Azoya

Understanding the Chinese Cross-Border E-Commerce Consumer

We surveyed 1,000 Chinese cross-border e-commerce shoppers and 100 international retailers to learn more about the state of the cross-border e-commerce and find out why it is becoming increasingly difficult for retailers to penetrate the market.

by Azoya Consulting

There are an estimated 125 million Chinese consumers purchasing overseas products through cross-border e-commerce in China. 

In our recent research study on the state of the industry, conducted with Frost & Sullivan, we found that only 21% of international retailers selling through marketplaces were satisfied with their performance in the market. 

While the percentage of satisfied retailers was slightly higher for standalone online stores (31%) and global e-commerce vendors such as Amazon (37%), these figures are still quite low and show that there is a lot of room to grow for international retailers looking to build a strong foothold in the China market.

Why is it so difficult to penetrate the China cross-border e-commerce market? 

To answer this question, we surveyed 1,000 haitao shoppers to learn more about them and their preferences. 

The characteristics of cross-border e-commerce shoppers are inherently different; for one, they come predominantly from Tier 1 and 2 cities (42% and 52%, respectively) and are more affluent, with 20% spending over 2,000 RMB a month on online shopping. 

They are relatively young (36% were between 19-29 years of age, whereas the remaining 64% were between 30 and 40 years old). 

Since they are more likely to be well educated and have higher salaries, they are more willing to pay up for higher quality products. 

They might have started out purchasing overseas products through daigou (C2C) agents or friends/family living abroad, but moved to buying directly from retailers via cross-border e-commerce because they were looking for a more official, less grey-area avenue to purchases high quality goods. 

In our survey, only 27% of respondents mentioned that they had purchased products through daigou agents, as opposed to 84% who purchased from eCommerce platforms and 67% who purchased from global eCommerce vendors.


 daigou.jpg

Daigou as a sales channel has become less popular

 

The market has become increasingly competitive over the last several years 

While there are opportunities in that the market is still very young and brand loyalties are not set in stone yet, because of the large number of brands out there it is very difficult for a Chinese consumer to distinguish one from another. To add to that, the prevalence of fraud and fake goods in the e-commerce market also make many consumers wary. 

Though the average haitao shopper is willing to pay up for higher quality products, he/she is likely to engage in more in-depth research before making a purchase. This is especially the case for health supplements and maternity & baby goods, where subpar products have the potential to negatively impact one’s health. 

Our survey of 1,000 haitao shoppers show that 13% purchase healthcare & nutrition products at least once a month, and 15% purchase maternity & baby products at least once a month.

When a cross-border e-commerce shopper conducts research into a product, he/she is oftentimes overwhelmed by the number of choices and info out there. 

For one, most of the information is likely in English, which makes it difficult to conduct research. Secondly, a lot of the Chinese information online may be paid content or posted by people looking to advertise their products online, making it difficult to trust online info. 

50% of the haitao shoppers we surveyed are likely to rely on information from friends and family when making a decision. This figure is much higher than social media (32%) and search engine results (25%). In the end, trust issues are still prevalent in the e-commerce industry, and shoppers are much more likely to trust people within their close circle.

influencers.jpg

Consumers primarily rely on word of mouth for shopping advice

 

Another source of trusted information is key opinion leaders (KOLs), or well-known industry influencers that are followed by millions of fans from all over the country. Our study shows that haitao shoppers tend to turn to KOLs for advice and recommendations when purchasing fashion (37%) and beauty (23%) products.

kol by category.jpg

KOLs are more trusted when purchasing fashion & beauty products

 

The cross-border e-commerce market in China is becoming more competitive and brands will find it increasingly difficult to distinguish themselves from their peers. However, the market is still in early stages and full of opportunities. 90% of the consumers in our survey reported having a positive experience with purchasing through this channel, and 58% report that they plan to spend more on cross-border e-commerce in the future.

To read more about our findings, click below for the preview to our 79-page report, Cross-border E-commerce Opportunities in China.

 

Cross-border E-commerce Opportunities in China

The Frost & Sullivan Report dives into the cross-border e-commerce industry and review strategies and expectations of international retailers.

Download