Ogilvy & Mather Joins Forces with Ipsos to Investigate “The Cashless Mobile Life”

2016.08.04

Ogilvy & Mather Joins Forces with Ipsos to Investigate “The Cashless Mobile Life”

A look at the current trends in the world of Chinese mobile payment and the future of mobile marketing

Ogilvy & Mather recently joined forces with renowned research institute, Ipsos, to uncover some of the most exciting trends in Chinese cashless payments over the past year. Based on extensive interviews with 8,180 internet users and scores of businesses, the report – ‘The Cashless Mobile Life’ – provides compelling insight into the current state of mobile payment development in China in addition to suggestions for brands involved in mobile marketing.

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In 2015, third-party mobile payment transactions in China reached RMB10 trillion[1]. .Grasping a first-mover advantage, Alipay was far ahead in terms of RMB volume, accounting for 51.8% of the total[2]. WeChat Pay meanwhile was the most frequently used mobile payment tool, with over 50 average uses per user per month. [3]

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That same year, the number of mobile payment users reached 358 million, a 64.5% increase year-on-year. The ‘cashless’ lifestyle is becoming more and more popular. Post-90s students and recent-graduates aged 23-29 are leading the trend with more than 12% of college students and nearly 35% of young white-collar workers saying they would go “cashless” for amounts less than 100 yuan.

Mobile payment has permeated all aspects of life and changed basic, everyday habits. This report probes into 5 sectors of clothing, food, home, transportation and entertainment, analyzing consumer payment habits and presenting specific “Ogilvy Viewpoints”.

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Clothing: From Mobile Shopping To Offline Scanning

Research shows that consumers shopping online for clothing are moving from traditional webpage purchases to purchases through mobile devices. 78% of respondents said they had bought clothing online using mobile payment. The number of consumers preferring to use credit or debit cards when making offline purchases is also in decline, while the number of those who pay by scanning QR codes is growing. 40% of respondents said they had used mobile payment tools to buy clothing offline. Thanks to the general adoption of mobile payment devices in shops, the willingness of consumers to use them is getting stronger. Shops are also beneficiaries of this trend, since mobile payment enables them to better understand the identities and habits of their customers, and to manage customer relations with mobile payment data.

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Ogilvy Viewpoint: The general use of mobile payment both online and offline will be a must-have for every brand. Brands need to design an effective mechanism for collecting and analyzing data when launching their mobile payment services in order to gain the greatest insight from the consumer data obtained through mobile payment. This will help woo potential consumers on a regional basis, and improve consumer loyalty using social networks.

 

Food: Eat Alone at Home, or Go Dutch Dining Together

A whopping 71% of respondents said they would use mobile payment facilities to order home delivery meals, order food in advance, or pay at restaurants. Meanwhile, mobile payment scenarios are becoming more and more varied: customers can simply scan QR codes on restaurant tables with WeChat to serve themselves, order and pay through restaurants’ WeChat public accounts. They can also order breakfast in advance to be delivered to the office using apps and pay using their mobile – although these savvy customers only account for 2.6% of the respondents, more than 40% of them have received a BA degree or above. Customers can also ‘go Dutch’ through mobile payment when dining together, and 25.8% of the respondents said they use this feature at lunch.

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For shops, mobile payment has also become a regular tool in promoting sales and attracting potential customers. The most popular practice is giving discounts or coupons to drag customers back, all done within the mobile payment ecosystem. Some restaurants even experimented with mobile payment only. For example, some 99 Cent Restaurant branches were bold enough to demolish the cashier counter to promote mobile payment, which decreased the average dining time by 11%, and improved table turnover rate by a maximum of 20%. After paying the bill, customers can choose to follow the restaurant’s WeChat public account, enabling the shop and customers to further interact.

Ogilvy Viewpoint: Restaurant chains need to flexibly make use of the convenience mobile payment affords consumers and use it as a hub to collect consumption data, establish high-frequency interaction, and manage customer relations. Consumer brands should fully understand the deep changes brought by mobile payment on consumers’ lives and their social behavioral habits, so as to reach exploitable insights.

 

Home: mobile payment is the “water, gas and electricity” of life, as well as its “rice and salt.”

The biggest change brought by mobile payment to the home is the payment of utility bills such as water, electricity and gas. Nearly 8 out of 10 respondents said that they paid utility bills via mobile payment. Moreover, leading convenience stores and supermarkets almost universally now support mobile payments, with most shops supporting more than three kinds of mobile payments. This makes acquiring staples like rice, salt and oil through mobile payment a ‘new normal’.

For respondents from first-tier cities, effort has been increasingly put into making use of powerful networks of third-party payment platforms linking property service companies, shops and home services enterprises to each other, making a truly seamless integration of online and offline. To pay water, electricity, and gas bills using WeChat, for example, Shanghai residents only need to go to the WeChat public service account “Electronic Bill Presentation and Payment”. Meanwhile, the very first intelligent residential complex linked to Alipay has emerged in Yong’an, Fujian. Residents of the complex can manage utility payments, parking lot spaces, home maintenance, and other household stuff on mobile via the platform.

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Ogilvy Viewpoint: Mobile payment has fundamentally improved the day-to-day experience of paying bills and fulfilling basic needs in residential areas. Meanwhile, various payment records obtained by third-party payment platforms create valuable behavioral data, which can be used by businesses and brands to target specific customers for more precise service and marketing. Brands – particularly brands of fast moving consumer goods and daily-life goods – therefore need to change their traditional marketing modes, and build more binding consumer relations by developing new marketing channels.

 

Transportation: Mobile Payment Carries You Across the World.

It has become a ‘new normal’ to book transportation services using mobile-phone apps. And what thrives in parallel is the mobile payment step after booking. In 2015, DiDi Chuxing’s average orders per day exceeded 11 million, and 45% of its users paid via smartphone mobile payment. As for travel, 50% of people directly use mobile phones to plan their itineraries and pay for them, while 17%[4] did so in 2014.

With the explosive increase of Chinese international travel and shopping, China’s mobile payment providers have set their eyes on the globe, sparing no effort to expand and accelerate their global strategies. Take WeChat and Alipay as examples. It is already providing a service called “Pay with RMB, Settle in Foreign Currency.” That means, when shopping abroad, users of WeChat need not exchange foreign money anymore. They can pay with RMB simply by letting cashiers scan the QR codes of their WeChat Wallets and then typing their passwords. This feature has been extensively used in duty-free shops, cosmetics shops, convenient stores, restaurants, hotels, and resorts all over the world, mostly in tourist sites that attract large numbers of Chinese. And it provides for tourists going abroad a payment experience as convenient as at home. As of now, platforms including WeChat Pay, Alipay, Baidu Wallet have provided services like this, as well as further tourist benefits in the forms of tax refund, discount, etc.

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Ogilvy Viewpoint: Though only 4% of Chinese citizens own passports, China is rated No. 1 in outbound tourism consumption. More and more Chinese people will be seen all over the world. To better serve them, companies need to deeply know them. Brands need to influence consumers at every contact point: from their intentions to travel to a place and their search for testimonials from those who have already been to their planning itineraries, as well as their actual travel experiences and sharing of photos on social networks.

 

Entertainment: Discounted Film Tickets and Carefree KTV Weekends

In the entertainment sector, film ticket sales are without a doubt the field mobile payment has infiltrated most profoundly. For example, online ticket sale accounted for 76.2% of the overall box office across the country in May, 2016. This percentage will exceed 80% in 2016. [5] In addition, the use of mobile tools to book and pay for KTV, ball sports games, and artistic performance is rapidly increasing. The need to use social network accounts to log in to game and video platforms in order to enjoy paid-for entertainment is rapidly expanding, urging entertainment businesses to build closer links with mobile payments.

[1] Source: China National Film Fund Management Office, BigData-Research, “Online Film Ticket Sales Report, May, 2016”, issued in June, 2016.

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Ogilvy Viewpoint: In entertainment-related scenarios, rapid popularization of mobile payment has brought unprecedented convenience and real benefits. In the future, non-cash payment will be further adopted as customers’ leisure lives change and evolve, adding scenarios such as gym, massage parlor, and Spas. Brands may fully exploit the customer’s time developing new channels to more precisely communicate with them.

 

Mobile Payment and “Social-ism” with Chinese characteristics

The report points out that Chinese mobile payment behavior represents a strong social motive. Not only do people enjoy its conveniences, they also use it to connect to each other in the name of friendship and love. Hence, the unique “social-ism” with Chinese characteristics. Online “hongbaos” (translates to “red envelopes,” a reference to the money gifts often given away during celebrations) are closely tied to human feelings. As many as 78% of respondents said they would send Hongbao to relatives and 11% of respondents said they would show filial piety to parents through mobile money transfer. Between friends, the usage rate of mobile Hongbao and money transfer is as high as 75%, whether being used to ‘go dutch’ or as a present or loan, mobile payment makes to-and-fros of money between friends and relatives convenient and spares embarrassment. Upon every big holiday, the usage of WeChat Hongbao increases vastly. However, WeChat Hongbao is not just a unique fervor in the Spring Festival anymore, it has become a habit and cultural phenomenon covering all festivals.

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Conclusion

Mobile payment has been gaining large-scale popularity throughout the world. In January 2016, Denmark became the first country to bid farewell to cash. Sweden has announced that it strives to get rid of cash by 2030. Mobile payment is undoubtedly the future of payment. So far, China is in a leading position in terms of scale, user number, and growth rate, while the popularity of a “cashless lifestyle” in China continues to increase every day.

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Mobile payment brings conveniences, as well as grants consumers more choices. Brands need to break with tradition and profoundly understand the idea of “Omni-Channel Marketing” in order to constantly develop new marketing channels and scenarios, understand consumers by harnessing big data, and building closer connections with them.

The full report is only available in Chinese. To read it, you can scan below QR code with your mobile:

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Or visiting: www.ogilvy.com.cn/mobile-payment-report/

 

[1] Source: iResearch, “2011-2019 China’s Third-party Mobile Payment Transaction Scale”, issued in March, 2016.

[2] Source: iResearch, “Q1 2016 Third-party Mobile Payment Reached 6.20113 Trillion Yuan”, issued in June, 2016.

[3] Source: KPCB, “2016 Internet Trends”, issued in June, 2016.

[4]Source: World Tourism Cities Federation (WTCF) & Ipsos, “Chinese International Travel Monitor 2015”, issued in June, 2016.

[5] Source: China National Film Fund Management Office, BigData-Research, “Online Film Ticket Sales Report, May, 2016”, issued in June, 2016.