessories. 30 percent of respondents said they would love to shop online, while only 24 percent plan to purchase online in the following six months.

“It’s a big jump in purchase intent for automobile products compared with 2011, when only 10 percent of Chinese respondents would buy cars and accessories online,” said Dodd. “Thanks to the strong demand from Chinese consumers for one-stop services for their online car purchases, combined with closer collaboration among multiple E-commerce stakeholders, we believe the online auto industry still has plenty of room to grow.”

Chinese Online Shoppers Hunger for Product Knowledge

Nielsen’s survey indicates knowledge is king for Chinese online shoppers who like to spend a considerable amount of time researching products before buying (72%), while 86 percent of online shoppers prefer  to read online reviews prior to purchase. 

In a separate report by Nielsen on the online-shopping behaviors of Chinese consumers, social media (36%) is one of the Top 3 online information channels used by consumers to help make purchase decisions. Search engines (52%) and category specific websites (42%) were also within the Top 3.

“In order to increase digital engagement with Chinese online shoppers, retailers need to deliver on multiple shopper needs such as low price, wide selection, and high quality products. Moreover, consumers want to shop on easy-to-navigate websites that offer a number of unique products with plenty of images, accurate descriptions and a history of good e-reputation on social media. These points are a must for brands that hope to convert more Chinese online browsers in to online buyers.”

About the Nielsen Global Survey

The Nielsen Global Survey of E-commerce was conducted between Feb. 17 and March 7, 2014, and polled more than 30,000 consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on its Internet users and is weighted to be representative of Internet consumers. It has a margin of error of ±0.6 percent. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60 percent Internet penetration or an online population of 10 million for survey inclusion. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.

About Nielsen

Nielsen N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA, and Diemen, the Netherlands. For more information, visit www.nielsen.com.