As China's e-commerce market booms, physical stores becoming testing sites for online shoppers

PUBLISHED : Tuesday, 02 June, 2015, 1:09pm
UPDATED : Tuesday, 02 June, 2015, 1:09pm

China's ever growing e-commerce sector has continued to cannibalise in-store visits and sales, according to a new report released this week.

Eighty-five per cent of Chinese consumers chose a digital channel – search engines, brand websites, or social media – when researching a new product or purchase, said PricewaterhouseCoopers in a report examining global e-commerce spending released on Monday.

“With the lines between digital and physical becoming irrelevant to consumers, retailers need to offer brand-defining engagement, such as real-time personalised offers in order to create differentiated services that entice customers to come back,” said Michael Cheng, PwC Asia Pacific and Hong Kong/China retail and consumer leader.

Far more Chinese respondents, 86 per cent compared to 68 per cent of global respondents, said they had intentionally gone to a physical store to check out a product before buying it over the web, with many citing lower prices as the reason for an online purchase.

“To prevent stores being used as showrooms, retailers can adopt in-store technology that uses customer data to design a customised and enriched shopping experience that keeps them in the store. This integrated retail model aligns the customer journey from discovery to fulfilment,” said Colin Light, PwC China and Hong Kong digital consulting leader.

Among Chinese respondents, 90 per cent said that interactions with retailers on social media had driven them to buy more, compared to 62 per cent of global respondents.

“Social media is the daily fabric of shopping in China, with the power to influence purchase decisions more than in any other country. As consumers trust the information shared on social channels, retailers should invest money where the customer is, and turn social engagement into retail action. To stay relevant in the O2O world, retailers must meet consumers’ appetite for innovation,” Light said.

China become the largest e-commerce market in the world in 2013. Last year, domestic consumers purchased online goods and services worth 2.8 trillion yuan (US$451.7 billion), an increase of almost 50 per cent on the year before, according to China's National Bureau of Statistics.

Last month, Alibaba Group, the world's biggest e-commerce firm, posted a 45 per cent year-on-year increase in its quarterly revenue to US$2.81 billion.

Alongside the broader e-commerce market, mobile commerce in China has also grown rapidly in recent years. Chinese mobile payment providers processed more than 6 trillion yuan (US$960 billion) in payments in 2014, five times the previous year's total, according to iResearch.

By some estimates however, China's e-commerce market is beginning to slow, with consulting firm AT Kearney warning that future growth will be driven by third and fourth tier cities, where infrastructure and logistics support are nowhere near as strong as in larger urban centres.

The PwC report surveyed 19,000 online shoppers across 19 territories, including 906 from China. Respondents were asked about their purchasing preferences, use of different shopping channels and expectations of retailers.