How China Became the First True Mobile-First Commerce Nation

Forbes has an overview over how China became truly mobile-first that is very much worth reading:

Chinese consumers account for 1.1 billion mobile internet subscriptions, more than 2.5 times those in the U.S, the next largest market. Chinse consumers embraced the ubiquity of the mobile device, using these new gadgets to interact with brands as well as purchase a wide array of goods and services.

In fact, for the first time in 2015, Chinese consumers made more purchases through mobile phones than computers. As of 2016, a whopping 66% of digital purchases were executed through a mobile device, according to the latest data from Euromonitor International. That equates to $450.3 billion in mobile-based purchases, with goods accounting for 70% of those digital purchases.

The reasons are manyfold: Mobile networks can be faster rolled out than landlines. The smartphone became the first and primary computer for Chinese consumers. In China, most people never experienced the desktop Internet. They only know the mobile Internet. And all this happened in a world where brick-and-mortar retail (as we know it in the Western world) did not had time to establish itself:

At the same time, consumers were going online for the first time, the existing retail landscape was weak and inefficient, thus opening the door to online competition. Marketplaces, digital platforms open to third-party merchants, propelled China’s digital shift. Local leader Alibaba Group Holding Ltd now captures 44% of the market for internet-based consumer goods purchases as of 2016. Online purchases would have been challenging given the low card payment penetration, but third-party payment apps like Alipay from Alibaba’s subsidiary Ant Financial sprouted up to provide a safe way for consumers to transact online.

Mobile is the first truly nation-wide retail infrastructure in China.

Let that sink in.

But it is not just China. It’s Asia in general:

Now this “mobile-first” mindset is being duplicated by its Asian neighbors, including Indonesia, South Korea and Thailand. Indonesians spent more through mobile phones than computers in 2016 and consumers in South Korea and Thailand are expected to do so in 2017, according to data from Euromonitor International.

In contrast, major developed markets have been slower to turn to smartphones as the default device of commerce. Although commerce is more established in markets like the U.K. and U.S., consumers were first conditioned to turn to the computer when shopping online by sites like Amazon.com Inc with the transition to the small-screen device being slower. Euromonitor International projects that consumers in Australia, the U.S. and the U.K. will not spend more through mobile devices than personal computers until late in the 2016-2021 forecast period.

In Western markets, people take longer to switch from desktop to mobile. The reason is obvious: It is always easier to compete with non-consumption (no computers before the smartphone in China) than it is to compete against products already in use.

Social media platforms are also helping people form decisions in a part of the world where word of mouth is more important due to a lesser trust in institutions:

Asian social media platforms worked with companies to bring their brand messaging into this wide network of personal influencers. These connections are especially valuable in a market like China where consumers do not trust official sources, such as the government or big corporations. As a result, their purchasing decisions are influenced more by word of mouth. In fact, 41% of China’s consumers cite recommendations from families and friends as “extremely influential,” compared with only 28% in the U.S. and 24% in the U.K., according to Euromonitor International’s 2016 Global Consumer Trends Survey.

Besides the sheer size of the market, it is also this mobile-first context that makes China worth keeping an eye on. It is for this reason why China is a few years ahead of Europe and the US when it comes to mobile services and mobile dynamics.

For Western companies it is like glimpsing into their future, as slowly the whole world goes completely mobile-first.

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6 comments

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