Chinese consumers increasingly turn to mobile for their shopping

13 March 2018 Authored by Consultancy.asia

China continues to see the number of online sales grow, amounting to almost 15% of the total share of revenues in 2015. The country has seen mobile commerce leapfrog online channels, with around half of all digital transactions performed through a smartphone.

Chinese consumers are continuing to move their buying into the online environment. The Boston Consulting Group’s recent analysis explores the extent of wider changes in e-commerce across global markets, with a focus on Chinese consumers.

The report highlights the online retail boom in China between 2010 and 2015, up from around 3% of total sales to close to 15%. In total, around $750 billion is sold through online channels in the country, representing more than the US and UK markets combined – the former of which has around a 10% online sales share, and the latter, close to 15%.

E-commerce exploded in china

Other Asian countries however have been slower to adopt online shopping, with India, Malaysia and Thailand all below or well below 5% of total sales. Japan comes in at around 7.5% while South Korea is the top performer, at around 16% - although the total market is considerably smaller than that of China.

One of the major reasons for the massive rise in online shopping in China is the country’s relatively new relationship with shopping. Customers – whose wealth has rocketed in recent years – are not as keenly set on the brick and mortar experience. The Chinese market is also projected to see further strong growth on the back of an expanding middle class – including “an expected influx of hundreds of millions of new customers, many from smaller cities and rural areas, many who have yet to go online”. 

Chinese consumers have not merely skipped the physical shopping experience, the country is also increasingly leapfrogging online shopping for mobile shopping experiences. Data for 2015 shows m-commerce at around 51% of total e-commerce spending in China, compared to 33% in the US. The firm’s projections are that by 2020 around three quarters of online shopping will be performed through mobile devices in China, compared to less than half in the US.

Mobile commerce

The study also shows that various categories may become bastions of online sales, in a country which is already comfortable purchasing “everything from organic foods to luxury cars online”, with around 15 categories, from snacks to financial services, projected to attract an at least 40% rate of sales via online channels. In comparison, only five categories, including mainstays such clothing and books, are predicted to reach the same level of online purchasing penetration in the US.

Aside from the rapid shift to enablers of online sales, such as smartphone proliferation and income level rises, the country also has a highly integrated digital ecosystem. Digital commerce is offered through massive, and multipurpose, platforms, such as Baidu, Alibaba and Tencent. The report states; “In China, news sites, games, videos, and ecommerce are all interconnected in the major online hubs, with click-to-buy product placements and quick links to payment options.”

Alibaba for example, which raised an astronomical $25 billion odd through its initial public offering in 2014, provides digital commerce through its Taobao and Tmall platforms (75%-80% market share) electronic payments through Alipay – with more than 450 million active subscribers and an approximate 50% market share – China’s biggest social media platform Sina Weibo with a 400 million monthly users, and an estimated 20% share of video streaming through Youku and Tdou.

China’s digital ecosystem

Millennials rising

Further supporting the rapid growth of China’s ecommerce market is the country’s young, eager and savvy shopping demographic, with typical Chinese teenagers said to be able to name 20 cosmetics brands in comparison to the 14 recalled by their US teen counterparts, and 42% of Chinese youth expressing the need to buy more things in comparison to the 36% in the US.

A recent report by Big Four professional services firm KPMG in conjunction with Chinese online luxury and fashion retailer Mei.com predicted that Millennials would overtake other demographics as China’s biggest consumer retail spenders within five years, while an analysis by management consulting firm Bain & Company found that Gen Y was the main driver behind the country’s strong rebound in luxury goods sales.

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