Affluent customers continue to boost e-commerce in Asia

With majority of Chinese affluent e-commerce shoppers considered aspirational, ambitious and affluent (Gen AAA), consumption of luxury goods among the Chinese continues to surge online, a new report by research firm Agility Research & Strategy.

A study released at the China Luxury Summit 2014 held in Shanghai recently explored this lucrative segment of the e-commerce space in Asia and found out, among others, that the typical affluent e-commerce customers are between the age of 18-34, majority are working adults (96 percent) and have children (85 percent). Fifty-four percent of the respondents are females and 46 percent are males.

The research and consulting agency further explained in its website that GenAAA consumers generally "aspire for brands that represent who they are and their achievements in life, they have ambition and drive to succeed and taste the best life has to offer and are driven to acquire and achieve."

The survey conducted online among 1,500 affluent respondents in five countries - China, Hong Kong, Singapore, Indonesia and the US - also showed that these segment of e-commerce shoppers are investors. All responders said they have some form of investment apart from real estate and around half (51 percent) have investments worth at least $300,000.

The Agility Affluent Insights report the top investment is fixed deposit (85 percent), followed by personal retirement funds (80 percent), local stocks (73 percent), premier banking (72 percent) and foreign currency savings (54 percent).

"The Chinese affluent e-commerce shoppers are young, working and reside in the Tier 1 cities. They have an annual household income between CNY180,000 (US$28,999.40) to CNY505,599 (US$81,445.70) and their investments are worth at least $300,000," added Prashant Saxena, Associate Director, Agility Research & Strategy, in an email interview. "They value quality, exclusivity & uniqueness. And like to spend most of their time in shopping, fine dining, wine tasting, and concerts.

By definition, those considered as "affluent customers" by Agility Research & Strategy are shoppers with household income of CNY180,000 (US$28,999.40) and above (China), HKD 720,000 (US$92,902.67) and above (Hong Kong), SGD 100,000 (US$80,411.54) and above (Singapore), IDR 160,000,000 (US$13,640.24) and above (Indonesia), and US$90,000 and above (United States).

A high 95 percent of respondents in five countries said they prefer or use luxury brands because of higher quality while 91 percent said they like the exclusivity. Around 88 percent also said they prefer luxury brands because "they are unique from other mainstream brands." While majority research luxury products online before purchase (90 percent), a higher number (93 percent) said they also indulge in exclusive research experiences before purchase.

Preference for receiving product information and advertising, however, varies for different types of purchases. For cosmetics, the top three channels preferred by Chinese luxury shoppers are blogs, forums or websites; media articles and television. However, for fashion, the preferred channels are media articles, television and website ads. For jewelry, the number one channel is television, followed by sponsored links and media articles.

Consumers of electronics products prioritize online news, followed by media articles and sponsored links; while customers who purchase airline tickets prefer website ads, online news, and magazine (mobile) ads. Meanwhile, car enthusiasts said they are on the lookout for sponsored links, media articles and outdoor ads.

Agility Research & Strategy said for brands looking to capture a bigger share of the market should  utilize the channels potential buyers pay attention to. A poor fit translates to a lack of response and a waste of advertising dollars. It is also necessary to understand the tastes of target shoppers and may need to fine-tune marketing efforts based on the successes of favored brands. 

"Brands that are not doing well in China may be interested in selling their products with the popular retail sites, or appearing on the hot branded sites via brand collaborations. An alternative may also be to buy advertising space on the preferred sites," the report added.

Among the findings of the study is that Chinese e-commerce shoppers patronize both online retailers and brand websites. The most popular websites patronized over the previous year include Asos.com (39 percent), AlexanderMcQueen.com (35 percent). Dvt.com and Shopbop.com (29 percent), Brownfashion.com (26 percent), and BetseyJohnson (25 percent).

Interestingly, they prefer globally renewed branded goods, but when it comes to financial services, they patronize local services.

The top global brands patronized by the Chinese e-commerce shoppers are Channel (fashion and accessories), Dior (watches and jewelry), Shiseido (cosmetics), Samsung (electronics and gadgets), Snow (alcohol), Audi (cars), Shangri-La (hotels), and Hong Kong (holiday destinations). Brands that are also high on affluent consumers' radar include Gucci, Burberry, Dior, Apple, BMW, Budweiser, Intel, Canon, and Olay, among others.

For financial services, Union Pay leads (62 percent), followed by China Construction Bank (52 percent), ICBC (50 percent), Bank of China (49 percent), CMB (49 percent), and China Life (47 percent).

"This is an insight that rests on the consumer perception to keep their finances local. Based on our research, we have observed that ‘keeping money close and local’ is often the mind of these consumers," Saxena said. "Servicing the Chinese affluent e-commerce shoppers demands more than a disconnected set of brands. It is about a holistic value chain that ‘wows’ these consumers across every touch point."

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