How China Won the Race to be a Mobile-First Commerce Nation | Straighttalk

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By Michelle Evans, Global Head of Digital Consumer Research, Euromonitor International

This article is by Featured Blogger Michelle Evans from her Forbes.com column. Republished with the author’s permission.

While “mobile first” has emerged as a commerce buzzword, thus far there has only been one true mobile nation: China. 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.

China’s Perfect M-Commerce Storm

A perfect storm of factors led to the emergence of China’s digital commerce landscape. Like other emerging markets, China turned to the mobile device to establish digital connectivity due to the cheaper network investment and falling mobile device prices. The number of mobile internet subscribers has quadrupled in the last five years. As a result, the smartphone became the primary device for Chinese consumers to access the internet and that forever impacted how consumers there communicated and consumed.

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.

Today’s Chinese consumers turn to their smartphone most frequently for service-oriented purchasing, including online downloads, entertainment event tickets and foodservice takeaway/delivery. Although completed with slightly less frequency, Chinese consumers spend the most digitally on inexpensive apparel followed by consumer electronics and appliances thanks to the continued development of user-friendly apps that are further cementing the tendency towards on-the-go consumption. Mobile is expected to consolidate its leading position as the go-to form factor during the 2016-2021 period, as more Chinese consumers, even those in more rural areas, embrace smartphones as a conduit for commerce.

Asia: The World’s First Mobile-First Region

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.

The fast uptake of mobile commerce across Asia Pacific as compared with the West is due in part to how social media is interwoven into the fabric of everyday lives. WeChat, the popular Chinese mobile messaging app from Tencent, is one of the best examples of a next-generation operation system. It’s a tight ecosystem of over 800 million users that leverages a social graph as the fabric for a connected web of services that touch almost every aspect of the consumer’s digital life, from communications to entertainment to health to commerce.

Influence of Social Commerce

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. Emerging market consumers, in general, reported being more influenced by their friends’ social media posts in the same survey, which highly correlates with those consumers that turn to social networks when conducting commerce.

That’s because one of the first places where social converged with commerce was Asia Pacific. These consumers took a pragmatic and practical approach to time spent online. Companies like Alibaba with a diverse portfolio of online businesses initiated aggressive marketing and pricing strategies. For fashion-driven, middle-class Chinese consumers, social media became a gateway to discount-focused online retailers, especially in segments like luxury clothing. In another example, the popular social messaging app WeChat can be used to hail a taxi, order food delivery, buy movie tickets, pay utility bills and even book a doctor’s appointment all in a single, integrated app. This go-to platform for Chinese consumers illustrates the more advanced functionality of existing social channels in Asia Pacific compared to the West.

In contrast, the experience in the West is much more fragmented with a variety of apps from a plethora of competitors fulfilling those needs. In addition, Western social media players have been less confident about the introduction of purchasing tools and how to leverage the social platforms in the consumer engagement process to build more genuine relationships. Only in recent years have Western players, such as Facebook, began to embrace social commerce through the likes of buy buttons, chatbots or image-driven search. Given the high demand for social shopping among Asian consumers and the fact that local companies own the entire cycle, implementing social-driven strategies has been a far easier process than it has been for those in the West, which contributed to Asia Pacific’s mobile-first mindset.

Originally published on Forbes.com.