As China’s economy rapidly expands there is increased opportunity for retailers to diversify in the way they sell to consumers. The findings in “China’s Connected Consumers” include the rise of online transactions, as well as the increasingly important roles of social media and mobile devices.
Drivers for online purchases
Price advantages are one key driver for buying online, showing that the digital consumer tends to be more price sensitive. However convenience was also cited as a key motivator, together with a desire for a wider range of products, variety and to be able to purchase unique or individual items. This was especially prevalent amongst the younger respondents.
Online payment trends
We also see a shift from cash on delivery to a greater use of online payment mechanisms. Already 70 percent of the payments are online. Banks have traditionally been slow to online payments and these new opportunities. However, this is changing and a number of banks have already started to establish online payment promotions with different partners.
Take-up of internet and smartphones for e-commerce
While desktop PCs still dominate access to online retail websites for premium and luxury items, the availability of affordable smartphones have seen them quickly rise in popularity. Almost 70 percent of respondents use a desktop while already 53 percent said they use smarthphones.
Influence of social media
With almost instantaneous feedback and easy-to-use interfaces, social media platforms have become extremely popular in China and online consumers show a great reliance on user reviews on these platforms. For brands the social media platforms have proven to be a powerful mechanism for promotion of their products, either through online communities or through active marketing activities.
The way forward
Despite the opportunities on hand, some luxury brands have been slow to adopt these online strategies in China, preferring a wait-and-see-approach. But with the online world becoming more important for brand positioning and more consumers spending time online the trend will likely continue. The further development though is also linked to the technological advancements and the further take-up by consumers in the way they research and purchase products online.
Implications for Swiss luxury companies
With a high level of exports in the watch industry and other luxury products, the Swiss consumer goods industry is depending on foreign consumers, especially China. Therefore, it is key for Swiss companies to keep track of the current developments in the industry and adapt their communication and sales strategies with a higher online focus to ensure an easy accessibility of their information and products. A change in this direction will help to maintain the competitive advantage of Swiss luxury products.