China's imported goods market sees rapid development in post-COVID-19 era, opening up new opportunities for retail digitization

Report by Deloitte and Tmall Global reveals latest trends in China's post-pandemic imported goods market

Published: 3 November 2020

Forging Ahead Against Headwinds: China’s Imported Goods Market Research 2020, a new report from Deloitte China and Tmall Global, shows how COVID-19 has reshaped global retail markets and hugely impacted consumer habits with online retail on the rise despite the downturn in overall retail sales.

To grasp new opportunities arising from this shift, the report says, retailers of imported goods need to design business models that meet changing consumer needs, accelerate digital transformation and work with e-commerce platforms to deliver an omnichannel experience.

The pandemic has not only vastly impacted the global economy, but also devastated consumer markets worldwide. Although China's retail sector is recovering, the crisis has upended the shopping habits of consumers everywhere. In the State of the Consumer Tracker, 38% of respondents across the globe surveyed in March and April said e-commerce will become mainstream. A preference for contactless payment has increased e-commerce and digital services adoption, propelling a sharp rise in online retail sales, in contrast with the plunge in overall retail sales. According to the National Bureau of Statistics of China, online sales of consumer goods accounted for 22.2% of total retail sales in September.

Tianbing Zhang, Deloitte APAC Consumer Product and Retail Sector Leader, says, "Chinese consumers increasingly favor online shopping. The proportion of online sales will continue to grow, supported by factors including the boom of shopping events and new sales channels like livestreaming, strong government support, and continued improvement in digital platforms and logistics systems. With the expanding domestic demand and advances in emerging retail technologies, China has also introduced preferential policies, such as lower import taxes and expanding the allowed range of imported goods. All of this has prompted a surge in cross-border e-commerce imports despite the pandemic, underlining a period of rapid growth for China's imported goods market."

According to the report, this rapid expansion is mainly driven by new demand from younger consumers and those in smaller cities. Characterized by a preference for niche brands, young Chinese consumers are also more inclined to consider product quality. Data from Tmall Global reveals post-90s consumers' spending on healthcare and beauty products has increased by 51% and 85% since the pandemic. Although the post-80s and 90s generations remain the biggest spenders, post-00s consumers aged between 10 and 20 are rapidly gaining spending power. Also, the imported goods market has penetrated lower tier cities, with demand for imported goods rising in tier-3 and below cities. What's more, the number of consumers in tier-6 cities who shop on a daily basis rose 57% during the pandemic.

COVID-19 has transformed how we live and consume, giving rise to new retail scenarios that are set to redefine the imported goods market landscape. As consumers become accustomed to shopping from home, personal care and cooking products are growing in popularity. With the pandemic being brought under control, sales of alcoholic beverages and travel size products have surged on the release of pent-up demand for socializing and short trips.

Tianbing Zhang adds, "COVID-19 and the new economy have had a profound impact on Chinese consumers' attitudes and buying patterns. Our report highlights four key trends in the post-pandemic imported goods market.

First, with consumers increasingly concerned about health and quality of life, products catering to the desire to 'be kind to yourself' have become a new growth driver. Second, post-lockdown 'revenge spending' has fueled the consumption of imported goods from popular travel destinations. Third, the boom in celebrity livestreaming has spurred cross-border e-commerce purchases by domestic consumers. Finally, overseas brands are moving to cross-border e-commerce platforms as they expand their distribution channels in light of disruptions to offline retail."

Ryan Wang, Vice-President of BG & General Manager of Government Affairs, Alibaba Group – Tmall Import & Export Business Group says, "Global travel curbs, and the shift of the imported goods market online, have spurred the emergence of new consumer demands. It is more important than ever for global brands to capture the opportunities in China's imported goods market. As Tmall Global's import business continues to grow, we've been investing in infrastructure to enhance our logistics, storage and supply chain capabilities, with a view to furthering foreign brands' entry into the Chinese market."  

The report includes three key takeaways for retailers of imported goods:

  1. Increase customer touchpoints and sales conversion. As consumers can no longer interact with brands or purchase through conventional channels, retailers need to expand customer touchpoints by utilizing a mix of online sales and marketing channels, including livestreaming, social media, short-format videos and online advertising. They can also set up storefronts on e-commerce platforms and leverage business incubators to enable sales conversion.
  2. Ensure smooth transactions. With the shift to online shopping, retailers face a huge logistical challenge in dealing with surging orders and managing overseas supply chains.
  3. Enhance customer retention. As digital retail has enabled more convenient access to information, making good use of data and gaining consumer insights will be crucial to attracting target customers.

Click to download the full report (Simplified Chinese version only).

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