Smartphones have become widely available on the market in China at an affordable rate, resulting in the number of internet phone users exceeding that of those accessing the internet via PC in the country. This means that much of the Chinese ecommerce market has become more mobile, where phone users can now shop online anywhere in which they have internet signal, as opposed to only being able to browse on a PC at home.
This change in digital consumption has led Chinese eCommerce giants to speculate on how to maximise the opportunities of this new emerging digital market.
Efforts across numerous sectors have been utilised to promote the growth in ecommerce, such as the increase in Government-subsidised internet access, the increase in the adoption of internet connected mobiles and the spread of high-speed internet access. This has led to China having an online population of over 513 million potential shoppers, 41% with access to 4G internet .
(Figure 1 – Ampp3d China’s gender imbalance & Singletons day)
For those that are unfamiliar, the 11th of November is “Singletons day” in China. A Chinese cultural festive holiday to rival Valentine’s Day has become the highest expenditure day in China. This day is for singles to buy themselves gifts and receive gifts from their coupled friends. In 2014 Alibaba, China’s biggest ecommerce site reported that 50% of their sales were done by consumers using their phones to shop. Alibaba had recorded sales of $2 Billion in gross merchandise value within one hour. In 2013 it took nine hours for the company to record the same value of sales. By 8pm, Alibaba had recorded $7.7 Billion, exceeding their own expectations. Alibaba’s success on Singletons day 2014, where they had announced sales revenue of $1 Billion in twenty minutes, can be attributed to their recognition and adaptability to the change in how consumers approach ecommerce. Alibaba encouraged consumers to use their tablets and mobiles by offering them further shopping discounts on those devices. This approach was utilised to benefit the promotion of Alibaba’s Alipay system as well as to encourage more shoppers to convert to the smartphone and tablet shopping system. By increasing their market share of the up and coming mobile device ecommerce early, they will be hoping to preserve this gained share of the market as competition follows and saturates the market.
With the countries growing Chinese middle class increasing their demand to consume products and services, there is still much room for ecommerce in general to grow and in particular mobile device shopping. The Chinese middle class is expected to grow from 200 to 800 million in the next twenty years suggesting that the already gigantic market of Chinese ecommerce still has much growth before it can be considered to be at its true potential. The Boston Consulting Group conducted research to find out why the appeal of shopping on ecommerce was so present amongst the Chinese, finding that the key factors for consumers were: greater product selection, practicality and lastly the ability to compare prices with many vendors at once. A substantial 65% of those surveyed in the study stated that they often compare prices when shopping online. Of the BCG’s research helps explain how the change in trend from accessing ecommerce by PC to mobile devices has stimulated the appeal of shopping online further for Chinese consumers resulting in an increase in expenditure online.
What was abundantly clear after November the 11th 2014 Singletons day, there is a clear correlation between the amount of smartphone users in China and the propensity to use mobile devices for ecommerce. Ad adge reported that almost 46% of the sales on the day were logged on in the first hour. This is a significant rise from the year prior in 2013 where only 21% did so.
The major growth in Ecommerce in China largely owes credit to an improvement in shipping prices and reliability. The cost of shipping in mainland China is around a sixth of what American consumers face. The increased satisfaction with parcel deliveries in China has resulted in ecommerce giant Alibaba’s Taobao site to account for 50% of the packages sent around China. What the country’s main ecommerce giants have successfully done is follow consumer trends and encourage these new channels to be adopted into mainstream, in which consumers can shop online from anywhere at any time in their schedule from their smartphone devices which they take with them on their daily routines. The utilisation of the ability to conveniently purchase instantly on impulse as well as the increased transparency of ecommerce competition pricing is the main reasoning behind the added boost that the mobile and tablet devices provide for Chinese ecommerce sites.