WWD: Product Shift Draws More Chinese Female Consumers

July 25th, 2016; WWD

Franklin Chu, managing director of Azoya International, shares insights into the behavior of Chinese shoppers.

The “She-conomy” is coming of age.

At JD.com, the site’s midyear sales event yielded 119.9 billion renminbi in online orders, which is close to rival Alibaba’s 2016 Singles’ Day performance that generated 120.7 billion renminbi in sales.

What’s noteworthy is that for this year’s midyear sales, JD.com highlighted female shoppers’ contributions to the surge of gross merchandise volume.

Figures released by JD.com showed that the number of female customers had doubled during the midyear sales event — on a platform that was traditionally regarded as an online shopping destination for men. For most customers, JD.com was famous for discounted digital products and electrical appliances.

But this year, the platform attracted more female shoppers who were lured by the site’s offerings in beauty and cosmetics, food and beverage, mom and baby products, and travel necessities.

Moreover, when it comes to cross-border e-commerce, female Chinese consumers are also dominating. As monitored by AzoyaLab, female shoppers account for more than 70 percent of total active customers of multiple, foreign e-commerce web sites. Top categories include skin care and cosmetics, mom and baby, health and nutrition.

And increasingly, a typical Chinese e-commerce web site now features more products that have more female users than male users.

On the other hand, more e-commerce sites are now featuring categories such as beauty, personal care and fashion products that generally have more female shoppers than male. There’s also rumblings in the industry that the big marketplaces in China are battling for female shoppers by providing better quality and services, not just prices — making the Chinese e-commerce increasingly friendly to female users.

In a 2010 report by Time magazine, the authors noted that women are simply a better “customer” as they value the experience of purchase, inquire more about the products and services, as well as spend more. A McKinsey report in 2016 indicated that women contribute about 41 percent of the GDP in China, which is among the top tiers in the world. An increase in income coupled with the fact that women traditionally hold the purse strings in a household has led to a better understanding of why this increase is occurring.

A study from iResearch showed that male shoppers account for more than half in early stage of cross-border e-commerce in China. But now women are catching up, and have become the major sales contributors for overseas retailers. Compared to male shoppers, female shoppers are warier than men in terms of price and risk, which means that they can be savvy about leveraging different tools to find out the best deal, e.g. social media, shopping guide websites.

The She-conomy is often used to describe a series of service and products in bulk that are targeting female users, or decision makers. Such services and products are often featured with a high-quality, nice-looking, smooth shopping experience that can often be the criterion of making purchase decisions.

FMCG (fast-moving consumer goods) is no doubt among the top sectors that respond quickly to this consumption upgrade trend in China. Retail sales of cosmetics and skin-care products continue to rise. Other categories such as mom and baby products, fashion and apparel are also enjoying faster growth in China, leading the vertical e-commerce boom. Retailers with categorical focus in these areas also have a higher chance of success in the cross-border e-commerce sector.

But heavy competition in popular brands and products could be problematic as more retailers are trapped in the loop of selling popular products with limited margins. To break away from the current loop, retailers with categorical focus on FMCG should also consider refreshing product offerings to include a bigger portion for niche and premium products — which is gaining in popularity in the China market.

Feelunique, a leader in cross-border beauty e-commerce, recently introduced Charlotte Tilbury to the Chinese market to leverage this trend.

For global retailers with ambition about the China market, staying relevant and attractive to the female shoppers is key. Also critical is shifting to a categorical focus that appeals to women as well as offering a broader product assortment and price points that resonate with experienced shoppers as well as entry-level consumers.

Optimizing fulfillment capabilities and improving international logistics processes to reduce shipping time and costs will also improve the overall shopping experience, which is also key to female customers. Lastly, it is important to target users regularly with tailored content designed to inspire purchases.

As seen on WWD Think Tank