Times of crisis have shaped the retail industry in China. During SARS in 2003, JD was launched. Taobao wasn’t far behind, altering China’s retail landscape forever. Now with the COVID-19 outbreak, e-commerce platforms are seeing behaviour and demographics shift.
Daily Active Users (DAU) of ecommerce decreased from 398 million to 350 million during the Spring Festival holiday according to QuestMobile. Users bounced back to 383 million two weeks after the festival. This was a better result than last year as people were housebound during the outbreak, allowing them more time online.
One of the most notable changes is the user demographic of shoppers. More consumers than ever over 30 have started to shop online. The portion of tier 3 and lower cities shopping rose 12 percentage points to 70%. Similarly, the share of lower-income shoppers increased.
Of the main online shopping categories, fresh food was the standout winner. During the Spring Festival, daily usage time grew 56.2% above normal time. Two weeks later it was up 96.4% to 12.4 million minutes.
People over 40 years old have ordered fresh food online much more than normal due to restrictions in movement. Middle-aged users and above grew 237% on the MissFresh platform. As many as 90% of over-40s were estimated to place online orders for fresh food with help from their children.
The fastest growing search keywords on fresh produce platforms were common staples such as eggs and fruit – with searching doubling. Instant noodles also performed well according to QuestMobile.
On 8 February, the National Health Commission recommended consuming at least 300 grams of milk products a day as one of its dietary recommendations for fending off the coronavirus. Despite this, sales of every dairy category on Tmall (excluding infant formula) have dropped significantly according to China Skinny analysis – the likely impact of poor logistics and delivery performance. One interesting observation was that value per order grew notably, the likely result of consumers stockpiling for the outbreak.
During the outbreak, the large ecommerce platforms with stable supply chains and delivery services actively bore social responsibility to assist producers and consumers. This involved helping farmers with initiatives such as “Farm-Home”, increasing the ability to deliver produce directly from farms to apartments. This solved the problem of rotting produce that wasn’t being picked up, and got this produce to the spike in consumers who were seeking it. They also ran an online concert, donated ¥570,000 ($82,000) and helped farmers sell 380,000kg of agricultural products.
Possibly one of the biggest shifts in the retail scene is the rise of phystical retailers using digital channels to help counter the drop in brick & mortar sales and more traditional ecommerce vendors branching into more innovative sales channels. These saw strong growth in WeChat Groups, mini programs, live-streaming and contactless delivery.
The enduring trends of the coronavirus outbreak are likely to see many of the older and lower-tier city consumers who tried online shopping for the first time, continue to do so when things return to normal. Online sales of fresh produce is likely to be one of the beneficiaries. Similarly, many of the less traditional online sales channels used by retailers are likely to continue and evolve.