McKinsey: Chinese Consumers Poised to Lead Healthcare Consumption in 2015

As Chinese digital consumers increasingly embrace e-commerce and major retailers roll out more comprehensive and diverse online services, the development of China’s e-commerce sector has far exceeded expectations. McKinsey conducted a survey of Chinese digital consumers, covering approximately 630 million internet users across cities of various tiers and extensive rural areas, to deeply investigate and analyze their behaviors and intentions. VCBeat has excerpted and organized the portions of the report related to internet healthcare, aiming to explore what aspirations Chinese digital consumers hold in this field.

Social Commerce—The Direct Sales Network for Healthcare Products Is Set to Open

In McKinsey’s survey on social networks, it was found that social interaction and shopping behaviors are closely intertwined. Chinese shoppers are keen to rely on recommendations from friends (whether online or offline) as the most important factor in their online purchasing decisions, particularly on mobile social platforms. For example, in 2014, thousands of merchants transplanted China’s popular direct-selling model onto mobile platforms by establishing semi-private WeChat groups of 50–100 members, selling a wide range of products—from organic vegetables to the latest fashion—to friends and friends-of-friends. In 2015, McKinsey predicted that companies would continue to benefit from this trend and model, leveraging China’s vast base of social media users to build digital direct-selling networks that rely on word-of-mouth and referrals to sell more products, such as healthcare and insurance offerings.

Consumer Expectations for O2O in 2015: Healthcare Ranks Among the Top Three

O2O is considered a transformative trend poised to reshape the landscape of e-commerce in China, and Chinese consumers’ enthusiasm for O2O has exceeded prior expectations. Our survey shows that 71% of Chinese digital consumers are already using O2O services, with 97% of them indicating they will continue to use these services—or even increase their usage frequency—over the next six months. Among consumers who have not yet used O2O services, nearly one-third expressed willingness to try them within the next six months. In 2014, Chinese consumers’ expectations for O2O became clearer: regarding goods and merchandise, 72% of consumers hoped O2O would enable offline returns for online purchases, while 56% desired the option to order online and pick up in-store (see figure below). This consumer demand for physical stores presents an interesting challenge to pure-play online merchants in China: Do they need more physical outlets to meet consumer needs? Today, some online retailers in the UK, the US, and Taiwan have already established pickup and return points in convenience stores. This trend also allows traditional retailers to regain their competitive edge, as they can more easily leverage existing assets to deliver an omnichannel shopping experience to consumers.

What were Chinese consumers’ expectations for O2O services in 2015? O2O applications in the food & beverage and tourism sectors had already seen robust growth. Among consumers surveyed by McKinsey, the top three additional categories where they most desired O2O services were entertainment (61%), healthcare (47%), and housing and automotive services (42%). For instance, 150,000 vehicles were booked and sold online on “Singles’ Day” (November 11), demonstrating that Chinese consumers are indeed willing to purchase high-value items through O2O platforms.

According to the McKinsey iConsumer 2015 China Digital Consumer Survey, the growth of China’s e-commerce market has exceeded expectations, with consumer demand for internet-based healthcare services continuing to rise. Last month, Malay Gandhi, General Manager at Rock Health, also forecasted the five areas with the greatest growth potential in digital health for 2015. Among these, consumer-centric healthcare engagement, telemedicine, and personal health tracking tools ranked prominently on the list. Many have hailed 2015 as a landmark year for digital health. Yet, without placing consumers at the center, how can it truly be considered “landmark”?

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