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China Has A $1 Trillion Ecommerce Market – Here’s How Western Companies Miss Out On Their Share of Customers


admin - July 3, 2018 - 0 comments

The last two years have been dubbed the period that Chinese ecommerce shoppers officially took off. A report by Nielsen showed that from “a 12-month rolling average leading up to November 2017, online sales grew 27% versus the year before, whereas offline sales increased only 6% over the same period.”

One of the reasons for this explosion is that disposable Chinese incomes are rising and so is their demand for premium goods. That spells a winning combination for ecommerce sites, and if you’re a US or European retailer who sells online, there’s an easy way you can make the check out and purchasing experience of these customers simple and convenient.

When Chinese consumers shop anywhere – at a brick and mortar, abroad or online – they prefer to use mobile payments.  It’s one of the reasons people have called China the first cashless society. Not even credit cards are popular to consumers in China, where mobile payment through Alipay and WeChat Pay reigns supreme.

The same Nielsen report explains that, “Alipay and WeChat pay are the most popular online payments in China, and they are already an integral part of e-commerce platforms such as Alibaba and JD.com.”

Together Alipay and WeChat Pay have over 1 billion users. They own over 90% of the $5.5 trillion mobile payment market. On top of that, from 2015-2016, ecommerce shopping through WeChat alone doubled in size.

chinese ecommerce shoppers

With these numbers in mind, you have to ask yourself, “Why doesn’t my website offer Alipay or WeChat Pay as a payment option for Chinese consumers?”

Chinese Consumers Are Drastically Increasing Cross-Border Ecommerce Shopping

According to a report by McKinsey, “Cross-border e-commerce is projected to account for 9.2 percent of the country’s total online retail market by 2018.” One of the reasons for this is that U.S. retailers are offering lower prices and higher quality, which Chinese ecommerce shoppers are are catching on to.

The desire for higher quality is said to be rising across all industries and product types, from clothing to cars to cosmetics.

The same McKinsey report stated that, “Nearly one-fifth of the digital consumers we surveyed now buy some goods from vendors outside China (Exhibit 5). We also found that cross-border shoppers prefer items that are either too expensive or too scarce at domestic vendors.”

chinese ecommerce shoppersAlipay and WeChat Pay Offer the Preferred and Easy Payment Option for Chinese Consumers

Approval rates using WeChat Pay and Alipay are almost double those of debit and credit cards. Transactions clear within 24 hours, with no chargebacks – all with fees that are lower than credit/debit card international transaction fees. Not only will you be able to attract new customers, you’ll be able to shave off expenses from your budget.

Also, as many businesses in the ecommerce area know, checkout conversion rates can be tough to improve. Adding WeChat Pay and Alipay functionality doesn’t require consumers to type in payment and personal information, or deal with a long and complicated checkout experience. This will reduce the checkout friction and improve those conversion numbers faster than your typical month long a/b testing.

Lastly, the typical language and currency exchange barriers that can occur during a online shopping experience are all solved when the consumer can check out with Alipay or WeChat Pay.

 

Alipay and WeChat Pay Offer Digital Marketing Opportunities to Target the Chinese Ecommerce Shopper

As researchers have begun to analyze the growth in ecommerce sales in China, one of the interesting facts that stood out is that Chinese consumers are far more likely to engage with ads that are personalized to them in some way, whether this be retargeting or the marketing of a product they’re known to purchase.

A PWC report on ecommerce shopping in China found that, “One behavioral statistic or fundamental reason for some of the (ecommerce) growth is that 31% of Chinese consumers will click on an advertisement that is relevant to them vs. 16% globally, almost 2 to 1 more likely to respond to targeted ads…”

Alipay and WeChat Pay provide merchants opportunities to market directly to their users. You can use customized loyalty programs, targeted content, and unique messaging to engage or upsell Chinese consumers.

While other marketing options allow for geo-targeting, Alipay and WeChat Pay have one of the largest overall user bases of any online platform, and they’re already connected to these users’ preferred method of payment.

Partner With Citcon to Increase Your Share of Lucrative Chinese Ecommerce Shoppers

Citcon is already working with a number of ecommerce companies to help them better sell to Chinese customers. The online shopping experience is almost exactly the same as it is for any store front buyer.

  1. The user adds a product to their e-shopping cart
  2. At the checkout / payment page Alipay and WeChat Pay payment options are displayed together with other payment options
  3. They then click Alipay or WeChat Pay as their preferred payment option, and a QR code pops up that is unique to the product
  4. The consumer pays with Chinese Yuan from their bank account linked with their wallets, and enjoys the best on-spot exchange rate, without foreign transaction fee
  5. The transaction is completed within seconds
  6. The consumer receives an electronic receipt
  7. Merchants will be settled in local currencies (USD, Canadian dollar, Euro etc.)

Chinese shoppers will be able to enjoy a checkout experience that’s familiar, doesn’t require credit card and personal information inputs, and is up to five times faster than other forms of payment.

The Citcon Hosted Online Platform (CHOP) is a simple yet flexible payment method that helps you integrate quickly while reducing your PCI DSS compliance burden. We also offer a full back-end API if you need more granularity and flexibility.

The amount of research and data that speaks to the usage of mobile payment in China, as well as the benefits to ecommerce merchants is quite staggering. Beat out your competition by getting your business setup to accept Alipay and WeChat Pay as soon as possible.

Citcon has the experience – as well as the trust – from working with brand names all over the world.

To start accepting mobile payments and attracting Chinese consumers to your ecommerce site, call Citcon at 1-888-254-4887 or fill out the contact form below.

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