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Ecommerce Shapes Brand Perception in China’s Next Tier


Chinese online shopper-02

The impact of ecommerce is much more significant in China than it has been in other countries. One major reason for this is that ecommerce plays a crucial role in leveling the playing field for lower tier cities, and this will further shape brands’ and retailers’ expansion strategies in China in the future.

As shown in the data below, China’s fairly developed region, Eastern China, has the highest level of online shopping penetration (47.1% of the overall netizens in that area); however, the other 5 regions have relatively similar levels of penetration and the gap between these six regions is decreasing.

Ecommerce enables consumers who live in lower tier cities to access brands and products that are not available in their hometown, and this will shape how brands expand their territories within China.

For example, five years ago, the major strategy for brands to expand in China focused on mapping out different tiers of cities for offline storefront expansion. However, as ecommerce levels the playing field for lower tier cities, many of them are now considering using online store to reach consumers in less developed cities while consolidating their brand flagship storefronts in central cities to enhance brand recognition and popularity.

Observer Solution believes that the rise of ecommerce will continue to increase brand availability for top products in China’s lower-tier cities. Their purchasing decisions and brand experience will take place almost exclusively online. Their reviews and comments online will in turn impact the overall image of brands. Therefore, ecommerce strategy will have a direct correlation with the ultimate ‘winners’ and ‘losers’ in China’s next tier.

Online Shopping Penetration of China’s 6 Regions
Region Region Online
Shopping Penetration
Province Details
Northwest China 38.8% Including Shanxi(陕西), Gansu, Qinghai, Ningxia, Xinjiang.
Northeast China 40.8% Including Liaoning, Jilin, Heilongjiang.
Northern China 41.1% Including Beijing, Tianjin, Hebei, Shanxi(山西), Inner Mongolia.
Central & Southern China 41.2% Including Henan, Hubei, Hunan, and Guangdong, Guangxi, Hainan.
Southwest China 41.3% Including Chongqing, Sichuan, Guizhou, Yunnan, Tibet.
Eastern China 47.1% Including Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Shandong.
Note: Regional Online Shopping Penetration= Number of regional consumers who have purchased online within half a year/numbers of overall netizen in that region*100%
Source: China Internet Network Information Center.As of 2012. Observer Solutions analysis. 

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