Why Young Chinese People Have Embraced Online Shopping

With the rapid growth of the Chinese internet in the past fifteen years, and perhaps China in general, many assumptions have been made (more often than not by Euro/American Sino-sceptics) about how China couldn’t or wouldn’t. While ebay flourished around the world, doubters said the same couldn’t happen in China, due to the distrustful and pragmatic nature of Chinese consumerist behaviour. In a sense this was true, ebay wasn’t a success but taobao, on the other hand…

After successfully navigating around issues of credit cards, and implementing successful schemes such as COD (Cash on Delivery) – online shopping has in fact not only managed to establish a foot hold in the consciousness of young Chinese, it has opened up a new realms of possibilities for those willing to both spend and make money. OEM factories now have the ability to directly reach Chinese consumers as their export demand has greatly diminished during the global recession. In addition, entrepreneurial young Chinese have a low cost solution to starting a business during a time when consumerism and Internet penetration is greatly expanding.

Demographics are surely a factor in online shopping; there are no age limits to who can buy what, but these statistics can give us a definite idea of what sorts of products will be likely to sell better than others. According to netpop research, 13-34 years olds in America represent 35% of the internet whereas in China this same age range accounts for 73% of the internet. Although there is much talk about the youth shopping boom online, there are also online shopping sites, such as Vancl, that are catering to an older 25-40 year old demographic that is looking for basics, such as polos, dress shirts, etc.

Our interviewee told us that low cost goods such as t-shirts sell well due to their cheap and transient nature and that one wouldn’t risk too much in that kind of purchase. However, we also found a market outside of taobao for luxury goods of the streetwear variety. Either way, fashion and clothing are big online consumables, helping young people across China better define their image without being constrained by a local stockist. A good example of this would be in the sales of cosmetics products online.

Projection of Chinese cosmetic industry 2005-2012

China is the second biggest cosmetics market in Asia, with skin-care and hair care products accountings for 38% and 20% of total toiletries and cosmetics sales in 2008 respectively. It is a mass market but one that is yet to reach saturation and that has been only further buoyed by increased online shopping activity. Online shopping has only further increased the activity in this market segment allowing easier entry for overseas brands to compete and giving rise to a rise in quality or notoriety of local brands.

Viable options as to the future of online retail could be greater connection with SNS and online communities. What is widely known about China’s vast BBS communities is the not only the sharing of knowledge but also of opinion and experience. People will check BBS before they buy to check feedback and then return to confirm or offer their own testimony. Perhaps, brave, online sites could offer greater synergy with BBS and SNS to help create a community of both sellers and buyers.