Is armchair shopping the next big thing in China?

While the traditional TV shopping model depends on consumers making purchases via the telephone, the US$15 million WTTM joint venture now allows them to buy products through an interactive TV digital set top box.

"It's long due - one would have expected this to have come earlier given the size of the consumer market and the media sophistication," says Thomas Wong, CEO of MPG China.

According to iResearch, Taobao.com has an 80 per cent market share of China's online B2C and C2C market. WTTM aims to extend its online shopping service to TV, a more familiar media to many Chinese consumers. Advertisers such as Li Ning, Sanyo, BenQ, and Panasonic have already signed up for the service.

Justine Chao, international corporate affairs, Alibaba, says WTTM compliments existing e-commerce channels and Alibaba is not worried about WTTM cannibalising the e-commerce model. "We see digital TV shopping as a way to reach Chinese consumers who have yet to try online shopping," she says.

Still, at the moment, profits from direct sales on TV in China are low. Analysts International estimate that direct TV sales account for only 0.8 per cent of general retail sales, although it optimistically reports that the industry should gain a 50 per cent increase year-on-year.

Wong says the success of Taobao as an online shopping platform shows there are few consumer apprehensions about giving out credit card and personal details ahead of purchases. He believes that taking this confidence to a TV platform and tapping into a larger audience base is a logical move. Though he says it is "a different matter if you ask whether a shopping channel will have the same, less or more appeal than a digital platform."

Ultimately, the trust given to TV as a medium for shopping relies heavily on WTTM's logistic, digital and security systems.

As a new medium, it may take time for consumers to warm to TV shopping. Those looking to cash in on it should heed advice given by Antony Yiu, managing director of iProspect Hong Kong, who points out that sometimes Chinese consumers spend tiny amounts online. Quite often purchases via Taobao.com are for daily necessities.

"Some buy just one toothbrush or even a can of Coke," Yiu says. "A transaction can be as little as $1."

Moving this shopping behaviour away from computers to televisions, therefore, might not make a big difference to how much money is being spent.

Chao says Alibaba does not have a projection on the revenue that could be generated by WTTM, but she says it will "focus on reaching Chinese consumers that are shopping for quality products."

This article was originally published in the 15 July 2010 issue of Media.