Mathew McDougall from digital marketing agency Digital Jungle looks at the differences of eCommerce between here and Asia.
We all know about E-commerce. It’s the business of buying and/or selling products and services online. Whether you’re talking B2C, B2B or C2C, giving it a crack in a foreign market will always be different from one to the other because each one has its own specific culture and characteristics.
The main difference between the Chinese market and the Western market is social media. Many Western companies failed in trying to enter China, including household names such as Groupon or eBay. This was due to a lack of knowledge regarding China’s social media landscape. The digital landscape in China is different in terms of social media, search engine and laws. Therefore, brands cannot expect consumers to behave the same way as the ones in the West. These consequences are usually unexpected by brands and prevent them from breaking into the Chinese market. In short, launching an e-commerce platform in the country requires a great deal of knowledge of the market.
When launching a company anywhere understanding the competition is paramount. China’s e-commerce market is dominated by Alibaba Group Holding Ltd [IPO-BABA.N]. The company owns; Taobao, China’s eBay doppelganger; Tmall, another B2C platform for sophisticated brands and finally; Juhuasuan, a third platform for group buying.
According to CNNIC’s internet development statistics report, the Internet users population increased by 2.3% from 618million, in 2013, to 632 million, in June 2014. The penetration of Internet users is less than half of the population but this still represents a significant number of potential consumers. This is why China is expected to be the number one online market by 2015 despite the average netizen spending only 25 hours on the Internet every week. This could be considered as a weak amount of hours compared to Western consumers. Nevertheless, the huge population offers ample opportunity for online campaigns to reach an important target group.
Understanding the local social media landscape is another hurdle. As you may know, Facebook, Twitter, YouTube, Google and even Snapchat are not allowed in China. Sina Weibo and WeChat are the most popular platforms in China but there is much more to it than that. Chinese social media is much more complex and fragmented than you may realize. Thus, it is important to know who exactly you are targeting, understand their unique online behaviors and what platforms they favor. Without underestimating this important point let us now examine the ecommerce trends in the Chinese market.
According to a study from We-Are-Social in 2014, 81% of Chinese Netizens (Internet users) access the Internet via mobile device. That’s 511.920 million Chinese consumers going online via mobile. The increase of Internet users came from the connections via mobile devices in 2013. In fact, according to Reuters. the number of mobile shoppers increased 42% between December and June. 2013 Spending a lot of their time on smartphones, Chinese consumers are used to purchasing online. According to Robert Wang (Business Consulting manager), Chinese costumers would like to do their online shopping during working hours. What is interesting and different from the West is that costumers can actually contact sellers via online chat to resolve pre-sale and post-sale problems rather than use call center services.
Debit card and cash on delivery are the dominant payments methods for online purchases on platforms such as Taobao. In addition, some Chinese consumers use the Alipay (Alibaba Group) app to pay for everything. By everything I mean taxi rides, electricity/water bills, rent and even sending money to friends. Alipay is the current leader in China in terms of online payment business as Paypal is not popular in the country.
In an attempt to compete with Alipay, WeChat has recently partnered with a Taxi app providing an online payment tab via the app. WeChat has an impressive 355 millions active users across the world and provides the opportunity to communicate and pay via the same platform. This is its unique selling point. Just like its competitor Alipay, WeChat can be used to book a flight, a taxi, transfer money (locally or internationally), pay bills, buy in-store or on delivery.
Website design is also a factor to take into account. An e-commerce platform should utilize colors and layouts that have been adapted to Chinese consumers. East Asian websites are more inclined to use bright/primary colors such as red, blue, green and yellow. Oppositely, Westerners appreciate clean and understated content. Unsurprisingly, Chinese netizens will stay longer and be more likely to make a purchase on a platform that is easy to navigate. Despite the obviousness of this statement, the web design process is more complicated than you might think. Chinese websites tolerate or even appreciate invasive advertising such as web banners and pop-ups. In comparison, Westerners will avid sites with heavy advertising.
More important than the price factor when making a purchasing decision, is the brand reputation. Thus, when developing an ecommerce strategy keep in mind that a Chinese consumer is more inclined to purchase from a brand if they have heard about it before through advertising either a campaign or from their friends, family or fellow netizens.
As you might expect, when doing eCommerce in China there is an incredible number of potential consumers, owing to the staggering number of Internet and smartphone users. On the other hand, what you might not expect when doing eCommerce in China is the complexity of factors that are fundamentally different from the West. In addition, the behavior of online consumers differs between China and the West. Chinese consumers expect a different kind of content and are use to receiving information in a certain way. Chinese consumers are very comfortable purchasing goods online, either through apps or websites. Knowing how successful the eCommerce market is in China means this might be the perfect time for your brand to expand in to the Chinese market.