By Doris Li
According to the 2017 Total Retail Report released by PwC last week, China has not only become the world’s largest e-commerce market, but is still harbouring huge potential for continued growth across various sectors. Food, luxury and sports products are segments that are predicted to see breakthrough growth opportunities in the China market. Mature product categories including fashion, beauty and cosmetics, and electronic products will experience continuous expansion and rapid revenue increase in all Chinese cities outside Tier 1 locations such as Beijing and Shanghai.
E-commerce, particularly mobile commerce, is playing a huge role in China’s retail market. The frequency of purchases on mobiles has reached parity with purchases offline. According to the research, approximately 52% of Chinese consumers shop through mobile devices on a weekly or daily basis, a much higher figure than the global average of 14%. This is reinforced with 79% of Chinese consumers buying products via mobiles at least once every month.
For brands and retailers who are planning to take products to this massive market, there are a few things to know before beginning the journey.
The O2O model
O2O (Online to Offline) has almost become a compulsory option for new brands entering into the China market. With a large and diverse number of e-commerce platforms in China, global retailers and brands have unprecedented access to Chinese consumers through online distribution channels and stores. Furthermore, the online marketing and sales model provides businesses with access to valuable consumer insights to inform their offline store strategies in China, such as their location, purchasing power and frequency.
While O2O traditionally means ‘online to offline’, in China, it is equally important to focus on the other way around with offline to online. While 40% of consumers prefer to interact with brands in store, there is an increasing number of consumers who interact with brands online. 63% of Chinese consumers follow brands on WeChat after a good offline experience, providing marketers a great opportunity to re-engage with them and build a sustainable relationship.
Personalised digital marketing
E-commerce sites and social media are the key channels for Chinese consumers to search for product information, as 61% of Chinese consumers start product searches at Tmall while 70% of Chinese consumers use social networks as a source of inspiration for purchases. Influencers and celebrities are still playing an enormous role in product endorsement with 29% Chinese consumers using social media to see what brands or products influencers and celebrities endorse. The growth of livestreaming and wanghong (网红, ‘online influencers’) has driven this trend even further and provided another avenue for mobile and social engagement in China.
Meanwhile, Chinese consumers are more attracted to personalised marketing as 31% of them are more willing to see ads that they can relate to, almost double the global average. In order to get Chinese consumers’ attention, it is crucial for retailers to understand the target audience - their interests, their values, preferred language - and tailor messages through different marketing channels.
Another growing trend in China’s retail market is the use of big data. China has shown great improvement in data management and has started to build a new digital marketing ecosystem, with significant development in third party data monitoring platforms. These platforms allow retailers to analyse their target customers, achieve accurate marketing and personalise their marketing content to target specific audience segments. All retailers should consider how they can use new technologies to communicate more personal, trustworthy and meaningful messages to their consumers.
China’s retail market is transforming faster than ever before and leading the global retailing trend towards mobile commerce. How foreign brands adapt their strategies in and outside of China to satisfy consumer preference will dictate how they thrive or survive.