China’s online boom

New data from China is exposing the anatomy of what will soon be the world’s most important online retail market.

The data shows unprecedented growth in China’s online retail market as more and more Chinese turn to the web to shop.

Statistics from iResearch show the Gross Merchandise Volume (GMV) of China online shopping in 2012 reached 1.3 trillion yuan (US$208.4 billion) – 66.2 per cent up on the previous year.

Online now accounts for 6.2 per cent of total consumer goods retail sales. Online sales especially soared during seasonal promotional days such as November 11 and December 12, with the GMV of online shopping reaching 423.9 billion yuan in the last quarter of 2012 – year on year growth of 80 per cent, and a quarter on quarter growth of 32.4 per cent.

Research believes China’s online shopping market has entered into a more mature life stage from 2012. In the coming years, with more traditional enterprises entering the e-commerce industry, the online shopping potential in western China and in third and fourth tier cities in middle and eastern China will be further explored.

It predicts the development of mobile internet and mobile shopping, offering consumers increasing convenience, will underpin ongoing rapid growth and predicts the GMV will exceed 3000 billion yuan in 2015 or 2016.

iResearch has split the data between business to consumer (B2C) and consumer to consumer (C2C), sites like eBay where people buy and sell direct, often commercially. The data shows the GMV of B2C reached 386.9 billion yuan in 2012 and accounted for 29.7 per cent of online shopping market GMV, a share worth 4.4 per cent more. The B2C sector grew 95.1 per cent in 2012 – far faster than the 56.4 per cent growth rate of C2C.

The company expects B2C will continue to be the main driving force to develop China’s online shopping market, arguing that after some 10 years’ of online shopping development in the world’s most populous country, shoppers are starting to pay more attention to the quality of goods they are purchasing rather than just the price.

B2C is securing more and more trust from online shoppers in both reputation and quality assurance. Some value-oriented B2C websites, such as Tmall, 360buy, and Suning, undermine the advantage of C2C, focusing more on attracting suppliers and retail partners of high quality. In this way, they satisfy the need of consumers by guaranteeing the quality of goods and enriching the categories of products.

The research found out that Tmall ranked first in the B2C market in 2012 with a market share of 56.7 per cent while 360buy,with a share of 49 per cent, takes the lead in the independent B2C market.

The market share of Suning is 13.6 per cent and ranked the second among the independent B2Cs due to its rapid growth rate and its acquisition of other websites. Other participants including Amazon China, Dangdang, 51buy, and Gome all belong to the second group.

iResearch believes that the competition of “two giants and many strong players” in China B2C market will progress with time.

So what are the Chinese buying online?

The data shows clothes and bags accounted for 26.5 per cent of sales, slightly less than in 2011, reflecting the broadening overall online offer. Communication, computer and consumer electronics sales increased 0.3 per cent over 2011, accounting for 18.4 per cent of sales due to the promotion by e-commerce enterprises.

One of the fastest growing categories was maternity and baby goods, which accounted for 4.4 per cent of the total online market.

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