On May 10th JD Big Data Research Institute released a report on the consumption of domestic brands in China in the year 2020 during the Chinese Brands Day event that gives cyber holiday to online platforms. The report has detailed analysis and important takeaways as well as the impact of the covid 19 pandemic on online business growth.
E-commerce platforms greatly helped domestic brands penetrate the lower-tier markets in 2019. These markets in the fifth and sixth tier cities have remained the main driving force for the consumption of domestic brands as first-tier cities like Shanghai for instance start embracing domestic brands more. Shanghai is in the top five list of domestic brands consumers though it still is the second in consumption of international brands, following Beijing.
According to JD Big Data, the YOY growth rate of domestic brands in 2019 was 20% higher than that of international brands This growth was further accelerated in the first quarter of 2020 to 30% due to the pandemic.
In the first quarter of 2020, transactions on domestic fresh foods on JD.com registered a 156% increase as compared to 2019 as the online retailer saw sales in meat, eggs, poultry, and vegetables increase a hundredfold. The most significant increase was recorded on the instant deli, meat, and frozen food and have become the top category in fresh food products over seafood and fruit.
There was an increase in transaction volume on office products and computers by 109% YOY as working and studying from home became a new normal. Domestic mobile phone recognition was relatively high by 10% against international brands. Most people chose to bake at home as opposed to past routines of purchasing baked products. This pushed the transaction on bakery supplies to shoot up over ten times yearly.
The healthcare category registered a huge increase in the demand for masks, glucometers, and family care products in the first quarter of 2020 as compared to a similar period in 2020. Domestic brands in sports, maternal and baby care, and personal care products (female care and facial cleaning) exceeded an average of over 150%.
It’s interesting to note that the report managed to capture the domestic brand volume purchased by people in different occupations as well as age groups and gender. There was a rapid growth in domestic brands procured by financial and medical professionals revealing growth in uptake among the high-income consumer market. Women below 25 were reported to be keener on acquiring domestic brands.
On the other hand, the report revealed that there was a significant increase in international products in the categories of musical instruments, paper products, toys, and cleaning products.
Some of the key points realized from the report in summary are:
– Chinese consumers gradually made domestic brands their top choice as a result of the constant improvements in products.
– The consumption of domestic brands increased yearly in first-tier cities where more well-paid and well-educated consumers have a higher purchasing power.
– More attention paid to domestic brands is from young female consumers aged below 25 who also buy more.
– There is still more awareness among consumers on domestic phone brands.
JD Big Data goes on to reveal that emphasis on quality remains key to consumers across all tiers. Consumers are seen to be sensitive to the online reviews of products in the upper tier and lower-tier consumers being sensitive to familiarity with brands and verbal reviews in their acquaintance model of society. It is equally important to note that the lower tiers form a larger consumer base than the upper tiers and as a result have more requirements on the ratio of performance- to- price.