China is estimated to be the largest consumer economy today as measured in purchasing power parity (PPP) terms and has become a key target for businesses seeking to expand their reach and maximise profits. However, when it comes to shopping habits, Chinese consumers have unique preferences and behaviors that distinguish them from their Western counterparts. To succeed in this lucrative market, brands need to understand and cater to these distinct behaviors. From pre-shopping research to post-purchase service, every step of the shopping journey has to be tailored to the preferences of Chinese consumers.
In this article, we'll take a closer look at four ways in which Chinese consumers shop differently, from their expectations for fast delivery to their love for shopping festivals.
1. They expect fast delivery, perfectly within 48hrs
Consumers in China expect their parcel delivery to be on-demand and free, and do not expect to pay extra for these features. This is a contrast to the European and American markets, where consumers pay a premium for expedited services like Amazon Prime. As the result, the e-commerce giants, Alibaba and JD.com, have both thrown traditional e-commerce logistics business models away and created market-specific solutions.
Alibaba's Cainiao Network is a data-driven logistics platform that connects warehouse operators, distribution centers, and contractors to improve efficiency and customer experience in the supply chain. It focuses on freight between warehouses and uses third-party partners for last mile deliveries. The network has invested in logistics companies to enhance operational efficiency, and its smart warehouse in Wuxi has 700 automated guided vehicles guided by Internet of things technology. Additionally, it established Cainiao Post, a package pickup station, in local communities and universities. Serviced as the last-mile delivery business, Cainiao Post includes scheduled deliveries, smart lockers, and delivery outlet pickups.
JD Logistics offers end-to-end logistics, including both freight-to-warehouse and last mile delivery. Similar to Ciniao, it also utilises automation and 5G technology to expedite logistics processes. Through the expansion of its "Asia No.1" logistics parks network to 56 intelligent parks with a total area of more than 13 million square meters nationwide, JD has increased its same- or next-day delivery coverage, particularly in lower-tier markets. The Park in Dongguan, covering an area of 500,000 square meters, can fulfill about 1.6 million orders per day. During the peak 28-hour period of 2022’s 618 Grand Promotion, trucks loaded with merchandise left JD.com’s Logistics Park in Beijing every 2 seconds on average.
2. They purchase unattainable or costly foreign items through Daigou
Daigou (代购) is a prevalent practice in China whereby individuals act as surrogate shoppers to obtain luxury goods from foreign countries and duty-free shops at a reduced cost. The range of products that are typically procured by these individuals encompasses mother and baby products, cosmetics, luxury items, as well as food and beverage offerings that are currently unavailable in China. Recent data from a 2022 survey indicates that approximately 24 percent of Chinese respondents reported utilising Daigou for procuring mother and baby products.
Numerous underlying factors prompt Chinese customers to resort to Daigou services. Primarily, the burgeoning middle-class in China has resulted in a surge in demand for luxury goods. Additionally, due to the tax issues, products procured through Daigou can be comparatively more affordable, even with an additional fee charged by the Daigou, compared with purchasing in China. Moreover, there exists a preference and heightened level of trust among certain Chinese clientele towards imported goods, particularly in the realm of mother and baby products. Lastly, many international brands are currently unavailable in China, and have tacitly condoned the Daigou market as it enables their products to enter China without incurring costs associated with advertising or other launching fees.
3. They are excited about shopping festivals, when the big discount occurs
China is known for its extensive celebration of shopping festivals. These festivals occur throughout the whole year on special days or national holidays and provide massive promotions to increase sales and expand audience reach, including significant discounts from brands, spend-and-save offers from e-commerce platforms, additional coupons from KOLs' livestreaming, as well as presales.
Double 11/Singles’ Day, originating as a celebration of singlehood among university students, has become an annual shopping extravaganza largely driven by Alibaba's promotion. Chinese consumers spent $84.54 billion on Alibaba's e-commerce platforms during the two-week shopping event leading up to November 11, 2021. Singles' Day in China outperforms other major shopping campaigns, such as Black Friday and Boxing Day, making it the world's largest shopping holiday.
618 shopping festival, initially introduced by JD.com as a counterpoint to Alibaba's Singles Day, was originally conceived as a marketing strategy but has since evolved into a festival in its own right. The event has emerged as China's second-largest retail promotion, following closely on the heels of Singles Day. Commencing with a pre-sale in mid-May, the festival offers a month-long promotional period leading up to the main event on June 18.
Double 12 shopping event is held on December 12th yearly, following the biggest Double 11 shopping event. The main concept behind is to create more opportunities for sellers to clear the stock left post Single Day. Other famous shopping festivals include Chinese New Year, 520 Day (May 20th), International women’s day, etc.
4. They use community group buying to buy in bulk at discounted rates
Community group buying is a form of e-commerce that involves a minimum number of consumers purchasing goods and services at reduced prices. Meituan Select, a Chinese community group buying service provider, generated a GMV of 120 billion yuan in 2021, while Pinduoduo's Duoduo Grocery ranked second with an annual GMV of 80 billion yuan. Meituan launched its Meituan Select in 2020, which enables community leaders in selected rural areas of China to purchase groceries and other essentials online in bulk at discounted rates. Meituan provides delivery services for each order to a designated pick-up point, usually a store or a restaurant located in a nearby town, and subsequently, the buyer retrieves the order and distributes the goods among the community. This community group buying model has gained immense popularity among China's eastern coastline, where home delivery is the primary method of fulfilling orders. However, due to the high costs and logistical complexities involved in home delivery in certain rural areas, community group buying apps are introducing the click-and-collect approach, thus making it viable for the first time in significant swathes of the Chinese hinterland. Meituan claims that the service has expanded to cover 90% of the counties in mainland China.
By understanding the above key differences, businesses can position themselves for success and tap into the immense potential of the Chinese consumer market. Want to know more about Chinese consumers’ preference, talk to us today!