It won’t surprise any savvy international retailer to learn that the Chinese e-commerce market is rich with opportunity. 50 percent of Chinese consumers now say they buy products online weekly, compared with 22 percent globally. Growth rates have been so dramatic in recent years that e-commerce sales in China now exceed those in the United States.
Figure 1 China online retail mobile transactions and year-on-year growth
While online mobile transactions in the retail sector are continuing to grow, retailers know that growth is never unlimited. In short, what goes up can also come down.
The key takeaway? Successful expansion into the Chinese online retail market is possible, but not guaranteed. The online retailers that succeed will be those that are open to the reality that Chinese shoppers are setting their own trends. At Ingenico ePayments, we call these individuals ‘the new Chinese shoppers’. In many important aspects of their shopping experience and preferences, they are very different to consumers in other large markets, such as the US.
This article explores the latest trends shaping the experience of the new Chinese shoppers, to help international retailers plan and scope their investments in China.
WeChat is one of China’s most popular social commerce platforms with around 1 billion users. Mini-programs were first introduced by WeChat in 2017, and have been growing rapidly since then. Put simply, they are applications that exist within WeChat itself, helping users more easily integrate their social and shopping experiences. Of the 2.3 million mini-programs currently online, the largest group (18 percent) are designed for e-commerce. Their appeal has been boosted by the fact that they can be set up in a matter of weeks, helping to drive the 5.6 billion Renminbi (RMB) – equivalent to $830m – that has been raised for e-commerce mini-programs.
For the new Chinese shoppers and retailers alike, the core appeal of mini-programs is shareability. 35 percent of users access mini-programs via links shared with them by friends and family, among others. This helps businesses tap into the power of social commerce – the practice of incentivizing customers to market products and build brand awareness. It is set to grow at a compound annual growth rate (CAGR) of 35.5% through 2022, and hit 2.78 trillion RMB by 2022.
To see how WeChat’s mini-program works in practice, take a look at the smart retail experience created by Amsterdam’s Schiphol airport through the program, which blends useful flight information with engaging offers.
For more information on providing localized payments support, read our product overview.
Global measurement and data analytics company Nielsen recently identified this trend, based on a series of surprising statistics. On one side, the finding that 64 percent of consumers will try a new product simply because of the packaging. On the other, the reality that average annual working hours in China are higher than anywhere else in the world. The high-pressure environment this generates has created a boom for some surprising products, such as anti-hair loss shampoo. Despite being priced 1.7 higher than ordinary shampoo, its growth rate in terms of demand is 5 times higher than other types of shampoo. Nielsen also notes the boom in healthy food and beverages, with 82 percent of Chinese consumers willing to spend more on these, compared to the global average of 68 percent.
The takeaway? Find a practical solution to a real and genuine local concern, package it well, and Chinese shoppers will reward you with their (mobile) money.
Nielsen also found that, much as the new Chinese traveller is looking overseas for new experiences and destinations, the new Chinese shopper is expanding their horizons in search of premium products. 49 percent of Chinese consumers purchase premium products from overseas retailers, more than double the global average.
For international companies offering a consistent payment experience globally, and the option to pay in RMB, these opportunities are magnified. Ingenico ePayments supports RMB for all the local payment methods it offers in China. Especially when dealing with luxury goods, consumers will expect a seamless and familiar experience.
The new Chinese shopper is discerning about the way online retailers treat them. 67 percent expect retailers to have up-to-date customer information, and personalize their experiences as a result. That compares to less than half (42%) of global consumers.
The centrality of personalization in its platform is another factor in the success of WeChat mini-programs. The platform has been built so brands can design their own e-commerce stores, complete with banners and videos tailored to the needs of their audiences. Crucially, WeChat can also be used for customer relationship management and to set up loyalty schemes via users’ accounts.
The need for personalization also reinforces the importance of a comprehensive set of near real-time reporting tools. Retailers need to be able to get the information they need, when they need it, to make fast, smart decisions. But they should also expect their ePayments partners to provide dedicated consultancy that helps to support and contextualize the insights they see in their data.
The one certainty in the world of online payments is change. Today’s trends will be outdated by tomorrow, and it is only those international retailers that operate at the cutting edge, particularly in the ePayments space, that will see long-term success.
The WeChat Mini-Program, Azoya Consulting, April 2019