China is Ahead of U.S. and U.K. for Mobile Commerce

Mobile commerce has exploded in China, ahead of the US and UK, according to a new KPMG global survey. With an exponential rise in the use of smartphones, KPMG forecasts Singles’ Day in China to see record sales this year.

KPMG’s third annual China’s Connected Consumers survey finds that up to 90.4 percent of the 2,560 respondents had made at least one online purchase using a smartphone in the past 12 months, significantly higher than other markets such as the US (74 percent) and the UK (74.6 percent), also ahead of the 69.9 percent global average (A total of 18,340 respondents from over 56 countries were surveyed).

The survey highlights a mobile evolution in China as its consumers lead the global transition to mobile commerce (m-commerce), nearly a quarter of China’s consumers prefer to use mobile phones to make their online purchases, compared to 5.2 percent and 8.5 percent of consumers in the US and globally, respectively.

Jessie Qian, Partner-in-charge, Consumer Markets, KPMG China, says: “The meteoric rise in online and mobile activity points to a Chinese consumer that is increasingly sophisticated, hungry for information, more likely to spend and keen on accessing a greater variety of products.”

One of the key drivers for m-commerce growth is the high level of consumer confidence in the security of third-party payments. In addition, e-commerce is making shopping more convenient and accessible to consumers in China – especially those in third or fourth tier cities, who may not have much access to physical stores, according to the survey.

“Although desktops and laptops are still the most commonly used devices for shopping, with smartphone use in China skyrocketing, we expect m-commerce to become the preferred medium for many consumers throughout their entire shopping journey, encompassing initial product research, purchase and final payment, as well as product review. E-commerce is making a lot of positive contributions to the economy, we expect Singles’ Day in China will continue to set new record sales,” adds Qian.

Convenience of shopping anytime

The survey notes that consumers in China opt to purchase online primarily because of the ability to do so at all hours (58.6 percent), compare prices (52.3 percent) and secure better deals (41.6 percent). More than one-third of respondents highlighted the convenience of not having to travel to a physical store.

In addition, the survey finds that about one-third of China respondents indicated payment options as the most important factor when deciding which company or website to purchase from when shopping online. Bank credit cards and Alipay are expected to remain the preferred methods of payment in the near future, according to the survey, while payment options provided by messaging platforms are also becoming more popular.

Consumers in all major markets expect to pay with cash less frequently in the coming year. In China, where only 9.7 percent of the survey respondents expect to use cash in the next 12 months, compared to 22.1 percent this year.

Integrated omni-channel strategy

Meanwhile, companies are increasingly recognizing the need to focus on both online and offline platforms and create an integrated omni-channel shopping experience, as Chinese consumers are frequently researching and purchasing products online, as well as visiting brick and mortar stores.

Almost one-third of China consumers said they made online purchases after seeing the products in a physical store, compared to 24 percent in 2015, while 42.6 percent indicated seeing the products in an online shop triggered online purchases, up from 19 percent a year ago.

Qian adds: “The findings underscore the need for brands to not only focus on developing online platforms, but to also establish a strong physical presence where buyers can touch, feel and experience the products. We continue to see a number of online platforms launching pop-up shops in malls or cooperating with physical stores to give buyers a real world experience of their products.”

The internet remains a convenient channel for consumers to research and purchase items and also a popular avenue to share their feedback via social media channels post-purchase. The survey highlighted that consumers in China are much more vocal than previously – 51.6 percent shared purchase, views, opinions or other feedback online, compared to 41 percent in 2015.

With high consumer engagement on online platforms, social media is becoming an essential and influential tool for brands to keep consumers updated on their products and services, as well as to win new customers, the survey notes.

Qian concludes: “We expect e-commerce to continue to grow at a significant pace in China. E-commerce is bringing goods to consumers in a more convenient and cost-effective way, and is a very meaningful channel to increase domestic consumption. Three or four years ago, some companies in China might not have been 100 percent sure about the value of e-commerce. But now, FMCG manufacturers and retailers view it as essential, and we see a lot of our clients putting very high growth targets into e-commerce.”

 

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