As a growing number of retailers across the world make it easier for Chinese consumers to buy items from abroad online, a new Nielsen survey finds that China’s online shoppers are willing to spend significantly more on their cross-border purchases than they are on domestic goods.
While Chinese online shoppers currently spend less overall on shopping abroad than they do domestically, they’re buying a high volume of cheaper items at home and investing in big-ticket purchases abroad, according to the report. Luxury is especially poised to benefit from this trends, as Chinese online shoppers have shown a preference to purchase beauty products from France and South Korea, clothes from Hong Kong and Italy, shoes and bags from Italy, healthcare products from Australia, and infant products from New Zealand.
One-third of cross-border online shoppers in China made between three and five purchases from abroad last year, adding up to an average of 76 percent of their total spending on domestic items. The amount per purchase was significantly higher, however, coming in at 176 percent more than domestic orders. One-fourth of respondents spent between 1,000 and 3,000 RMB (US$156-$469) per international online purchase, while 11 percent of them are making purchases over 5,000 RMB (US$782).
While many retailers have made it easier for consumers to purchase from China online, most cross-border shoppers are buying from overseas purchasing agents on Tmall (known as haitao), while buying from professional cross-border online shopping sites takes up 29 percent of sales.
“Even though e-commerce platforms are very competitive in quality and after-sale guarantee, better product supply and logistics system, consumers still have strong intention to support purchasing agents because they take the advantages of differentiation, flexibility, and timeliness to meet customers’ special demand,” explains Steven Li, the vice president of Nielsen China.
A host of new companies have developed their overseas shipping to China recently, including Bloomingdales, Gap, Gilt, Macy’s, and Saks Fifth Avenue. While some, like Macy’s, are setting up shop on Tmall Global or JD.com’s JD Worldwide, others are teaming up with organizations like Borderfree to enable Chinese payments and easier shipping to China.
Demand for cross-border online shopping is almost equal in China’s first- and second-tier cities, according to the survey, which says that 88 percent of respondents expressed interest in ordering from overseas over the next year. Tier 2 cities are an especially big opportunity for businesses, as offline channels to buy goods from overseas are more limited than in Tier 1 locations such as Shanghai or Beijing.
Nielsen found that the majority of cross-border online shoppers in China are “affluent and well-educated young people.” Men aged 26-35 and women aged 26-40 are the age groups most interested in ordering from abroad, and their occupations are usually in private enterprises, joint ventures, or foreign companies.
Given the wide number of fake products on China’s e-commerce sites, the report finds that authenticity is a top concern for shoppers ordering overseas, while selection is also vitally important. As a result, the report recommends that international retailers breaking into the China market focus on the depth of a few popular categories rather than offering a few goods from a wide range of categories in order to make their shop a go-to stop for online shoppers in search of goods they can’t find at home.