By focusing on the frustrations of grocery shopping for ordinary Chinese consumers, online-only supermarket Yihaodian (1?? – lit. Number 1 Shop) has recently launched an advertising campaign, designed by Ogilvy & Mather Advertising Shanghai, which appeals to consumers to eschew the drudgery of shopping in supermarkets, and switch to online shopping at its website. Increasingly intense rivalry for volume of trade among both the bricks-and-mortar and online modern grocery operators in the market is compelling the competing retailers to use ever more innovative ways in which to attract consumer interest, and drive up feet through the door (virtual or real).

China online retail research Yihaodian

These latest adverts by Yihaodian pick on two key consumer bug-bears, the length of time spent in check-out queues and the hassle of carrying large loads of shopping, once purchased. The first advert illustrates how online shopping is faster compared with time wasted in stores, by using the idea of a shopper (a young man) turning into a snail as the queue he is standing in is cut-in by the relatives of the woman he is standing behind. The second advert shows a young couple at the check-out, where the husband asks his wife how they are supposed to carry so much shopping, to which his wife answers “you’ll think of something” at which point the husband turns into a donkey.

Using humour to deal with the frustrations of modern living in China not only helps to add to the appeal of the online shopping concept (and the leading online grocery retailer – Yihaodian), but the adverts also appeal to the increasingly convenience-conscious consumer mentality. Mintel’s own consumers research (conducted for our recent report on Supermarket & Hypermarket Retailing in China) has found that as Chinese consumers average incomes have risen, they are becoming less tolerant of life’s inconveniences that they had to endure, and are increasingly voting with their feet, choosing retail outlets that offer greater convenience to them, including (particularly) a rising acceptance of online retailing.

Both the video and print adverts are being shown across a wide range of media, including online, building screens, taxis and screens subways for the duration of the second half of 2012, in tier-1 and -2 Chinese cities. The aim is to reach as many people as possible and so drive up volume trade for Yihaodian. Yihaodian only went live online in 2008 and in the four years hence as seen its consumer base grow to 20 million registered users by March of this year. The website now sells in excess of 250,000 product lines, and delivers to shoppers in all provinces across China.

Being a private company, Yihaodian does not publish financial results, so we cannot say how profitable the company is, if at all. But that is perhaps not the point. The company has grown its customer base very rapidly, and has secured a strong market share. It is getting increasingly noticed through its advertising, and marketing stunts such as the virtual supermarket at Shanghai subway stations, trialled by the company, where consumers can scan pictures of products on the subway walls onto their smartphone and put them in a virtual shopping basket, ready to purchase via an online payment system and have their shopping delivered to their doorstep for when they get home.

The idea was essentially the “build it and they will” come model, and not only have Chinese shoppers moved to Yihaodian in their droves, but also the investment from global retail giant Wal-Mart. According to news releases by the company in mid-August 2012, the company will (regulatory approval pending) increased its shareholding in Yihaodian from under 20% to a 51% majority holding this year. Wal-Mart clearly sees a strong future for online grocery retailing in China, and is buying into the local experts rather than reinvent the virtual shopping trolley.

But many online retailers in China struggle to make profit, and without financial results, it is hard to judge the strength of the operation at Yihaodian. They certainly look good from the advertising, the website and the innovation, and Chinese consumers are showing an interest. But, when it comes down to it, modern grocery is a volume game, and Yihaodian needs to convert the mass of subscribers into real, regular users who adopt the online shopping habit for a significant part of their shopping.

Mintel’s consumer survey data shows that, of our online survey of 3,000 mostly middle income shoppers in 10 cities in China, over 80% use online shopping sites at least once a month, with 30% using such sites once a week. What Yihaodian is now trying to achieve with its latest ad campaign is to convert more of the 80+% of people who shop online once a month, to join the ranks of those shopping once a week. Our survey results also show that the likelihood of shopping online is higher among younger consumers, and so the targeting of the advert at young couples and singles makes sense. They are the consumers with fewer set ways and habits to change, who tend to be more tech-literate and for whom shopping for groceries is even more of an ass!

Take a look at Mintel’s latest Chinese supermarket and hypermarket maket reseach, or contact us to find out more about how Mintel can help your business learn more about what makes Chinese consumers tick. 

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