Mobile “on the go” shopping in China is becoming the norm – from researching products and discussing with friends to purchasing with a swipe of the finger. Mobile shopping is changing the way customers discover, research and ultimately buy products in China, primarily through 1) providing tools to conduct research while in-store, 2) creating robust platforms for marketing and real time customer engagement, and 3) allowing brands to inexpensively expand their customer reach. Our businesses are proactively expanding customer engagement campaigns to include both e-commerce and m-commerce.
The “showrooming effect”, where shoppers visit traditional brick and mortar stores, but ultimately make a purchase elsewhere, is becoming increasingly prevalent as Chinese consumers are often found trying a product or service in-store while shopping on their mobile device for the best deal. McKinsey’s 2014 Survey reported that of the 30% of shoppers who research the product online while physically in the store, only 16% will make a purchase in the physical store, while 29% will purchase the product from the retailer’s online store and 45% will purchase the product from other online stores. More importantly, m-commerce is changing the way we reach our customers. Retailers are placing QR codes next to their products to offer discounts and additional product details, while acquiring increasingly useful data about the consumer. At our branded wholesale business, Soho Baby, which manages Silver Cross’s monobrand store in Shanghai’s Plaza 66, you will often find shop keepers leveraging mobile phones as a part of the consumer experience – our team recently observed a shop keeper promoting the key features of a high end pram through a video call with a client in distant Anhui province.
Our businesses have created WeChat groups to promote products, capitalizing on the overwhelming importance that Chinese shoppers place on recommendations from friends, family and thought leaders. Surveys show that China’s 500 million social network users became 40% more likely to shop online after joining social networking services like WeChat or Tencent’s QQ messaging service. Yeehoo, Pinco Pallino and TenGuard all actively use WeChat accounts to publicize developments, new product launches, and promotion highlights. Zhang Ziyi’s recent collaboration with Pinco Pallino in Italy, some 5,650 miles from China, was followed in real-time by more than 100,000 WeChat followers.
M-commerce is reducing barriers. While internet penetration rates in rural China remain below levels seen in developed countries, 65% of rural respondents in McKinsey’s survey had participated in online shopping in the past 3 months, and 85% stated that they would use mobile to go online. Furthermore, from September to December last year, Alibaba added 48 million additional mobile users – more than the entire population of California.
During “Double Eleven”, China’s equivalent of “Black Friday”, transaction volume for mobile shopping totaled RMB 24.3 billion, roughly 43% of total transaction volume. This was nearly 4.5 times the 2013 mobile commerce revenues for the same period, easily setting a new record high for mobile shopping in a single day. During Q4 2014, gross merchandise volume purchased over mobile phones rose to 42%, compared to 20% during Q4 2013. These trends are also visible in our portfolio. On “Double Eleven” 2014, 51% of Yeehoo’s revenue came from mobile sales, a 133% increase from 2013.
As smartphones proliferate and cellular coverage expands, an increasing number of Chinese consumers, particularly in rural areas, will consume through mobile sites, for convenience and cost. Our project teams are busy proactively monitoring this phenomenon, and creatively thinking how to engage the new generation of Chinese consumers to position our brands as market leaders.
