Omnichannel Shopping Patterns: China, Japan, Korea

With the new retail technology getting more and more accessible to the expending segments of the population, it is getting harder to predict what exactly provokes customers to make a purchase decision.

Imagine your dad, walking into a brick and mortar electronics store to buy an activity tracker, that you shared with him via Facebook. At first it might seem like it’s a spontaneous purchase but is it really? You spent two weeks doing online researches, added various models to shopping carts, eventually abandoned them, because you got distracted by a competitors brand enticing ad, which you later shared with your dad.

Not that obvious, right? That’s the exact reason why I want to focus on shopping patterns this time, so you can build a more solid omnichannel retail strategy if you’re working with Asian markets.

Let’s roll….

OMNICHANNEL RETAIL DEFINITION

There are several definitions on the web, which can be concluded this way:

“ …the ability to meet people on the channels they use daily, whether it’s a physical or online store, social media or advertising, and building a consistent experience across these channels while adjusting your strategy to the customer’s devices that are used to interface with your brand.”

Currently, we can see some movement towards joining several channels, but most of the time the retailers simply guess and don’t rely on data.

Of course, you might say that larger retailers have access to their personal data on shoppers behavior across channels they own, but term “omni” means keeping in mind everything, not only the stuff that’s happening on your own “turf”.

What can we see today is that nobody knows how Asians shop. What we know for sure is that no one is shopping through single medium anymore and that there is cash flowing from every possible source.

ONLINE SHOPPING — WHO BUYS?

If you don’t feel like reading, here’s a quick conclusion — almost everyone. Judge by yourself:

“80% of the whole Asian population with internet access has made at least one online purchase in the last 30 days”

In China, online is quickly becoming a favored way to shop, with 18% of total retail sales are made online and that number is going to grow to 25% by 2020, according to PWC China’s retail survey. Korea falls behind China and is the second largest digital buyer in Asia with 65% of internet users shopping online. Even this short conclusion shows how profitable can omnichannel retail presence can be.

DEMOGRAPHIC COHORTS:

Asia is split when it comes to online or brick and mortar shopping, but we can see certain dynamics when it comes to demographic differences. Put it simply — they younger the generation is, the more of a tilt towards the digital shopping can be noticed in every region of Asia. However, according to ComScore, Japan citizens aged 55+ spend the most time shopping online of all age groups.

PWC’s survey shows that 65% of Millennials and 55% of Generation X pick online as their preferred destination of shopping and search for information related to shopping. Since they prefer online shopping more, it’s natural that they spend more time doing that than the older generation, 50% more time in fact (6 vs 4 hours).

CAREGIVERS vs NON-CAREGIVERS

There’s just one difference between those categories and it’s comfort. You might say that each demographic group is influenced by this factor, but none of them value comfort more than the caregivers.

According to the National Retailers Federation studies, 50% of caregivers simply couldn’t do without online shopping, they spend 65% more money online than non-caregivers and 75% more weekly time.

! Product variations

Always keep in mind that various products might bring various financial results through the same mediums. Let’s take large furniture for instance. The best place to sell those products is through physical stores, while it is possible to charge extra for a comfort of ordering a high-value product that’s easy to delivery from your Website.

MEN vs WOMEN

This section is surprisingly boring. Asian women and men use different shopping channels rather similarly. The only difference worth noticing is that there is a bump of men spending 25% more than women during last year.

GEOGRAPHICAL DIFFERENCE — CITY vs SUBURBIA vs VILLAGE

Guess what — people shop differently depending on their habitat. Despite the fact that cities have brick and mortar stores all over the place, Asian metropolitan inhabitants spend more time and money shopping online than their suburban and village counterparts. So what is standing in the way of flipping it around? More than 60% of suburban shoppers indicate that the delivery cost is the main stopping block.

WHERE DO CHINESE SHOP ONLINE?

69% of Chinese shoppers have concerns regarding getting their personal information hacked while making online purchases with their mobile devices.

Alibaba’s Tmall overshadows another platform with a market share of a whopping 53% and according to PWC’s report is used by 97% online shoppers. Tmall is often described as China’s Amazon, but that’s hardly true. Surveys show that 61% of Chinese consumers use Tmall as a starting point for product research. Amazon falls short with only 39% (global customers) using it as a discovery engine.

WHERE DO JAPANESE SHOP ONLINE?

A while back, in 2014, Rakuten played a role of the biggest Japanese e-commerce platform — 20.2%, however, the latest data shows that by 2018 it has been slightly beaten by Amazon.co.jp, Yahoo!Japan is used by 8.9% of Japanese online users

WHERE DO KOREANS SHOP ONLINE?

South Korea holds the third place in by the size of the e-commerce market in Asia with 13% of all retail sales falling on online. Gmarket is South Korea’s leading e-commerce marketplace (34.8% of total internet users). 11Street lands itself on a 2nd place with 34.2% online consumers share an is followed by Coupang a large platform known to generate 70% of its sales through mobile devices

Most of Asia’s online consumers start their purchase journey on marketplaces, however, there are those that prefer “local” boutique websites, some prefer traditional shops. The number of components to how a purchasing decision is made, we will cover them in the next chapters.

ONLINE vs PHYSICAL STORE

The physical stores play an important role for many retailers. In fact, a major part of successful retailer try do be as omnichannel as they can, since Asian’s are currently divided in half on which channel they prefer, however, there is a gap in how much they are willing to spend on each channel, and traditional brick and mortar stores win by a wide margin 64% to 36% online. Of course, the percentage can vary due do demographics correlations.

ONLINE STORE vs LARGE RETAIL vs MARKETPLACE

The array of online shopping options just keeps growing and it’s getting hard to find a customer that is faithful to just one of them.

NRF’s data shows that 75% of Asian’s, made purchases at large retailers, 55% used online marketplaces and 35% used industry-specific websites.

This shoppers behavior leads us to two retail terms:

Omnichannel and Multi-channel:

1. Multi-channel retail, meaning that a certain brand sells its products on different online platforms — websites, marketplaces, and social platforms.
2. Omnichannel retail means that retailers with both brick and mortar and web stores.

Practice shows that the most successful retailer start out as multi-channel and then gradually transform to omnichannel, following along their customer’s journey.

If your business is selling stuff through your own webstore, always consider marketplace presence as a part of your multi-channel strategy to capture large amounts of potential leads.

PRO TIP!

Start out by evaluating what is currently working for your business. Do most of your sales come from a B2C e-commerce marketplace like Amazon? Maybe it is time to consider similar local platforms like Tmall as your next step, due to their similarities? (By similarities, I mean product discoverability). Whichever platform you pick as your next step, never use the exact same blueprint from your previous channel, rather refer to it as to a guideline.

WHEN ASIAN’S SPEND ONLINE?

With mobile device sales taking over other ways of online shopping, there is no limit to where and when consumers shop online. The data below displays how often various demographic cohorts click the “Purchase” button and where they do it from.

HOW OFTEN DO THEY SHOP?

Online shopping is now omnipresent. 85% of Asian’s have made a purchase online this year and it seems like it’s becoming a habit because 70% consider purchasing goods on a monthly basis, 30% consider getting products ordered every week and 4% even love the idea of ordering food online every day.

As you probably can imagine, online shopping takes a lot of time. Asian consumers spent 5 hours per week shopping online and if take caregivers (parents or pet owners) they spend two hours per week more.

WHERE DO THEY BUY FROM?

As we can see from previous chapters, Asian’s use to shop online quite often. According to InReality’s study, more than 70% of consumers tend to use their phones while cruising through brick and mortar stores. Some other researches indicate that a quarter of the online population made a purchase during their visit to a physical store.

It might sound strange, but we can see purchases being made from very untraditional places. For instance, 39% of Japanese, who have shopped online made a purchase while staying in bed. 25 % of Chinese respondents indicated that they made purchases during work, and 20% stated they made a purchase from a bathroom (In fact we can see that Millennials favor this location 5 times more than Seniors).

STATE OF MIND

Location isn’t the last variable in omnichannel retail. 10% of respondents indicated they made a purchase under alcohol influence. Men are more two times more prone to do so than women, and younger generations are 5 times more likely to do so than the seniors.

WHAT ARE ASIAN’S BUYING?

Of course, Asians do shop online as well as in physical stores, sometimes these products overlap and sometimes they differ.

Since a purchase journey of a modern consumer is mostly multi-channel, Asians pick the most comfortable and practical way to shop.

As we can see in the infographic below — the most popular product category up to date is “Clothes and Shoes”. 44% of consumers made a purchase recently from marketplaces like Tmall, 11street, and Rakuten. 46% purchased from large retailers like Walmart or Dashang and only 25% from industry-specific online stores.

The next most popular item is Electronics with 35% of shoppers have recently purchased from marketplaces, 32% from retailers and 10% from industry specific websites.

Beauty products come next with 29% having gone for online marketplaces and 24% for retailers.

WHAT PROVOKES ASIAN’S TO BUY?

Just as with their American and European neighbors there are two factors that push Asian consumers to make a purchase — price, and comfort, however, the moment the price difference becomes significant — comfort loses its importance.

*Elements of pricing — shipping, taxes, coupons, discounts.

For smaller retailers, the above-mentioned elements of pricing are frequently considered as marketing expenses, and for the e-commerce giants, like Tmall, free shipping eats up a huge amount of budget but builds the brands reputation in return.

As important as pricing is, it isn’t the only component the initiates the purchase sequence for the customer. Let’s dig deeper in this section.

THE COMPONENTS

There are three of those. Let’s list them in the decreasing order:

1. Pricing (85%)
2. Delivery cost (80%)
3. Delivery speed (80%)
4. Coupons and discounts (69%)

Demographic surprises:

The only demographic cohort that breaks this list is Seniors, since they don’t rate discounts that high (47%). Surprisingly enough, younger generations have higher trust in advertisements than Baby Boomers and Seniors.

RECOMMENDATIONS, REVIEWS, AND ADS.

In recent years, there has been a shift in how Asians react to friends suggestions and advertisements. More than 41% of online shoppers trust the recommendations from their close ones, 24% trusts the voice of public on Social Media channels, and 20% find ads important in the purchasing decision.

WHY CONSUMERS ABANDON SHOPPING CARTS?

On average, Asian website conversion rate isn’t exactly promising at 1.5–2% (according to PWC’s report). So it’s easy to calculate the number of purchases for 100 visitors, and it’s not even 2. That is a problem. With exponentially growing ads pricing and an even higher cost of creating an unbelievable customer experience that would initiate buzz, abandoned shopping carts quickly become a major problem for e-commerce retailers of any size. Asia average cart abandonment rate is 69%. For 66% of China’s consumers, the major reason to abandon a cart is a high delivery cost and the fact that the returns are very difficult (especially for rural areas).

POST-PURCHASE REGRETS AND ACCIDENTAL PURCHASES

PWC’s report shows a high number of post-purchase regrets across all demographic cohorts — 42% of shoppers regret buying a certain product later on. As far as accidental purchases go, 20% is a surprisingly high number. Younger generations have higher rates of regrets (50%) than Seniors and Baby Boomers (35%).

CONCLUSION

To sum up the data above in one sentence retailers need to spend more effort to meet their customers on the platforms they are whether it’s on mobile devices, brick and mortar stores, social media or in brands native applications. If you hope to build an online store and hope for customers to start bringing in the money — it just won’t happen. Omnichannel retail is about flashing in front of consumers in the places they are and at the exact moments when they are looking to make a purchase. Technology made a lot of corrections into retailing. There’s no such thing as brand loyalty anymore. People now shop in a totally unpredictable fashion with some online purchases being made while shopping in the physical store.

Brands must start analyzing their customer’s journey immediately and to do that the picture of a buyer’s persona must be very clear.

Originally published at cudato.com on November 3, 2018.