Contact:
Sue Feng, sue.feng@nielsen.com, 010-5912-9195
Shanghai – September 19, 2014 – While the price advantage that e-commerce platforms bring to online shoppers is clear, a recent report from Nielsen indicates that Chinese online shoppers have become more sophisticated and segmented than ever before. Nielsen is a leading provider of information and insights into what consumers watch and buy.
Generally speaking, the top 3 reasons that persuade people to shop online are a wide selection of brands and products, comparatively lower-prices and convenience. However, consumers frequently focus on a number of other online shopping advantages depending on individual needs.
“Just as you cannot use a one-size-fits-all marketing strategy to resonate with all consumers in today’s China, the growing online shopper base must be segmented as not all shoppers want the same online experience. Only by deeply understanding their key online shoppers, can brands and e-tailers be best-positioned for online success,” said Patrick Dodd, Managing Director of Nielsen China.
Chinese online shoppers continue to grow more sophisticated
Compared with the 2013 online shopping survey, among the four types of online shoppers, the percentage of price-sensitive shoppers (most of who are aged 40 and older with comparatively lower income) remains the same at 16%. The ratios of potential online shoppers (mostly early 20s, enjoy online shopping, but have limited income) and online dependent shoppers (mainly aged between 30-40, with higher education backgrounds and incomes) witnessed a small drop of 2 and 3 percentage points to 32% and 26 % respectively.
However, the percentage of rational online shoppers, sometimes referred to as “cautious” shoppers, saw a healthy increase of 5 percentage points from 24 % in 2013 to 29% in 2014. These shoppers are primarily male, aged 26-30 with good income and generally have a high standard for quality when shopping online. They have the money and desire to make premium purchases, however they sometimes end up not buying due to mistrust of sellers or quality within the e-commerce environment.
“The increasing number of rational online shoppers is absolutely a good signal for China e-commerce as it helps push the development of the market, encouraging a healthier and more sustainable online environment,” said Dodd.
According to Nielsen’s information, when compared to the other three types of online shoppers, rational online shoppers often focus more on e-tailer benefits such as convenient and safe payment (34%), high-quality products (16%) and reliable online reviews (13%).
When it comes to where to shop online, the Nielsen report shows that preferred online retailers are usually “reliable” with “reasonable price” and “good-quality products”, however, desired qualities can vary between categories.
Meanwhile, the sophisticated nature of Chinese online shoppers can also be observed in their multi-step online-shopping journey. First, the process frequently involves thorough research about products, and then online and offline comparison before the actual online-purchase. Finally, the report shows more than 40% of online shoppers surveyed say they are willing to share their shopping experiences and product reviews through Wechat or other instant messaging tools.
In another survey by the China Internet Network Information Center (CINIC), “good shopping experiences” are regarded as equally important as “good price and promotions” (66%) in terms of driving repeat purchases.
“All of these signs indicate a transformation in China’s e-commerce, from ‘price-driven’ to ‘service-driven’ thanks to the increasing maturity of Chinese online shoppers,” said Dodd.
Top online categories by market size
According to Nielsen’s survey, apparel and accessories still enjoy the highest penetration among Chinese online shoppers. As many as 83% of respondents say they have bought these products online over the past three months. Daily use and household items rank second, with a penetration rate of 67%.
However, from a sales value perspective, electronic appliances/mobile/digital products ranks as first among the eight categories covered in the survey. This is due to it having the highest average spending of all categories; 1,601 yuan over the past three months despite also having the second lowest purchase frequency at 15 times per year.
Notably, the online market size for tour(like hotel reservation and flight tickets)/virtual products and services increased significantly compared with last year and ranks 3rd following apparel and accessories. According to the survey, the online shopping frequency for this category increased from 16 times a year in 2013 to the current 18 times a year. The average spending for the category over the past three years increased 114% from 305 yuan last year to the current 654 yuan.
Purchase beyond boarders
According to Nielsen’s report, not only has e-commerce changed China’s retail landscape, but it has also given birth to new shopping behaviors among more and more Internet-dependent consumers, such as the purchase of overseas products online.
While still a new phenomenon, 32% of Chinese respondents said they had experience purchasing overseas goods online. Apparel, accessories and handbags (43%) is the top category for overseas purchase, followed by cosmetics and personal care products (41%), as well as mom-and-baby products (30%).
A closer analysis into these online shoppers for overseas products finds that nearly 40% are aged between 26 and 30, and 60% claim to have an household income of more than 11,000 yuan each month. Compared with men, women show more enthusiasm for buying overseas products online as they make up over half (57%) of these consumers.
“Together with the improving living standards of Chinese shoppers comes the increasing demand for high-quality and genuine branded products directly purchased from overseas markets. With an estimated trade value of more than 100 billion yuan in 2014 from overseas products, we have reason to believe that the huge potential of this market will further expand China’s e-commerce capabilities in the future,” Dodd added.
Bigger Screens lead to a Bigger Market in Mobile Commerce
62% of respondents said they used desktop for online shopping, with 67% also using laptops. Smartphones are a close second choice, and the only device that enjoyed a boost of 4 percentage points (from 53% to 57%) in online shopping penetration compared with last year.
Convenience remains the key reason smartphones have become the primary tool for online shopping, with 81% of consumers saying they use a smartphone to shop online. Convenient payment (42%) ascended to the No.2 place thanks to an increase of nine percentage points compared with last year, and followed by guaranteed payment security (38%).
Compared with last year, China sees more online shoppers turning to online retailers’ exclusive shopping apps (61% vs. 53% in 2013). These apps have made shopping online anytime, anywhere, more convenient than ever.
“A variety of larger-screen smartphones are available in the market, further enabling people to shop online while they’re on the move,” said Dodd.
“The use of these devices introduces all sorts of questions for retailers and manufacturers alike. For instance, will shoppers still make shopping trips—buying a whole basket full of items at a time—or will shoppers shop throughout the day, one or two items at a time, shifting from retailer to retailer in the process? How will these potentially new shopping patterns impact age-old practices? Over the coming year or two, the industry will need to examine these habits in more detail,” Dodd concluded.
About the Online-Shopper Trends Report:
Nielsen’s latest annual report on online shopping behavior of Chinese shoppers is aimed at providing a comprehensive overview of the E-commerce market and online shoppers. The report is based on an online survey of 4,500 respondents aged over 18 from 14 major Tier1 and Tier 2 cities in China. All respondents have independently made more than 3 online purchases in the past 6 months. The online-based survey was conducted from July 18 to Aug 3, 2014. Beyond the key online shopper trends, the report also gives detailed analysis of the performance of 46 of China’s key online retailers, including Tmall, Taobao, Yihaodian, Joyo, Dangdang, Suning and etc. Online shopper preferences for these e-tailers for a total of 8 large product categories are also covered in the survey.
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.