Understanding China’s E-commerce Market

Understanding China’s E-commerce Market

by CIW TEAM STAFF on NOVEMBER 24, 2011

 

Taobao.comImage by bfishadow via Flickr

Boston Consulting Group shared research findings this week predicting that China online shopping, will see exponential growth through 2015, with spending that could make China’s e-commerce market worth more than RMB 2 trillion and possibly surpass the size of the U.S. market.

Here is a summary of some findings of BCG survey:

  • Less than 10 percent of China’s urban population shopped online in 2006. The figure jumped to 23 percent in 2010 and will nearly double to 44 percent by 2015.
  • An astonishing 30 million additional Chinese consumers are expected to shop online for the first time every year until 2015.
  • E-commerce in China will go from representing 3.3 percent of the country’s total retail value today to 7.4 percent in 2015. It took the United States ten years to achieve that growth.
  • Within five years, most of today’s online shoppers in China will be spending RMB 6,220 (or about $980) per year, twice what they are today. That’s close to the U.S. average of $1,000.
  • The low cost of shipping in China gives e-commerce an ongoing boost. It costs $1 on average to ship a 1-kilogram parcel, versus $6 in the U.S.

 

China's Rapidly Expanding E-commerce MarketChina’s Rapidly Expanding E-commerce Market

 

Uniqueness of China E-commerce Market

  • Up to a quarter of e-commerce demand in China is for products consumers cannot find in physical stores—a circumstance unique to China, where the immensity of the country limits the coverage of physical retailers. In fact, there are many consumers, especially the younger ones, whose first contact with a brand or type of product occurs on the Internet.
  • The relationship between search engines and retail sites is different in China. In most markets, shopping begins with a Google search. In China, online retailing marketplace Taobao.com blocks the spider of the top search engine, Baidu.com. Therefore, most shoppers start their search within Taobao, which accounted for nearly 80 percent of e-commerce volume as of 2010. “Chinese shoppers are developing the habit of not relying on search engines to find products online,” said Jeff Walters, a Beijing-based principal at BCG and coauthor of the report.
  • Largely because of consumer wariness and distrust of merchants, Chinese consumers are the most likely in the world to check for product recommendations on social networking sites. Forty percent of online consumers in China say they’ve read and posted reviews—more than double the rate in the United States. Conversely, only 19 percent of consumers in China go to official brand or manufacturer sites, compared with 41 to 60 percent in Japan, the United States, and the European Union.
  • China’s shoppers are increasingly not just looking for discounted products as they shop online. Today they are also concerned with finding unique products that are not available offline, better customer service, convenience, and the pure fun of the discovery process that happens online.
  • The concentration of the Chinese e-commerce market by category is much lower than in other countries, with the top-five categories only accounting for half of the total market (while in the United States, Japan, and the United Kingdom, that ratio is nearly 70 percent)
  • Payments from consumers are held in escrow (Alipay) until the consumer receives the order
  • The logistics of the e-commerce process is a top priority for consumers

BCG forecasts that e-commerce will go from representing 3.3 percent of total retail value today to 7.4 percent in 2015. In the United States, it took ten years to achieve that growth. BCG projection means that China will surpass the United States to become the largest e-commerce market in the world, achieving a compound annual growth rate of 33%, to reach more than RMB 2 trillion.

Read more: http://www.chinainternetwatch.com/1306/understanding-chinas-e-commerce-market/#ixzz2IDrWUdej

Please see original post:http://www.chinainternetwatch.com/1306/understanding-chinas-e-commerce-market/

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