The Mainland Cities of the Greater Bay Area (4) : O2O Shopping Preferences

Today, with the ubiquity of online shopping, consumers can buy practically anything they need without leaving their homes. As a result, the issue of how to market products and services to consumers via online channels while still being able to take advantage of business opportunities from offline channels has become very important to industry players. A survey conducted by the Hong Kong Trade Development Council ( HKTDC )^[1]found that online shopping platforms, WeChat and short-video sharing platforms have the greatest influence on consumers in the nine mainland cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). The survey also discovered that in recent years the number of female and young consumers getting information about products and shopping via second-hand trading platforms and consumer experience sharing platforms has been increasing. As for offline sales channels, consumers still visit shopping malls or physical stores regularly, about once a week on average. Consumers visit shopping venues to dine out, experience the products they are considering buying, take part in recreational and leisure activities, and receive services. The function of physical stores has shifted from being purely a place to shop to being a centre for recreation, leisure, and information on the latest trends. This means that various kinds of offline stores are still attractive to consumers.

Mobile-centric Living

A mobile phone has become a daily necessity for many people. On the mainland, a large number of mobile apps already offer a shopping function or are being used as marketing and sales channels. A host of such channels are now available to industry players looking to reach consumers. According to the survey, online shopping platforms such as taobao.com and jd.com have the greatest influence on consumers’ purchasing decisions, with 71% of respondents citing them, followed by WeChat on 57%. 51% of respondents also said short-video sharing platforms like douyin and kuaishou have an impact on their buying decisions. These three types of mobile apps are popular because of their extensive coverage and their relevance to people’s daily lives.

Comprehensive online shopping platforms not only offer consumers the convenience of a wide range of products, their apps also feature functionalities such as direct interaction with the seller and live-stream promotion so that the consumers can learn more about a product before placing an order. WeChat is the most popular social media app with mainland consumers, and it is also the most widely used promotional tool in China’s social media retail^[2]today. Through WeChat Moments , consumers can view the various products recommended or put up for sale by their friends. Many businesses even set up WeChat mini programs and official accounts so that consumers can directly access their official website to place orders and get the latest product information.

Short-video platforms have now become the most popular mobile app with consumers looking to kill time. Many merchants and individual video producers insert ads in the short videos either before or during the streaming. These apps also feature hyperlinks luring the consumer to shopping websites.

If businesses want to reach consumers via online channels, they must understand how mobile apps and social media are being used for promotion on the mainland and make use of them effectively. For example, they must provide detailed product information on online shopping platforms, make use of WeChat to engage more customers, and release interesting videos on short-video platforms.

Mobile Apps Growing Fast

In recent years, as consumers have become more receptive to used-goods trading, the number of second-hand trading apps has mushroomed. These second-hand trading platforms not only allow users to buy products, but also to sell their personal articles. 64% of respondents in the survey agreed with the statement that “second-hand trading platforms can help me sell things that I don’t need any more”, the majority of them being young and earning a low monthly household income. 70% of respondents in the 26-30 age group and 75% of those with a monthly household income of below Rmb8,000 held this view. Second-hand trading platforms such as Xianyu , Paipai and Zhuanzhuan are most favoured by young consumers selling their unused articles or searching for rare items (e.g. special edition sports shoes). Because the number of second-hand trading platform users is rising, some individuals and micro-sized businesses have started to use them to sell new products as well. 42% of respondents in the survey said their buying decisions were influenced by group-buying or second-hand trading platforms. This means that industry players should consider raising their exposure by offering discounts or selling niche products on these platforms.

The influence on consumers of social media - in particular Weibo and consumer experience sharing platforms such as Xiaohongshu - is also worth noting. The survey found that female respondents and young respondents were much more likely than others to be influenced by Weibo and consumer experience sharing platforms in their buying decisions. 47% of female respondents indicated that consumer experience sharing platforms could influence their buying decisions, as opposed to 18% of male respondents. 39% of respondents in the 26-30 age group said Weibo had an impact on their buying decisions, compared to 29% of their counterparts in the 41-45 age group. During a consumer focus group discussion, one female participant said: “I find the information on Xiaohongshu very detailed. Other users of this platform make suggestions on overseas travel with text, photos and videos, including details such as recommended tourist spots and restaurants, and the best means of transportation to take.” Product and service providers targeting female consumers should consider using Weibo and consumer experience sharing platforms to promote their offerings. 

Store Advantage: Product Experience

With the emergence of online sales channels, consumers can now obtain product information and make purchases whenever and wherever they want. Because of this, the role of bricks-and-mortar stores has changed. The survey found that 59% of respondents used O2O (online-to-offline) for shopping - that is, they would choose the product online first, visit a store to get a feel of it, then go back online to make a purchase. 51% of respondents said they would visit a store first to get a feel of the product before going online to buy it.

The number of respondents buying products at a store is significantly smaller. 36% of respondents said they would choose O2O shopping and “get a feel of the product at a store first, then make a comparison online before going back to the store to make a purchase”. 22% of respondents said they would go online first to check/compare a product before visiting a store to make a purchase. There is no marked difference in the percentages of respondents from different backgrounds opting for O2O shopping.

These findings show that physical stores are the main choice for consumers wanting to get a feel of the product before they buy. Although shopping websites offer many functions which help buyers better understand a product, the advantage of in-store shopping in offering consumers experience of the product in person is irreplaceable. One of the participants in a consumer focus group discussion said: “By visiting a store, I can see the details of the product, such as the material and cut of a garment or have experience of using an electronic product.” Businesses planning to open stores in the nine mainland GBA cities are advised to ensure they can offer customers a relaxing environment to experience the product, and employ sales assistants who can clearly explain the product and brand concept to customers.

Regular Visits to Stores

Consumers in the nine mainland GBA cities visit shopping malls or physical stores to try out or get a feel for the products they want to buy, and also to enjoy different kinds of services. 59% of respondents said one of their main reasons for visiting shopping malls or physical stores was to eat at a restaurant. 54% (and 61% of female respondents) gave experiencing products or obtaining information on the latest trends as one of their main reasons. 52% opted for shopping, 51% for engaging in recreational and leisure activities and 49% for receiving services. The numbers saying one of their main motives was to meet friends and relatives (29%) or to go window shopping (20%) were significantly lower. Respondents with a higher monthly household income tended to take part in more consumption activities (rather than meeting friends and relatives or going window shopping). There were no big differences in the reasons given by respondents of different age groups and living in different cities.

The survey also found that the average number of visits paid by the respondents to shopping malls or physical stores was 1.08 times a week, with female consumers (1.21 times a week) and young consumers aged 26-35 (1.16 times) recording higher frequencies. One of the focus group participants said: “Every Sunday I go out with my family to shop, eat and have fun, this is our family activity.” There was no marked difference in the frequency of visiting shopping malls or physical stores among respondents earning different monthly household incomes and living in different cities. This shows that the role of shopping malls and physical stores has already shifted from being a venue for shopping to being a centre for recreation, leisure, experiencing products and getting information on the latest trends. Visiting shopping malls or physical stores regularly has become part of the routine of most consumers.

Offline Stores Can Attract Consumers

Consumers in the nine mainland GBA cities tend to spend time in areas where recreational and leisure facilities are plentiful, transport is convenient and special offline stores can be found. 46% of respondents in the survey cited the presence of “more recreational and leisure facilities”  as one of the main factors attracting them to a shopping mall or physical store. The same percentage opted for “more convenient transport”, while 45% chose “more one-stop household and daily goods shops”, 44% picked out “more shops with unique décor or special themes”, 42% went for “more branded flagship stores or experience stores” and 41% opted for “a greater diversity of restaurants and eateries”. Respondents in Guangzhou, Shenzhen and Dongguan were more likely than those in other cities to say that shopping malls or physical stores that offered more recreational facilities, more convenient transport and a greater diversity of restaurants and eateries were more attractive to them. During a focus group discussion, a participant from Guangzhou said: “To me, a shopping mall must have eateries such as bubble tea shops. Then I can window shop and have a drink at the same time.”

Female respondents are in general more interested in stores with unique décor or special themes as well as shops offering personal services. 48% of female respondents said that unique décor or special themes would attract them into a shopping mall or physical store, compared to only 41% of their male counterparts. 43% of female respondents said that “more shops offering personal services” was a feature that would attract them to a shopping mall or physical store, while just 33% of male respondents said the same.

Young respondents are more interested in leisure and recreational facilities. Among those in the 31-35 age group, 50% said “more recreational and leisure facilities” attracted them to go into a shopping mall or physical store, a significantly higher percentage than the 40% of respondents aged 41-45 who agreed with the statement. Respondents with a high monthly household income were in general more attracted by different kinds of special offline shops. 50% of those with a monthly household income of Rmb25,000-39,999 were attracted by shops with unique décor or special themes, as opposed to the 36% of those with a monthly household income of below Rmb8,000 who were similarly attracted. It is likely that the higher the income, the higher the desire to consume.  

Taking all this into account, it’s clear that businesses wanting to take advantage of the offline consumer market in the nine mainland GBA cities should open shops in shopping malls or districts where recreational and leisure facilities are widely available and there are convenient transport facilities. They should also consider opening shops that offer customers unique shopping and service experiences, which can in turn attract more female consumers and young consumers. The findings of this survey also show that consumers in the nine mainland GBA cities are becoming increasingly attracted to various types of special offline shops. It is worth noting that while online shopping is becoming increasingly popular, bricks-and-mortar stores are still attractive to consumers.

Conclusion

The online and offline consumer markets in the nine mainland GBA cities are deeply integrated. While consumers have already become accustomed to going online to shop for their favourite products, they also visit physical stores to experience products and enjoy services. Hong Kong companies wanting to promote their products and services to consumers in the GBA should pay equal attention to both online and offline sales channels. As well as using popular online sales channels to promote their products, they should keep an eye on platforms that are becoming increasingly popular and reaching specific consumer groups, such as group-buying or second-hand trading platforms and consumer experience sharing platforms.

Although online shopping offers convenience, many consumers still like to visit physical stores to experience the products they are thinking of buying. Hong Kong companies planning to open shops in the GBA should consider creating a pleasant environment for customers where they can experience the products and get to know the corporate brand. As the spending power of consumers continues to rise, their demand for special offline shops increases. In view of this, Hong Kong companies capable of mapping out strategies using both online and offline marketing channels are likely to have a greater chance of seizing the huge business opportunities arising from the consumer market in the nine mainland cities in the GBA.

[1] For background information on this consumer survey, please see Appendix.

[2] Social media retail refers to a form of sales using one’s social circle to offer goods and services for sale.

Appendix

Survey Background

In the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area issued by the State Council in February 2019, nine cities in Guangdong province (Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing), as well as the two special administrative regions of Hong Kong and Macao, were designated to form the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), which is set to command an important strategic position in national development. Over recent years, the nine mainland GBA cities with their large population, have seen rapid economic growth and the average income of the residents is higher than the national average. This reflects the huge potential of the consumer market in the area. In light of this, the Hong Kong Trade Development Council (HKTDC) conducted a consumer market survey of the nine mainland GBA cities in order to gauge local people’s consumer sentiment, their attitude towards the consumption of different products and services, and their consumption preferences, characteristics and trends. Recommendations, based on the findings of the survey, are then made to Hong Kong companies to help them tap into the market of the nine mainland GBA cities more effectively.

Methodology

The present survey was carried out in November 2019 in the form of an online questionnaire. A total of 2,160 consumers in the nine mainland GBA cities were covered. Before conducting the questionnaire, two focus group discussions were held in the cities of Guangzhou, Shenzhen, Zhongshan and Huizhou to try to get a deeper understanding of consumers’ attitudes in the nine cities and thus provide a degree of qualitative analysis.