iClick: 2013 China Online Shopping Market Report Analysis

iClick, the industry's leading online marketing company, recently released the "2013 China Online Shopping Market Analysis Report", which sorted out the latest changes in China's e-commerce industry, summarized the various factors that drive the changes in the behavior habits of Chinese online shopping consumers, and proposed corresponding strategies and successful cases for brands, vertical e-commerce, and platform e-commerce. The report pointed out that in 2012, the average annual consumption of Chinese online shopping users reached RMB 5,203, a year-on-year increase of 25%. Not only is the gap with the United States narrowing year by year, but it is also expected to surpass the United States in 2015 to become the world's number one.

For any brand or retailer, whoever understands the needs of Chinese online shoppers first and takes the lead in entering the Chinese online shopping market will have the best chance of success.

“Who” ignited the enthusiasm of online shoppers?

According to Boston Consulting Group, the scale of China's online shopping market exceeded RMB 1.2 trillion in 2012, accounting for 6% of China's total retail sales, with 38 million new online shoppers, and has maintained rapid growth in the past five years. The factors behind its rapid development are mainly the increase in per capita income, the popularization of broadband networks, the mobile shopping experience brought about by smart phones, and the active sharing on social networking sites, which have driven more Chinese users to enjoy the convenience brought by online shopping and gradually grow into senior online shopping users. According to CNNIC, a study on China's online shopping market in 2012 found that nearly 50% of Chinese online shoppers shop online at least once a week, and the frequency of online shopping is ahead of the global average.

The report's analysis of online shopping users found that people aged 25-30 accounted for the largest proportion of 33.1%, and the age of the main online shopping users is gradually tilting towards those over 31. At the same time, user income continues to develop towards the middle and high end, with users with incomes of more than RMB 3,000 increasing by nearly 10% year-on-year in 2012, and the proportion of online shopping users with monthly personal incomes of more than RMB 8,000 is also increasing.

(Data source: CNNIC , 2012 China Online Shopping Market Research Report, March 2013 )

As consumption levels rise, online shoppers pay more attention to clothing, personal care, skin care products/cosmetics, which are personalized products that are difficult to meet in offline stores, as well as 3C, home appliances and other products that improve the quality of life. Due to geographical restrictions, offline stores have limited coverage in third- and fourth-tier cities, especially for mid- to high-end brands. However, the number of wealthy consumers in China's third- and fourth-tier cities is gradually increasing, and in order to enjoy better quality products, they are often more keen on online shopping.

The popularity of smartphones in the past three years has also enabled users in third- and fourth-tier cities and rural areas to transcend the limitations of the previous fixed-line broadband era and directly enter the mobile shopping era, releasing their purchasing power. At the same time, it has also catalyzed the prosperity of social sharing shopping websites and gradually influenced online consumption decisions, such as herd consumption, conspicuous consumption, and advance consumption. In addition, social sharing has also assumed the function of brand popularization education to a certain extent, making online shopping consumers more rational in their brand choices.

(Data source: CNNIC , 2012 China Online Shopping Market Research Report, March 2013 )

Crisis in business opportunities, difficulties and solutions faced by different e-commerce companies

Although China's online shopping market has huge business opportunities, with the increase in the number of Chinese e-commerce companies and the ambition of overseas brands to enter, the competition in the e-commerce market has become more intense than ever before. Whether it is for new entrants, vertical e-commerce or platform e-commerce, the competition for users and traffic, the rising cost of acquiring new users, and the high churn rate of old users are all common risks faced by e-commerce companies.

(Data source: China E-commerce Research Center, Data Analysis to Improve E-commerce Conversion Rate, September 2012 ; Hitwise, E-commerce Website Visit Conversion Rate Data, August 2012 )

iClick found that the user churn rate of leading e-commerce companies is around 10%. In 2012, 6.5% of users abandoned the shopping websites they used more than half a year ago. The increase in the number of e-commerce websites has led to a decrease in users' dependence on a single website. With more and more choices, users will compare and shop based on the categories, product brands, price promotions, etc. of each e-commerce website. In a fiercely competitive environment, the conversion rate from product page to payment confirmation page of leading e-commerce websites is only 1%.

iClick data analysts pointed out that the overall conversion rate of e-commerce websites is currently low, and it is necessary to solve the problem by using targeted technology to push products that meet the behavioral characteristics of users. Due to fierce competition and rising advertising costs, the cost of acquiring new users for e-commerce is also increasing, from about 20 yuan in 2009 to more than 100 yuan in 2012. To overcome this problem, iClick has provided marketing solutions for three types of new brands, vertical e-commerce, and platform e-commerce in its report. The "Lookalike Targeting" mentioned in it is the latest advertising technology today. It can help advertisers identify potential customers similar to the advertisers' existing customers on the Internet by combining the e-commerce company's own CRM data, accurately expand the consumer group, and significantly improve the conversion rate and reduce the cost of acquiring new users.