In this three-part article, we talk to Matthew Crabbe, Director of Research for Asia-Pacific at Mintel, about the popularity of the e-commerce experience in the domestic market, the impact this is set to have on existing trends and how companies are readying themselves to respond.
Chinese market growth
Mintel’s research found that China’s total combined online cross-border e-commerce market, including Business-to-Business and Business-to-Consumer e-commerce, rose from 53 bn Chinese yuan (€7.1 bn) in 2011 to an estimated 626 bn Chinese yuan in 2016 (€83.7bn), at a CAGR of 64%.
From 2016 to 2021, growth is expected to slow to a still-strong CAGR of 15%, to reach a total value of RMB 1.3 trillion (RMB 1281 billion).
“Online retail delivers greater convenience, choices and options, competitive prices as well as home delivery at increasingly frequent and speedy times,” said Matthew Crabbe, Director of Research, Asia-Pacific at Mintel.
“Coupled with high smartphone penetration, consumers can shop from any retailer or brand, anytime, anywhere in the world,” he continued.
Knowing the marketplace
Demonstrating Chinese consumers’ preference for domestic etailers, 73% of those surveyed purchase foreign imported products from domestic shopping websites, whereas only 27% shop from overseas retail websites.
In addition, 56% of consumers buy from physical stores in China instead of overseas shopping websites.
When it comes to buying beauty and personal care products, the leading APAC market is South Korea with 45% of shoppers opting for the K-beauty haven. France is the leading nation outside of APAC, accounting for 20% of beauty and personal care items.
On a large scale
Today, consumers have “limitless choices and flexibility”, ,and as such online retail is an exceedingly inviting concept for large nations like China.
Sizable nations such as China provide further opportunities for brands entering or revamping their online retail space as “getting around cities can be difficult and tiring, and where the range of available retail outlets can be limited by geography,” Crabbe entertained.
As “online retail also piggybacks off the leapfrogging of technology, and the expectation among consumers for constant technological change” is significantly high in China, this indicates that the country is at the forefront of new technological changes.
Quality and pay
As Chinese consumers focus on importing products online, the quality of goods ranks as the most important feature for beauty buyers (68%).
Of those analysed, 44% of shoppers also rated being able to use third-party payment systems, 36% requested detailed product information and 25% of those prioritised Chinese-language customer service.
For Chinese brands looking to focus on building their online operations, developing trust is vital as 35% of those asked said they feel less confident about the returns policies of overseas websites than those of domestic online shopping outlets.
Also, 39% of shoppers would like to see the e-commerce arena evolve by offering additional payment options made available on purchasing sites.
Of those asked that had shopped overseas for imported products, 62% said the experience was missing the excitement of physical shopping abroad, and 20% strongly agreed with this, emphasising the importance of experiential purchasing.
However, Crabbe stressed that “as well as providing a better and more entertaining experience for Chinese online shoppers of imported foreign products, brands and retailers can improve by providing better practical solutions”.
“Offering better delivery, refund and returns options is a key area where overseas online retail websites can improve, as compared to domestic websites. This does create logistical issues, however, but having links through domestic online retail portals can help combat this,” highlighted Crabbe.
The second instalment of this three-part article will be published on 3rd April 2017.