April 17, Beijing — China is seen as the world’s most powerful e-commerce market today, and furthermore, considering that the country is home to 1.4 billion people and has online penetration of only 52%, there is significant room for e-commerce to grow, according to the latest Nielsen Global Connected Commerce Survey, which polled online respondents in 63 countries to understand the underlying factors that influence the evolving digital path to purchase.
The report found that 72% Chinese respondents said they have bought fashion items online, 68% had booked travel service online, and almost half people bought packaged grocery food online.
“If we had to choose a single word to describe today’s Chinese consumers, ‘connected’ would surely rise to the top of the list, digital retailing gives them more ways to shop and more access to products and services than ever before. It’s clear that consumers are embracing the freedom of shopping whenever and wherever they please, as online sales are capturing a double-digit share of retail dollars in Chinese market, and ecommerce potential is huge here,” said Vishal Bali, managing director of Nielsen China.
CHINA IS AMONG TOP COUNTRIES FOR SELECTED CONSUMABLE CATEGORIES
Globally, durable and service-oriented categories continue to lead the way in self-reported online purchasing, as expected. These categories formed the baseline of entry for e-commerce, and their popularity continues to expand. Consumable categories, in contrast, have been slower to gain popularity among online shoppers. However, in China, consumable categories purchased online are also growing fast.
Online shopping in fresh groceries is gaining traction especially in China. About four in 10 online respondents in China (40%) say they’ve purchased fresh groceries online, while the category has significant barriers to overcome to achieve widespread e-commerce adoption in Europe, North America, Africa/Middle East and Latin America, each with less than 10% saying they would purchase groceries online.
China also tops in packaged grocery food purchased online. 47% of Chinese respondents say they bought packaged grocery food online, while most countries around the world are below 30%.
Besides, China is also among the top three in terms of beauty & personal care (47%) and household cleaning & paper (38%). It shows that online purchasing not only prevails in China, but covers a wide range of categories, even in consumable categories.
“As more Chinese shoppers increasingly move seamlessly between offline and online channels, purchase habits are changing. Simply adapting to keep pace is no longer sufficient,” said Bali
“Savvy marketers know that using digital tools in new and innovative ways to engage with shoppers and influence shopping decisions must be a part of their growth plan for the future. To create maximum ROI in an omni-channel, winning brands and retailers must know their shoppers—their demands and how and what they’re buying online and in-store—and they leverage the specific touchpoints that will maximize their shopping experience.”
NON-EDIBLE CATEGORIES DOMINATE CHINA’S TOP ONLINE CPG PURCHASE
Online sales of all CPG categories in China measured by Nielsen totaled $23.2 billion between September 2015 and August 2016, up 25.4% over the previous 12 months. Of the top 15 CPG categories purchased online, the majority were non-edible, covering the personal-care, home-care and baby-care categories. In terms of value sales, skin moisturizer was the largest online CPG category, with sales of $3.4 billion, up 24% over the previous 12 months. Facial masks were the third-largest online CPG category in China, with sales of $2.0 billion, up 1% year-over-year.
The online baby-care market in China also is quite sizable. Online sales of infant milk formulas totaled $2.8 billion for the 12 months ended August 2016, while online diaper sales totaled $1.8 billion, up 22.8% over the previous year.
Beyond infant formula, edible categories haven’t achieved the same online success as their non-edible counterparts, but they’re growing rapidly. Pet food is the second largest edible category, with $697.0 million in online sales between September 2015 and August 2016, up 45.5% over the previous 12 months. Liquid milk and biscuits also are showing strong online growth, with sales up 80.2% and 50% year over year, respectively.
EFFORTS NEEDED IN NETWORK EXPANSION AND STRATEGY BUILDING
According to the report, the internet penetration in China is 52%, among the countries least covered by internet in Asia. When compared with the percentage on the global scale, it is still pretty low, indicating that though China is a strong powerhouse for online consumption, it still has space to grow, especially in its network coverage.
Besides, in terms of those who have already had access to the internet, statistics show that most people in China think that a money-back guarantee would definitely encourage them to buy consumables online. The report found that 50% respondents will be greatly encouraged and 43% said they will be somewhat encouraged, if the website guarantee a full refund for fresh produce if that do not meet expectations. Some consumers also find it purchase-encouraging when stores provide same day product replacement service, or when stores offer free delivery for purchases above a minimum spend.
“If online stores guarantee the consumers’ money back for products not matching what was expected, or even without any reason within seven days, consumers would scarcely hesitate to buy the things they like. Of course, some later discovered that if they retreat the products, they still have to pay the freight, which urged them to consider more before purchase. But anyway, this kind of strategy appeals to consumers very much. And if companies want to enlarge their market, money back guarantee is surely a good choice,” said Bali.
ABOUT NIELSEN
Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers watch and buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services for all devices on which content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen also provides its clients with analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries, covering more than 90% of the world’s population. For more information, visit www.nielsen.com.