Meet China’s online super-consumers
Like many college students in China, Song Yang buys most of the things she needs for daily life by shopping on the internet. But while her peers have to satisfy the urge to splurge with the occasional new smartphone or pair of branded sneakers, Song doesn’t worry much about living on a student’s budget.
A finance major at Beijing’s prestigious Peking University who says she made a “pot of gold” in the stock market after being staked by her parents, Song, 21, spends upwards of $15,000 a year shopping on Alibaba Group’s Taobao e-commerce website. Her purchases range from high-end imported cosmetics, fashion apparel and consumer electronics, to Japanese snacks and organic produce, to furnishings for her family’s new apartment, to parts and gadgets for her father’s car.
“As long as I have free time, I am on Taobao,” says Song, adding that her binge-shopping habit has resulted in up to 30 packages delivered to her home in a single day. “Whenever I have a new idea, I will search on Taobao,” she said.
Song is the kind of China super-consumer that retailers dream of connecting with—and Alibaba Group is happy to oblige. In 2014, Alibaba recognized that out of the millions of consumers that shop in the company’s China retail marketplaces, a small percentage had adopted online shopping as a significant part of their daily lives. The company created a membership program called APASS (Alibaba Passport) to cater to their needs by assigning them personal account managers and organizing special events like wine tastings and automobile test drives.
APASS shoppers are mostly young, internet-savvy and increasingly affluent members of China’s rising middle class. To qualify for the program, consumers must spend a minimum of nearly $15,000 a year online. That’s just the minimum. In fact, the average annual spend among current APASS members is about $45,000. In contrast, American’s millennials—defined as aged 18 to 34 with higher consumption than other demographic groups—spend about $2,000 a year online, according to a recent study conducted by BI Intelligence. During Alibaba’s recent 11.11 Global Shopping Festival, a 24-hour online sale, APASS members spent nearly eight times as much as the average consumer shopping on Alibaba’s platforms.
Alibaba identifies candidates based on an algorithm that takes into account not only how much e-shoppers spend, but how often they shop online, the range of products purchased, credit record, and engagement in online communities. If you think this screening limits membership to a very exclusive few, think again: There are about 100,000 APASS members.
Fostering relationships with top customers is a time-honored marketing tactic. To Alibaba, APASS members are vanguards of an emerging consumer lifestyle in China. “They are opinion leaders who drive the consumption trend among China’s middle class,” said Zheng Dongyang, senior manager of the APASS program. To stay on their radar and cultivate loyalty, Alibaba recently upgraded APASS to foster online communities and to offer members exclusive daily deals from more than 100 top brands including Maserati, Burberry, Fissler and Estee Lauder.
An APASS member who has recently enjoyed the perks of belonging is Hong Degang, a self-described “consumer electronics geek” who runs a wedding photography studio in the city of Wuhan. Hong, 27, was selected as one of 10 APASS members for a nine-day, all-expenses-paid trip to Italy. The mini-holiday included visits to the venues of eight top Italian brands including wine producer Mezzacorona and luxury carmaker Maserati.
Alibaba livestreamed parts of these visits on the company’s Tmall app and video site Youku over a nine-day period. A trip to a Mezzacorona vineyard generated 400,000 views, 200,000 likes and 120,000 comments, but it wasn’t just social sharing that was inspired. According to Tmall, total sales of the online shops of the eight featured brands jumped more than fivefold over the livestreaming period compared with sales during the nine days preceding the event.
Despite his recent exposure to Italian brands, Hong says he’ll likely remain enamored mainly with electronics gear. He says that he owns up to 20 computers and tablets at any given time, and stays immersed in his passion by reading electronics blogs on Mobile Taobao’s news channel every day while spending more than $3,000 a pop to acquire the latest cameras from Sony and Canon. He trades his used cameras and computers in Alibaba’s flea market app, Xianyu.
“I celebrate 11.11 every day,” Hong jokes, referring to Alibaba’s giant annual online sale.
Not every APASS member shops purely for the joy of it. Wu Xiaofang, a 41-year-old interior designer who lives in Lishui, a small city located in southern Zhejiang Province, says she is a big online spender and APASS member because she sources products for clients on Taobao.
Wu designs exclusively for themed country inns and guesthouses that are popular in her mountainous province, so before she shops she determines whether customers want rooms done up in Chinese ancient style, American country style, French classic style or other themes. Everything is purchased online: toilets, shower kits, bathroom faucets, customized beds and wardrobes, curtains, lamps and other furnishings.
“Taobao can always fill my specific demands,” Wu says. “I can buy second-hand antique French or German furniture on Taobao, and classic, floral-pattern tiles from ancient Chinese buildings. You won’t be able to find this unique stuff elsewhere.”
She says she has so far finished five “Taobao inns” at a total cost of about $270,000 on all the furnishing—but admits that APASS perks encourage her to shop not just for business but for herself and her family.
“I think everyone goes through the same journey,” she said. “When you first start online shopping, you are just curious. Later on, you kind of get addicted to it.”