China's "Silver Surfers" Could Mean Big Business for Online Shopping

The number of senior citizens in China aged 50 and over is expected to hit 200 million for the first time this year. While much has been written about the country’s rapidly aging demographics and the stress this will put on the economy and social services in coming years, this senior segment—a group larger than population of all but the world’s four largest countries—is also seen as source of growth for China’s booming e-commerce market.

People 50 and over make up 10 percent of China’s Internet users, and 1.75 million of them say they have tried online shopping, according to the China Internet Network Information Center. The average senior user is on the Internet for e-commerce 6.9 hours a day, says Boston Consulting Group, compared to 6.4 hours by active middle-agers and 8.1 hours among young professionals.

Despite this potential, the spending power of seniors remains untapped by most retailers, who prefer to focus on younger, more profligate consumers. A report released in January by Mintel, an independent market intelligence firm, concluded retailers and marketers are missing an opportunity.

"Evidently, efforts by Chinese retailers to capture this important market segment are insufficient, as China's elderly, clearly a group with money in their pockets, do not feel like there are enough goods or services that are targeted at them," says Matthew Crabbe, Mintel’s research director for Asia Pacific.

"Elderly Chinese do not want to be regarded as past their prime," he said. "Marketers need to focus on positive messages in their advertising, promoting old age as a time to celebrate, rather than one of mere survival," he said. Highlighting the potential for senior spending, over a third (34 percent) say that they have no worries about their financial future, according to Mintel.

Many older Chinese say they shop online for convenience and lower prices. Chen Bin, a 52-year-old resident of Yichang city in Hubei Province, started visiting Taobao, China's largest shopping website, a year ago after her son taught her how to use the platform. "My regular purchases are clothes and shoes," Chen said in an interview conducted via e-mail. She said she typically makes one or two purchases a month online, spending RMB 300 – 400 ($48-$65).

Chen is a good example of the average "silver surfer." When it comes to shopping online, senior women outnumber senior men by more than 50,000, or approximately 3 percent. And apparel, especially women's apparel, is the most popular category among older online shoppers. Nearly 9 million pieces of women's clothing were sold to shoppers over 50 years of age last year, according to China Online Shoppers' Behaviour Research by iResearch.

Other top spending categories for seniors are household items, digital products, skincare, and cell phone top-ups, according to Taobao statistics.

Senior online shoppers are mostly residents in big cities, with the highest concentrations in Shanghai and Beijing. Shopping via mobile phone appears to be gaining some traction among seniors, but there are usability issues. "Sometimes I shop on my mobile but it's difficult for me to read on smaller screens," says 57-year-old Shanghai resident An Huang. "I prefer to shop on my PC at home."

Many seniors say they are worried about fraud, fakes and Internet security when shopping online. "Most of the stores on Taobao.com and Tmall.com meet my needs, but I won't buy expensive things online," says Huang. "As my (online shopping) experience grew, I learned to choose sellers with higher ratings and more positive comments, and I would return my purchases right away if I’m not happy with them."

Her biggest concern: counterfeits. "I hope Taobao.com can strengthen the punishment measures against counterfeit sellers," she says.

For China's online merchants, engaging with increasingly Internet savvy seniors today just might pay dividends in the future. According to estimates, by 2050 more than a quarter of China’s population will be over 65 years old—and that's just too many people to ignore.