Technology | Media | Telecommunications

Saturday, November 10, 2012

An Evolving Online Shopping Marketplace in China


What are the main drivers of growing eCommerce applications in China? What role will m-retail play in the Chinese marketplace? These were a couple of the key questions that eMarketer considered during their latest market assessment of the online retailer landscape in China.

According to their latest study, online sales in China are flourishing. The Chinese people are embracing the internet for comparison shopping and product research, and marketers are eager to expand operations beyond the established markets of Shanghai and Beijing.

As people in China become more comfortable with shopping on the internet, the number of online buyers on the mainland will rise to nearly 220 million this year -- clearly outpacing the U.S. total of approximately 150 million buyers.

No other nation offers this online audience of shoppers. By 2016, eMarketer forecasts that 423.4 million people in China ages 14 and older will make an online purchase at least annually.

In 2011, B2C ecommerce sales in China reached $55.37 billion, that's up 103.7 percent over 2010. Online sales are forecast to rise an amazing 94.1 percent this year, to nearly $107.5 billion.

Already the second-largest B2C ecommerce market in Asia-Pacific in terms of sales behind Japan, China is the fourth-largest market in the world as ranked by B2C ecommerce sales. China's ecommerce sales are expected to surpass those of Japan and attain the global second-place rank from the UK in 2013.

China's fast B2C ecommerce sales growth puts it far ahead of any other country. Moreover, China will continue to lead growth throughout eMarketer's forecast period -- even as growth in the country slows to 22.8 percent by 2016.

That said, eMarketer believes that there are plenty of nuances to the ecommerce market in China. Westerners mostly shop online for convenience, but in China it's driven much more by availability and value. Shopping online means access to brands and goods otherwise not available beyond Tier 2 cities.

But foreign internet brands face major hurdles entering this market. The ecommerce market -- similar to its search, social networking, instant messaging and gaming sectors -- is currently dominated by a handful of local retail giants. And while online shopping certainly is on the rise, China still faces rampant piracy and counterfeiting problems.

Other challenges include ruthless competition and price wars, marketing and supply-chain costs, and uncertain taxation policies. Regardless, the upside market opportunities are very attractive to savvy online retailers.