China’s consumption is tipped to keep growing over the next decade with online sales playing an increasingly significant role.
The logical conclusion from this is that retailers who want to increase their chances of winning in the Chinese market need to embrace online retailing.
But this is not always straightforward and there are some key points to consider whether you are a domestic brand or an international organization looking to gain traction in China.
Mobility rules when it comes to consumption
Smartphones provide the ultimate gateway for internet users in China. According to the June 2015 figures released by China Internet Network Information Center (CNNIC), 88.9 percent of Chinese internet users chose to connect to the internet via mobile devices, which is in line with it being the country with the biggest number of smartphone users.
Putting the user behavior into the online sales perspective, Analysys found that there were 361 million online shoppers in China in 2014, and 65 percent of them were mobile online shoppers. That’s an increase of 63.5 percent from 2013.
Analysys also suggested that in 2014 the surge in mobile payments owed not only to a five-fold increase in transaction volume but also an obvious behavioral change among shoppers for whom mobile payment was turning into a habit.
Insights need to come from available data
Big data is a natural by-product of booming online transactions, enabled by sophisticated technology. The collection of data may be time-consuming but processing the huge amount of raw data and turning it into useful insights is what online retailers need. It is very possible with the tools at companies’ disposal. They need to use it!
These insights will allow retailers to understand the preferences of customers and predict the trends, thus reducing inventory and waste while improving efficiency. High quality data allows robust analysis of demographics and spending patterns that lead to better customer targeting.
Stand out from the crowd
A recent Deloitte report presented a piece of good news for online retailers. Most internet users in China (77 percent) are willing to be exposed to more online advertisements if it meant they could receive free content that they found valuable.
Using this consumer receptiveness requires differentiation from advertisers, especially when a lot of retailers are selling their products on a third party-operated platform, and more and more are integrating Online-Offline (O2O) to link the virtual and the physical shopping experience.
This significantly adds to the complexity of the customer base. Data and insights will allow you to target the most likely consumers but brands need to the right thing in front of them.
Be ready to play by the new rules
Governments around the world are imposing new policies to regulate online retailing in order to protect intellectual property, consumer rights and data privacy. In China, the Law on Electronic Commerce is expected to be tabled in 2015. The ability to adapt to the changes in this key legislation will be important for the sustainable growth of online retailers.
A new future
The growing complexity of the customer base in the future will require brands to have multi-channeled data collection to understand the way that their consumers seek information and make purchasing decisions.
Equally the advertising that companies pay for needs to meet this complexity in an efficient and measurable way. Companies who don’t tackle the challenge of engaging the audience online, offline, on PC, tablet and mobile, run the risk of making marketing to the Chinese consumer base a bottomless money pit.
– Contact us at [email protected]