In the past 15 years, online food retail has expanded to become an integral part of overall e-commerce in China. With consumers’ shifting their food purchases to the online channel, online food and drinks sales grew 49 percent in 2014.
What does a typical Chinese online consumer look like?
Although online shopping is a behaviour increasingly being picked up by people across all age groups, the most important consumers are still those between the ages of 28 to 38. However, the younger generation are avid online shoppers and are quickly gaining in importance.
“Young consumers born in late 1980s and 1990s may be less affluent than consumers over the age of 28, but they are glued to their smart phones and tend to order food online more frequently. Low prices, convenience made possible by fast delivery, and variety are the top three attractions for China’s young online shoppers,” says Food & Agribusiness analyst Gao.
Three strategies for small and niche food brands
It is these younger consumers that both retailers and food manufacturers are counting on for future growth, but how to produce products that they can readily buy? China’s online food channel so far has been largely a playground for small and niche brands. Rabobank believes that multinationals and large food manufacturers should actively devise their online strategies and take notes from the successful practices of mid- and small Chinese brands.
Rabobank has identified three key online strategies followed by mid and small-sized food manufacturers:
- Adjusting packaging size and design, and product formulation.
- Launching a new sub-brand or product series for the online channel.
- Conducting close interaction with narrowly-segmented consumers on social media in ways that resonate with consumers, with the aid of big data.