How Chinese Online Buyers Are Different from Their Western Counterparts March 2013
Chinese Online Buyers Are Different China is the second largest and one of the fastest-growing economies of the modern world. This standing has benefited every sector of the Chinese economy, including retail. Chinese retail sector has not only seen a stimulated demand in sales over the last decade but also witnessed a digital revolution brought about by new information technologies and development of e-commerce. China has become a major internet market with increasingly sophisticated consumers. The country already hosts the highest number of online shoppers (220 Mn in 2012 as compared to 150 Mn in the US) in the world, which offers huge growth potential for foreign firms looking to establish online sales in the country. By the end of 2013, China is also expected to become the largest online retail market globally (USD 265 Bn), surpassing the US (USD 230 Bn). This growth will be facilitated through multiple factors, including rapid rise of internet users, government-driven consumerism campaigns, improved infrastructure and rise in spending power of the country’s middle class. Some of the detailed market numbers are illustrated in the below figure. Number of Digital Buyers in China, 20102016 (Mn) 423.4 374.8
US and China – E-commerce Sales, 20112015 (USD Mn) US
490
China
322.1 369
270.9 219.8
276
178.4 138.2
201
176
228
258
290
184
120
2010
2011
2012
2013
2014
2015
2016
2011
2012
2013
2014
2015
Though Chinese online buyers are proving to be an elusive target, they present several disparate characteristics as compared to their Western counterparts. Some of the relevant characteristics of the Chinese online buyers are sketched below:
According to an industry estimate, most of the Chinese online consumers are located in the rural areas and spend around 40% of their income on internet shopping and entertainment Compared to their US and Japanese counterparts, Chinese consumers are far more interested in e-commerce transactions. According to a survey, 42.1% of Chinese online buyers do online transaction more than once a week, compared to 17.8% and 7.4% of the US and Japanese online buyers, respectively China averages 8.4 purchases per person per month, much higher than 5.2 by an average US customer and 4.3 by an average UK customer
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Chinese online buyers are primarily educated youths (61% aged 18-30 years) who are pricesensitive and seek value and convenience. They compare prices and quality of the product on internet before buying Chinese buyers read and rely more on other consumers’ opinion. They use internet and social media platforms (around 44%) to study a product before making a buying decision, unlike the Western buyers who usually tend to trust sellers’ and corporate websites more. Moreover, they also prefer to discuss their online shopping experiences on social media platforms. According to an industry estimate, 40% of Chinese online buyers share their shopping experience as compared to approximately 20% in the US Price is not the only consideration for Chinese online buyers when it comes to categories like apparel and electronics. Factors including positive reviews from previous customers, product availability & choice, and faster delivery also drive many online purchases in China Apparel and accessories are the hottest categories among Chinese online buyers, followed by books and magazines. Also, it is noted that Chinese buyers do not prefer online medium to buy digital products such as ebooks, games or music Chinese buyers tend to access internet and shop online using their mobile phones and smartphones. About 12% of the online purchases are made by mobile phones About 70% of Chinese buyers pay in cash for purchases made online, unlike the American and Japanese consumers who mainly use credit cards for payment More than half of the online sales in China come from high-priced products costing USD700 and above. Whereas in the US, the same price category accounts for only 31.5% of the overall online sales
Source: All data from secondary sources; Sutherland analysis
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