China's smartphone growth fuels e-commerce boom

RetailTech Innovation editors
RetailTech Innovation

The rapid growth of smartphone penetration in China is driving rapid growth in online and mobile commerce activity for luxury brands in China.

A new study of online spending in the country was conducted by KPMG in partnership with Mei.com, a China-based online luxury flash sales retailer, and Weibo, an online social media platform in China.

A key finding is that 45% of respondents said they purchased most of their luxury items through online options, and the maximum amount they felt comfortable paying online for a single item is 4,200 yuan ($661), far higher than the 1,900 yuan ($299) they indicated in a similar survey in 2014, or an increase of 121%.

The average spend levels also went up about 28% compared to the previous 2014 survey.

China’s consumers are spending close to one-third more on online purchases – averaging around 2,300 yuan ($362) on each single luxury transaction.

The top driver for purchasing online remains pricing and better deals, however, close to one-third of respondents had made luxury online purchases at the full, non-discounted price.

“Price is becoming less of a driver. But value remains important as customers are well informed about global prices since most of them travel physically or digitally,” said Thibault Villet, CEO of Mei.com.

“The pace of change in today’s marketplace in China is taking retailers and brands by surprise. This change is unrelenting and now outrunning the company strategy in many cases,” Egidio Zarrella, Clients and Innovation Partner, KPMG China, added.

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