From Steps to Clicks  Online Shopping Behavior of  Women in Low Tier MarketsStephanie Chai, Liu Jie, Wang Yuan Yuan, Huang...
Female purchase power in China- Disposable income of Chinese           They are avid online shoppers.   Their average annu...
E-commerce in China China’s middle and           E-commerce helps              Broadband internet        Credit Suisse for...
Digitization
Digitization taking low tier markets by storm                                        Media reach of tier 3/4 cities     -1...
E-commerce is fast penetrating low tier markets:       Online shopping is among top 10 online activities           Top 10 ...
Women in low tier markets & online-shopping
With the massive economic growth,Chinese consumers are becoming richer
The monthly HHI in tier 3/4 markets is still less           than that of tier 1/2 markets                                 ...
However, the rate of increase of monthly HHI in              low tier markets is faster                                   ...
Lifestyle & consumption of women in low tiermarkets have also changed, getting closer to     their counterparts in tier 1/...
In fact, they have a strong demand for “imported        compared with domestic products”                                  ...
And trust for international and well-known brands                                                                 45      ...
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...
8% more tier 3/4 consumers are likely to “spend            money without thinking”                                      39...
Online-shopping behavior
More active in offline modern channels                          2011 3/4 female                           Tier Tier 3/4 fe...
Except for TV, female online-shoppers in low tier          cities consume more media                                  Tier...
Online-shoppers adopt a variety of ways to                  access the internet                             87%           ...
They are also heavy users of mobile internet,    gaining access from both in and out of home             Tier 3/4 female m...
18% of female online-shoppers search for information and 16% write/read Weibo via mobile internet. Highly likely  that the...
They also want to purchase on the spotSource: Digital Natives @ apps.com, MEC 2011
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...
Top 5 categories tier 3/4 female online shoppers                 like to purchase                  Clothing/Accessory/shoe...
More of them buy clothing/accessory, sport/leisure, IT digital products and beauty & hair online than women in            ...
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...
Furthermore, the rate of increase is actually                     much higher                  Average annual expenditure ...
And they are willing to spend more of their   annual household income on e-shopping than        their counterparts in tier...
Implications
Implications - 1Offline and online channels and platforms are intertwined• Consumers tailor their usage of offline and onl...
Implications - 2From e-commerce to social commerce• Social commerce refers to the use of social strategies to anticipate, ...
Implications - 3Building trust• The issue of trust is central to building an effective, long-lasting online  relationship ...
Implications - 4Mobile strategy• 70% of female online shoppers of low tier cities use their mobile phone to  access the in...
Research methodology
Research methodology•   This is a data mining exercise, drawing from GroupM Knowledge Center’s Project Deep    Dive (PDD) ...
Bibliography
Bibliography•   Altimeter (2010) – Rise of Social Commerce : A Trail Guide for the Social Commerce    Pioneer, November 20...
For more information, please contact:Theresa LooNational Director – Strategic Planning, Analytics & InsightMEC China29/F, ...
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From Steps to Clicks-Online Shopping Behavior of Women in China's Lower-Tier Markets

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MEC research decodes e-commerce potential of women in 583 low tier cities. Women are half the population and control the majority of disposable income in their families, as they are often the principal purchaser of groceries and daily necessities. In China, many women also make purchase decisions for their parents and in-laws. In the past, they shopped in brick and mortar stores. Nowadays, 44% of women in tier 1 and 2 cities and 23% of women in low tier cities also shop online. The research from MEC uncovered that in terms of per capita spend on e-shopping in the past year, women in low tier cities, who spent an average of RMB 1757, were only RMB 339 behind the spend of their tier 1 and 2 counterparts.

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From Steps to Clicks-Online Shopping Behavior of Women in China's Lower-Tier Markets

  1. 1. From Steps to Clicks Online Shopping Behavior of Women in Low Tier MarketsStephanie Chai, Liu Jie, Wang Yuan Yuan, Huang Jia, Wu Jin
  2. 2. Female purchase power in China- Disposable income of Chinese They are avid online shoppers. Their average annual spendingfemales are on the rise Tier 1/2 cities: 44% on online shopping:- Female contributes to 35.8% Tier 3/4 cities: 23% Tier 1/2 cities: Rmb2,096of family income and spend Tier 3/4 cities: Rmb1,75729.2% of her family’s money on Only Rmb339 behindherself- Many also make purchasedecisions for their families, theirparents & in-lawsSource: Huakun Female Lifestyle Survey 2011
  3. 3. E-commerce in China China’s middle and E-commerce helps Broadband internet Credit Suisse forecast affluent classes are marketers break out of the penetration is close to that China’s e- spread all over the limiting reach of brick and 90% in tier 1 to tier 4 commerce will reach country in pockets of mortar stores. cities. Rmb2,703 billion by growth and wealth. 2015, accounting for 6.7% of retail sales.Source: Credit Suisse Equity Research, March 2011
  4. 4. Digitization
  5. 5. Digitization taking low tier markets by storm Media reach of tier 3/4 cities -10% 93% 94% 85% +25% 50% -21% -30% PDD 2007 40% 32% PDD 2009 29% 30% 24% 23% 26% PDD 2011 21% 6% 6% 7% TVTV (yesterday) Internet Newspaper Newspaper Magazine (past 1 Radio Radio Magazine (yesterday) (yesterday) (yesterday) (yesterday) (yesterday) (yesterday) (past 1 week) week) (yesterday) Respondents: people aged 15-45 PDD 2007 n=6153 PDD 2009 n=7577 PDD 2011 n=5151 Data source: PDD2007, 2009, 2011
  6. 6. 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
  7. 7. Women in low tier markets & online-shopping
  8. 8. With the massive economic growth,Chinese consumers are becoming richer
  9. 9. The monthly HHI in tier 3/4 markets is still less than that of tier 1/2 markets 8,147 5,062 Tier 3/4 Tier 1/2Data source: PDD2011, CNRS2011
  10. 10. However, the rate of increase of monthly HHI in low tier markets is faster +45% 2011 8,147 2009 +58% 5,636 5,062 3,198 Tier 3/4 Tier 1/2Data source: PDD2009, 2011 CNRS2009,2011
  11. 11. Lifestyle & consumption of women in low tiermarkets have also changed, getting closer to their counterparts in tier 1/2 markets
  12. 12. In fact, they have a strong demand for “imported compared with domestic products” 63 56 35 2009 Tier 3/4 2011 Tier 3/4 2011 Tier 1/2 female female femaleData source: PDD2009,2011 CNRS2011
  13. 13. And trust for international and well-known brands 45 37 17 2009 Tier 3/4 2011 Tier 3/4 2011 Tier 1/2 female female femaleData source: PDD2009,2011 CNRS2011
  14. 14. They can be “more enthusiastic” than their counterparts in tier 1/2 cities
  15. 15. 10% more tier 3/4 consumers “like to keep up with the latest fashions” 52 42 Tier 3/4 female Tier 1/2 femaleData source: PDD2011 CNRS2011
  16. 16. 8% more tier 3/4 consumers are likely to “spend money without thinking” 39 31 Tier 3/4 female Tier 1/2 femaleData source: PDD2011 CNRS2011
  17. 17. Online-shopping behavior
  18. 18. More active in offline modern channels 2011 3/4 female Tier Tier 3/4 female 20113/4 female e-shopper Tier Tier 3/4 female e-shopper 77 79 79 70 71 59 42 41 39 32 35 31 Shopping Convenience Independent Wet market Grocery store Street vendor mall/center store/Mini- supermarket/ supermarket Hypermarket Modern channels Traditional channelsData source: PDD2011
  19. 19. Except for TV, female online-shoppers in low tier cities consume more media Tier 3/4 female Tier 3/4 female e-shopper 88 77 80 71 63 57 34 37 31 30 20 17 12 6 6 6 (yesterday) (past 1 week) (yesterday) (past 1 month)(yesterday)(past 1 week) (past 1 month)(yesterday)* TV OOH Internet Magazine Newspaper Mobile Cinema RadioData source: PDD2011
  20. 20. Online-shoppers adopt a variety of ways to access the internet 87% 31% 86% 22% 31% 13% 23% 7%Blue for TotalOrange for online-shopperData source: PDD2011
  21. 21. They are also heavy users of mobile internet, gaining access from both in and out of home Tier 3/4 female mobile internet user Tier 3/4 female e-shopper who uses mobile Internet 75 68 47 44 33 29 22 21 16 10 2 0 1 3 At home On the go On going At work At school At someone Internet Others* elses home café*Data source: PDD2011
  22. 22. 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 Tier 3/4 female Tier 3/4 female e-shopper 17 18 16 12 For information Write/read microblogData source: PDD2011
  23. 23. They also want to purchase on the spotSource: Digital Natives @ apps.com, MEC 2011
  24. 24. Female online shoppers in tier 3/4 markets are younger than those in tier 1/2 markets Tier 3/4 female e-shopper Tier 1/2 female e-shopper 50 47 42 27 33 19 22 23 12 12 13 11 6 6 5 3 2 1 3 1 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64Data source: PDD2011, CNRS2011
  25. 25. 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 Tier 3/4 female e-shopper Tier 1/2 female e-shopper 34 25 24 22 26 21 18 11 10 12 10 9 10 5 North China Northeast* East China Northwest Southwest South China Central ChinaData source: PDD2011, CNRS2011
  26. 26. 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/childrens wear* Catering* Mobile phones/ communication… Others* Air tickets* Art Shows/ movies/ tickets* Flowers/ gifts* Photo* Travel/holiday* Automobile* Tier 3/4 female e-shopper Pub/KTV* Tier 1/2 female e-shopper Club/Gym*Data source: PDD2011, CNRS2011
  27. 27. More of them buy clothing/accessory, sport/leisure, IT digital products and beauty & hair online than women in tier 1/2 markets 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/childrens wear* Catering* Mobile phones/ communication… Others* Air tickets* Art Shows/ movies/ tickets* Flowers/ gifts* Photo* Travel/holiday* Automobile* Tier 3/4 female e-shopper Pub/KTV* Tier 1/2 female e-shopper Club/Gym*Data source: PDD2011, CNRS2011
  28. 28. With the development of online shopping in tier 3/4 cities, household products have lots of upside potential 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/childrens wear* Catering* Mobile phones/ communication… Others* Air tickets* Art Shows/ movies/ tickets* Flowers/ gifts* Photo* Travel/holiday* Automobile* Tier 3/4 female e-shopper Pub/KTV* Tier 1/2 female e-shopper Club/Gym*Data source: PDD2011, CNRS2011
  29. 29. They only spend 339 RMB less on online-shopping than their counterparts in tier 1/2 cities Average annual expenditure 2009 2011 online (RMB) Tier 3/4 female e-shopper 713 1,757 Tier 1/2 female e-shopper 1,450 2,096Data source: PDD2009,2011, CNRS2009,2011
  30. 30. Furthermore, the rate of increase is actually much higher Average annual expenditure 2009 2011 online (RMB) Tier 3/4 female e-shopper 713 1,757 +146% Tier 1/2 female e-shopper 1,450 2,096 +45%Data source: PDD2009,2011, CNRS2009,2011
  31. 31. And they are willing to spend more of their annual household income on e-shopping than their counterparts in tier 1/2 cities +64% +13% Spent on e-shopping / monthly HHI (%) 2.3 1.8 1.6 2011 1.4 2009 Tier 3/4 female e- Tier 1/2 female e- shopper shopperData source: PDD2009,2011, CNRS2009,2011
  32. 32. Implications
  33. 33. Implications - 1Offline 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.
  34. 34. Implications - 2From 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.
  35. 35. Implications - 3Building 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.
  36. 36. Implications - 4Mobile 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.
  37. 37. Research methodology
  38. 38. 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.
  39. 39. Bibliography
  40. 40. 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) – DigitalNatives@apps.com
  41. 41. For more information, please contact:Theresa LooNational Director – Strategic Planning, Analytics & InsightMEC China29/F, 989 Changle RoadShanghai China 200031Direct line: +86 21 2307 7790Switchboard: +86 21 2307 7800theresa.loo@mecglobal.comProject Manager & Editor: Stephanie ChaiData Analyst: Wang Yuan Yuan (Ivy)Report write-up: Liu Jie (Jane)Researchers: Amanda Song, Huang Jia (Fish), Wu Jin (Mandy), Cai Jing

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