What Makes the Chinese Cross-Border E-Commerce Consumer Tick?
Chinese consumers are becoming more and more sophisticated and picky with regards to the products they’re buying. To learn more about their needs and preferences, Azoya worked with market research firm Frost & Sullivan to survey 1,000 cross-border e-commerce consumers across China.
The cross-border e-commerce market in China is becoming increasingly difficult for foreign brands and retailers to penetrate.
Here’s what we found:
- 42% of our participants were from Tier 1 cities, and 52% were from Tier 2 cities
- 20% spent over 2,000 RMB a month on online shopping – a high figure when you consider that the average GDP per capita in China hovers around $8,000 a year
- CBEC consumers are young – 36% were between 19-29 years old, and the remaining were between 30-40 years old.
- 27% had purchased through daigou agents, whereas 84% purchased overseas products through local e-commerce platforms and 67% purchased from global e-commerce platforms such as Amazon. We believe that more shoppers are upgrading from daigou to cross-border e-commerce platforms, in search of more legitimate channels to purchase overseas products.
Daigou as a sales channel has become less popular
The Market is Becoming Increasingly Competitive
While there are opportunities in that the market is still very young and today’s millennials have yet to form long-lasting brand loyalties, because of the large number of brands out there it is very difficult for a brand to stand out. To add to that, the prevalence of fraudulent products makes many consumers wary. Though the average consumer is willing to pay up for higher quality products, he/she is likely to engage in more in-depth research before making a purchase.
For segments such as health supplements and maternity & baby goods, consumers are especially careful, because subpar products have the potential to negatively impact one’s health. Our survey results show that 13% of consumers purchase healthcare & nutrition products through cross-border e-commerce at least once a month, and 15% purchase maternity & baby products at least once a month.
How do Haitao Shoppers Conduct Product Research?
Chinese consumers are oftentimes overwhelmed by the number of choices and information available to them. For one, most of the information is likely in English, which makes it difficult because not everyone is fluent in English. Secondly, a lot of information online may be paid content or posted by advertisers, making it difficult to trust online info. In 2008, over 350,000 babies were discovered to have been fed faulty milk powder with harmful melamine substances, despite the fact that many of the products had been advertised as foreign brands.
As a result, 50% of the haitao shoppers we surveyed are likely to rely on information from friends and family when making a decision. This figure is much higher than social media (32%) and search engine results (25%). This indicates that trust issues are still highly prevalent in e-commerce, and shoppers are much more likely to trust people within their close circle when making purchasing decisions.
Consumers primarily rely on word of mouth for shopping advice
To narrow the number of choices out there, Chinese consumers also look to key opinion leaders (KOLs), or well-known industry influencers with a large following of dedicated fans. Our study shows that haitao shoppers tend to turn to KOLs for advice and recommendations when purchasing fashion (37%) and beauty (23%) products.
KOLs are more trusted when purchasing fashion & beauty products
The cross-border e-commerce market in China is becoming increasingly competitive and brands will have to work harder to distinguish themselves from their peers. However, the market is still in its early stages and full of opportunities. 90% of the consumers in our survey reported having a positive experience with cross-border e-commerce, and 58% report that they plan to spend more on cross-border e-commerce in the future.
Click to read more about our findings: https://shop.azoyagroup.com/products/the-cross-border-ecommerce-opportunity-in-china-preview-version
About the Author
Don Zhao is the Co-Founder and CEO of Azoya International, he is also a enthusiast of E-com Retail. Don is known as the China strategy advisor and experienced speaker.