from steps to clicks-online shopping behavior of women in china's lower-tier markets

From Steps to Clicks

Online Shopping Behavior of

Women in Low Tier Markets

Stephanie Chai, Liu Jie, Wang Yuan Yuan, Huang Jia, Wu Jin

Female purchase power in China

- Disposable income of Chinese

females are on the rise

- Female contributes to 35.8%

of family income and spend

29.2% of her family’s money on

herself

- Many also make purchase

decisions for their families, their

parents & in-laws

They are avid online shoppers.

Tier 1/2 cities: 44%

Tier 3/4 cities: 23%

Their average annual spending

on online shopping:

Tier 1/2 cities: Rmb2,096

Tier 3/4 cities: Rmb1,757

Only Rmb339 behind

Source: Huakun Female Lifestyle Survey 2011

China’s middle and

affluent classes are

spread all over the

country in pockets of

growth and wealth.

E-commerce helps

marketers break out of the

limiting reach of brick and

mortar stores.

Broadband internet

penetration is close to

90% in tier 1 to tier 4

cities.

Credit Suisse forecast

that China’s e-

commerce will reach

Rmb2,703 billion by

2015, accounting for

6.7% of retail sales.

E-commerce in China

Source: Credit Suisse Equity Research, March 2011

Digitization

Digitization taking low tier markets by storm

Media reach of tier 3/4 cities

Respondents: people aged 15-45 PDD 2007 n=6153 PDD 2009 n=7577 PDD 2011 n=5151

93%

24%

32%

26%

6%

94%

40%

29% 30%

6%

85%

50%

23% 21%

7%

TV (yesterday) Internet(yesterday)

Newspaper(yesterday)

Magazine (past 1week)

Radio (yesterday)

PDD 2007

PDD 2009

PDD 2011

-10%

-21% -30%

+25%

Data source: PDD2007, 2009, 2011

TV

(yesterday)

Internet

(yesterday)

Newspaper

(yesterday)

Magazine

(past 1 week)

Radio

(yesterday)

E-commerce is fast penetrating low tier markets:

Online shopping is among top 10 online activities

Top 10 online activities Tier 3/4 female Tier 1/2 female

Instant messenger (MSN, QQ) 74% 79%

Watch movies/ TV series/ TV programmes online 61% 47%

Use search engine for information 44% 70%

Online gaming 33% 60%

Read news on media websites (eg. Renmin, Xinhua) 33% 33%

Email 31% 37%

Listen to or download music/ ringtones 24% 20%

Browse daily life information 23% 48%

Online shopping 23% 44%

Visit SNS (Kaixin, Renren) 21% 24%

Data source: PDD2011

Women in low tier markets & online-shopping

With the massive economic growth,

Chinese consumers are becoming richer

5,062

8,147

Tier 3/4 Tier 1/2

The monthly HHI in tier 3/4 markets is still less

than that of tier 1/2 markets

Data source: PDD2011, CNRS2011

5,062

8,147

3,198

5,636

Tier 3/4 Tier 1/2

2011

2009

However, the rate of increase of monthly HHI in

low tier markets is faster

+58%

+45%

Data source: PDD2009, 2011 CNRS2009,2011

Lifestyle & consumption of women in low tier

markets have also changed, getting closer to

their counterparts in tier 1/2 markets

In fact, they have a strong demand for “imported

compared with domestic products”

35

56 63

2009 Tier 3/4female

2011 Tier 3/4female

2011 Tier 1/2female

Data source: PDD2009,2011 CNRS2011

And trust for international and well-known brands

17

37

45

2009 Tier 3/4female

2011 Tier 3/4female

2011 Tier 1/2female

Data source: PDD2009,2011 CNRS2011

They can be “more enthusiastic” than their

counterparts in tier 1/2 cities

10% more tier 3/4 consumers “like to keep up

with the latest fashions”

52

42

Tier 3/4 female Tier 1/2 female

Data source: PDD2011 CNRS2011

8% more tier 3/4 consumers are likely to “spend

money without thinking”

39

31

Tier 3/4 female Tier 1/2 female

Data source: PDD2011 CNRS2011

Online-shopping behavior

70

79

59

39 42

35

77 79

71

32

41

31

2011 Tier 3/4 female 2011 Tier 3/4 female e-shopperTier 3/4 female Tier 3/4 female e-shopper

More active in offline modern channels

Wet market Street vendor Grocery store Shopping

mall/center

Convenience

store/Mini-

supermarket

Independent

supermarket/

Hypermarket

Modern channels Traditional channels


88

63

34 31

20 12

6 6

77 71

80

57

30 37

17

6

Tier 3/4 female Tier 3/4 female e-shopper

（yesterday) （yesterday) （yesterday) （past 1 week) （past 1 week) （yesterday)* （past 1 month) （past 1 month)

Except for TV, female online-shoppers in low tier

cities consume more media

TV OOH Internet Magazine Newspaper Mobile Cinema Radio


Online-shoppers adopt a variety of ways to

access the internet

87% 86%

23%

31%

31%

7%

13%

22%

Blue for Total

Orange for online-shopper


75

44

29 22

10

2 1

68

47

33

21 16

0 3

At home On going At work At school At someoneelse's home

Internetcafé*

Others*

Tier 3/4 female mobile internet user Tier 3/4 female e-shopper who uses mobile Internet

They are also heavy users of mobile internet,

gaining access from both in and out of home

On the go


18% of female online-shoppers search for information and

16% write/read Weibo via mobile internet. Highly likely

that they share shopping information and experiences

anytime anywhere

17

12

18 16

For information Write/read microblog

Tier 3/4 female Tier 3/4 female e-shopper


They also want to purchase on the spot

Source: Digital Natives @ apps.com, MEC 2011

12 22 23

13 11 6 5 3 1 1

27

47 50

42 33

19 12

6 2 3

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

Tier 3/4 female e-shopper


Female online shoppers in tier 3/4 markets are

younger than those in tier 1/2 markets


Women of North China are the most active online-

shoppers. Whereas for low tier markets, it is the

women of NW China that are most active

11 5

10 12 10 9 10

34

18

24 25

22 26 21

North China Northeast* East China Northwest Southwest South China CentralChina

Tier 3/4 female e-shopper Tier 1/2 female e-shopper


Top 5 categories tier 3/4 female online shoppers

like to purchase

Clothing/Accessory/shoes/bags

Skincare/cosmetics/perfume

Household products

Sport/leisure/outdoor products

Books/audios/softwares/magazines

IT digital products

Beauty & hair

Food*

Home appliances*

Baby care/children's wear*

Catering*

Mobile phones/ communication…

Others*

Air tickets*

Art Shows/ movies/ tickets*

Flowers/ gifts*

Photo*

Travel/holiday*

Automobile*

Pub/KTV*

Club/Gym*






Household products



IT digital products

Beauty & hair

Food*

Home appliances*


Catering*


Others*

Air tickets*


Flowers/ gifts*

Photo*

Travel/holiday*

Automobile*

Pub/KTV*

Club/Gym*



More of them buy clothing/accessory, sport/leisure, IT

digital products and beauty & hair online than women in

tier 1/2 markets




Household products



IT digital products

Beauty & hair

Food*

Home appliances*


Catering*


Others*

Air tickets*


Flowers/ gifts*

Photo*

Travel/holiday*

Automobile*

Pub/KTV*

Club/Gym*



With the development of online shopping in tier 3/4 cities,

household products have lots of upside potential


They only spend 339 RMB less on online-

shopping than their counterparts in tier 1/2 cities

Average annual expenditure

online (RMB) 2009 2011

Tier 3/4 female e-shopper 713 1,757

Tier 1/2 female e-shopper 1,450 2,096

Data source: PDD2009,2011, CNRS2009,2011

Furthermore, the rate of increase is actually

much higher

Average annual expenditure

online (RMB) 2009 2011

Tier 3/4 female e-shopper 713 1,757

Tier 1/2 female e-shopper 1,450 2,096

+146%

+45%


And they are willing to spend more of their

annual household income on e-shopping than

their counterparts in tier 1/2 cities

2.3

1.8 1.4 1.6



2011

2009

Spent on e-shopping / monthly HHI (%)

+64%

+13%


Implications

Implications - 1

Offline and online channels and platforms are intertwined

• Consumers tailor their usage of offline and online channels and

platforms based on availability, immediate needs, size of shopping list,

convenience in terms of time spent or geographical distance. Offline and

online should no longer be seen as standalone silos, but should be

treated as integral components of a single business model. The key is

to drive traffic from offline to online and vice versa as consumers move

along the purchase pathway.

Implications - 2

From e-commerce to social commerce

• Social commerce refers to the use of social strategies to anticipate,

personalize and energize the shopping experience. Chinese consumers

are very social in their purchase process. They want confidence in what

they buy from their friends, and insight from their community. They are

prolific reviewers and readers of online product reviews. As this evolves,

the marketing mix will likely be more and more driven by consumers.

Marketers need to use new ways to sense and shape demand. The role

of brands is to be consumer’s friend and mentor, forging emotional

linkages with consumers. Brands can also create conversations with

consumers and provide them with materials to talk about in the social

space.

Implications - 3

Building trust

• The issue of trust is central to building an effective, long-lasting online

relationship with consumers. This is especially true for the China market,

as consumers have an underlying wariness of fake products being sold

online. Reviews and recommendations from friends and fan communities

serve to alleviate some of the distrust. However, there are multiple facets

of consumer trust online, such as product quality, internet safety,

efficiency, return policy, warranty etc. Success for any e-commerce

player in China involves tackling the various components affecting trust

along every step of the purchase pathway.

Implications - 4

Mobile strategy

• 70% of female online shoppers of low tier cities use their mobile phone to

access the internet at home, so a mobile strategy to offer convenience

and flexibility is necessary. The mobile strategy should be integrated into

the e-commerce and communication plan via the use of gamification,

augmented reality, social couponing and mapping/geospatial

technologies etc.

Research methodology

Research methodology

• This is a data mining exercise, drawing from GroupM Knowledge Center’s Project Deep Dive (PDD) surveys. PDD looked at consumption and media behavior of consumers in low tier cities (provincial level cities, county level cities and counties).

• 3 waves (2007, 2009 and 2011) of PDD survey data were used. The latest 2011 survey has a wider coverage, with the age bracket of respondents extended from 15-45 to 15-64 years old.

• Given that the respondents of PDD 2007 and PDD 2009 were in the 15-45 age bracket, only data of those who are from the same age group in PDD 2011 were used for YOY comparison.

• As for slides not involving YOY comparisons, the data were based on an age range of 15 to 64 years old. Due to the difference in the age group being used, the results may vary slightly between slides.

Bibliography

Bibliography

• Altimeter (2010) – Rise of Social Commerce : A Trail Guide for the Social Commerce

Pioneer, November 2010

• BCG (2010) – China’s Digital Generations 2.0: Digital Media and Commerce Go

Mainstream, May 2010

• BCG (2011) – The World’s Next E-Commerce Superpower, November 2011

• Huakun Female Lifestyle Survey 2011

• KPMG International (2011) – Going Social

• Credit Suisse (2011) – Equity Research: China Internet Sector, March 2011

• McKinsey Quarterly (2009) – The promise of multichannel retailing, October 2009

• McKinsey Quarterly (2010) – China’s Internet Obsession, February 2010

• MEC (2011) – [email protected]

For more information, please contact:

Theresa Loo

National Director – Strategic Planning, Analytics & Insight

MEC China 29/F, 989 Changle Road

Shanghai China 200031

Direct line: +86 21 2307 7790

Switchboard: +86 21 2307 7800

[email protected]

Project Manager & Editor: Stephanie Chai

Data Analyst: Wang Yuan Yuan (Ivy)

Report write-up: Liu Jie (Jane)

Researchers: Amanda Song, Huang Jia (Fish), Wu Jin (Mandy), Cai Jing

from steps to clicks-online shopping behavior of women in china's lower-tier markets

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