Exclusive interview

Online spending in China is at its peak

By Natasha Spencer

- Last updated on GMT

Online spending in China is at its peak
China is seeing a real transformation when it comes to the frequency of purchases made online, as consumers seek cost-effectiveness, convenience and efficiency. We explore what impact this will have on physical in-store shopping and overall customer service demands within the beauty and personal care industry.

Commenting on why online spending is currently so high, Matthew Crabbe, Regional Trends Director, Asia Pacific, at Mintel held that it is a combination of factors including a rapid surge in economic growth, rises in spending power and choice along with greater urbanisation, the large-scale shift of labour from manufacturing to services, the investment and development of logistics, growth in an online (and especially mobile online) population, uptake in online/cashless payments, and growth in travel and other consumer services.

Try before you buy

There may be the perception that consumers prefer to try before they buy when it comes to purchasing cosmetics goods. However, as “cosmetics brands have seen their sales inventory drift towards online”​, this reality potentially turns this concept on its head. Or, is that consumers go in-store to sample and forge that initial impression before buying the item from the brand's e-commerce site?

“People often do their research both in-store and online, looking for the best comparisons, prices, ingredients, and colours, to name a few,”​ Crabbe observed. “Online is a fast and efficient sorter of options and preferences, by helping consumers rank products by price, as well as key features sought.”

However, with this said, “experience is still a big part of retail, and this is where the online-offline convergence is playing well”,​ he emphasised.

“Cosmetics brands are now looking at improving their online and in-store experiences.”​ While this is “not necessarily”​ about the try-before-you-buy marketing method, it does focus on offering as “enjoyable experience”​ as part of the shopping process, and “obtaining some kind of tactile identity from the brands they are engaging with”.

In-store and​ online

As brands strive for even-greater online results, the online-offline convergence is “the natural next step”.

Crabbe highlighted how “online offers efficiency of comparison against massive choice, while in-store offers experience”.

This convergence is “further driven by the shift to mobile online access, and gives the opportunity for physical stores to remodel themselves for the online age”.

The brand experience

Ultimately, brands need to have their fingers on the pulse when it comes to their online activities and presence as it is “impossible for retailers now to ignore online, and likewise brands”.

This rise in online spending is seen throughout China, in particular. As such, this is having a dramatic impact on how Chinese brands form their business plans as these are now reflecting this, or is at least now part of their considerations.

Looking to the near-future, Crabbe noted how “brands need to think about how and where they appear online”​. It is also crucial that they “think about how consumers are going to compare them with their competitors—on image, ingredients, packaging, prices, etc”.

Effective and timely engagement is also paramount as this works to “create a more memorable brand experience”​. This can be attained through “providing more courteous, rapid and attentive customer service, engaging with people on social media, online platforms and in-store”.

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