Ministry of Industry and Information Technology: Overview of the development of China's home appliance online shopping market in the first half of 2013

On August 12, 2013, the "China Home Appliance Online Shopping Summit Forum and the Release of the Home Appliance Online Shopping Analysis Report for the First Half of 2013" was held in Beijing, guided by the Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology, hosted by the China Electronics Information Industry Development Research Institute, and undertaken by China Electronics News Agency. Representatives from the Ministry of Industry and Information Technology, relevant industry associations, market analysis institutions, e-commerce, and home appliance companies, as well as experts and scholars gathered together to comprehensively discuss the characteristics and trends of the current home appliance online shopping market in China. Gao Sumei, deputy director of the Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology, delivered a keynote speech entitled "Cultivating Information Consumption is the Engine to Promote Industrial Development", and Wang Xiangdong, director of the Information Research Center of the Chinese Academy of Social Sciences, Yan Xiaobing, vice president of JD.com, and Yang Ligeng, CEO of Haier E-Commerce Co., Ltd., delivered keynote speeches. Representatives of relevant industry associations, market analysis institutions, and leading home appliance companies also conducted in-depth dialogues and exchanges on the theme of "grasping the characteristics and trends of online shopping and promoting consumption to serve the people's livelihood." As the main content of this meeting, the "Home Appliance Online Shopping Analysis Report for the First Half of 2013" was officially released at the meeting. This is the first time that my country has released an online shopping analysis report for the home appliance field. The report is excerpted below for readers' reference.

In the first half of 2013, with the continuous expansion of information consumption in my country, e-commerce has grown rapidly. Online shopping has become one of the main ways for people to buy home appliances due to its advantages of breaking through time and space restrictions, more competitive prices, more product choices, and rich and effective product information. From the perspective of market size, product coverage, penetration rate, user attention and participation, etc., online shopping for home appliances has become a sector that cannot be ignored in China's e-commerce field.

(I) The scale of online home appliance shopping continues to expand, and its proportion in overall home appliance consumption is rising

According to data released by the Ministry of Industry and Information Technology, from January to June this year, the transaction volume of my country's online shopping market reached 855.9 billion yuan, a year-on-year increase of 60.2%, accounting for 7.7% of the total retail sales of consumer goods. The transaction volume of my country's online shopping market in the first half of this year given by third-party research institution iResearch is close to this, at 789.2 billion yuan.

Based on data from various sources, this report believes that the scale of my country's B2C home appliance online shopping market (including mobile phones and tablet computers) reached 53 billion yuan in the first half of 2013. Among them, four major home appliances, including flat-screen TVs, refrigerators, washing machines, and air conditioners, accounted for about 25.8%, reaching 13.7 billion yuan; small home appliances accounted for 5 billion yuan; and mobile phones reached 30 billion yuan.

With the improvement of logistics, payment, after-sales guarantee and other systems, as well as the increasing expansion of online shopping consumer groups and the further formation of online shopping concepts, online shopping has become a major choice for consumers to purchase home appliances, and the proportion of online home appliance shopping in overall home appliance consumption has continued to increase. According to statistics, in the first half of this year, online sales of flat-panel TVs accounted for 8.3% of the total retail sales of color TVs in the domestic market, and the proportion of online mobile phone sales in the overall mobile phone sales increased from 9% last year to 13.8% in the first half of this year. The proportion of white appliances such as refrigerators, air conditioners and washing machines has also increased significantly. Some emerging home appliance categories, such as air purifiers, have had high sales and popularity in the online market since their birth.

(II) Brand enterprises accelerate the layout of e-commerce channels, and e-commerce channels become more mainstream

As e-commerce channels have become an indispensable and important channel for home appliance consumption, in the first half of 2013, home appliance brand companies further adjusted their channel strategies and increased their layout of e-commerce channels. It can be said that in the first half of this year, the home appliance online shopping market clearly reflected the characteristics of "early layout, early benefits, fast transformation and fast results". Generally speaking, domestic brands have laid out e-commerce earlier and better than foreign brands. Haier, Konka and Hisense are all companies that laid out early; Skyworth and Changhong made major channel adjustments for e-commerce in the first half of this year, and the results were significant in June; LG's move to attach importance to e-commerce channels in the first half of this year was relatively prominent among foreign brands, and it quickly formed a large team.

Overall, e-commerce channels are becoming a mainstream channel for home appliance sales.

(III) E-commerce channels are highly concentrated, and professional platform-based online shopping malls have obvious advantages

B2C online shopping malls are still the most mainstream consumer channel for home appliance online shopping, and the concentration is high. In the first half of this year, on the one hand, the "price war" between B2C platform companies has focused the attention and purchasing power of online shoppers on B2C platforms; on the other hand, online shoppers' consumption behavior has become more rational, and they have higher requirements for the quality of online shopping products, especially home appliances, and the scale and concentration of B2C home appliance sales have further increased.

In June this year, JD.com's "June Big Sale" to celebrate its 10th anniversary greatly increased the sales of its home appliances. During the three-day store anniversary (June 17th to 19th), home appliances alone (excluding mobile phones and tablets) achieved a transaction volume of 1.59 billion yuan, and on June 18th, the store anniversary day, it achieved the largest single-day sales of 750 million yuan.

Despite the continuous efforts of new platforms such as Yixun in the first half of this year, the three major home appliance online shopping platforms, JD.com, Tmall, and Suning.com, remain unshakable. The combined sales of the three account for more than 90% of the overall home appliance online shopping. At the same time, JD.com has become the largest professional online mall in the home appliance and 3C digital fields with a share of nearly 50%.

(IV) Price is still the main driving force for purchases, and the phenomenon of online shopping following the crowd is obvious

Looking at the products with the highest sales volume in each category of the home appliance online shopping market in the first half of this year, without exception, they are products with lower unit prices in the category. There are two factors behind this: one is price drive, and the other is the herd effect. Products that some manufacturers and merchants "put on special prices" are easy to attract netizens to buy, and more people buying them may attract more comments. "Choosing products based on comments" is an important behavioral habit in consumers' online shopping behavior. Therefore, more comments can attract a group of people to buy, and so on, it can form high popularity and high sales. However, high-end products have fewer opportunities to trigger comments, and the proportion of people who buy high-end products writing comments is far less than that of low-end product buyers, so the herd effect that high-end products can drive is small.

Interestingly, due to the openness and anonymity of the Internet, after the process of "creating festivals to lower prices - rushing to increase sales - commenting to attract popularity - attracting sales", the magical network platform can screen out truly cost-effective products. Therefore, if you want to achieve high sales on online shopping platforms, the most fundamental link is that companies must put cost-effective products on e-commerce platforms with operational capabilities at the most essential prices.

(V) Online home appliances vary in size, and the trend towards high-end products is strengthening

From the perspective of product categories, in the first half of 2013, when consumers shopped for home appliances online, it was still easier to promote sales of small-sized and priced products and products for personal use than large-sized and family-use products. However, the online shopping volume of large home appliances is growing at a rate of several times.

In JD.com, among traditional home appliances other than mobile phones and tablets, the top ten products in terms of online sales in the first half of this year are: razors, sockets, electric kettles/thermos bottles, flat-screen TVs, electric fans, hair dryers, telephones, rice cookers, refrigerators, and air conditioners. Obviously, as a traditional large appliance, the sales ranking of flat-screen TVs is far higher than that of typical small appliances such as rice cookers, not to mention sales, while the sales of refrigerators and air conditioners have also increased by more than 100% year-on-year.

It is not just the product categories that are expanding the boundaries of home appliance online shopping. As the home appliance online shopping market matures, as the concept of online shopping becomes more popular, and as the number of online shoppers increases, the home appliance online shopping market has also shown a trend of expanding products to high-end in the first half of this year. For example, the sales performance of refrigerators in the price range of 6,000 to 8,000 yuan in the first half of this year was very eye-catching; the share of high-end air conditioners above 3,000 yuan in the online shopping market in the first half of this year has reached nearly 30%; the sales share of online smart TVs is also increasing.

(VI) People born in the 1980s and 1990s are most interested in online shopping for home appliances, with the male to female ratio of “paying the bill” being 5:1

Online shoppers are younger than offline shoppers, but among online shoppers, home appliance online shoppers are slightly older, with those aged 25 to 40 accounting for the largest proportion, exceeding 60%. This is the result of the family-oriented nature of home appliance consumption and the main age groups of netizens. Users aged 19 to 24 pay much attention to online home appliance shopping, but their purchasing power is slightly weaker than that of the above age groups at present. Of course, this group will be the main force of online home appliance shopping in the future.

As the age of Internet users continues to polarize, the age of home appliance online shopping users is also showing an increasingly divergent trend, with older users showing an upward trend in activity. Among home appliance online shopping users, those with a bachelor's degree or above account for 65%, and the highly educated group has become the main user group for home appliance online shopping.

In terms of income, middle-income people are the majority of home appliance online shopping users, with those with a monthly income of 4,000 to 5,000 yuan accounting for the largest proportion, at 38.6%. JD.com's sales data shows that in the first half of this year, each home appliance online shopping user purchased an average of 2 home appliances, with an average consumption of about 1,500 yuan.

From a regional perspective, North China, East China and South China are the regions with a higher proportion of home appliance online shopping. Due to the limitations of logistics and distribution, home appliance online shopping consumers are currently mainly concentrated in large and medium-sized cities. With the increasingly improved logistics and distribution systems of mainstream e-commerce companies, the scale of home appliance online shopping in western regions and second- and third-tier markets is rapidly expanding.