Chinese ‘e-tail’ revolution

Online shopping, almost nonexistent in China as recently as five years ago, has emerged as a major sales channel for retailers, with combined sales of about 1.3 trillion renminbi, or $211 billion, last year, said Carrie Yu, China and Asia Pacific retail and consumer expert at PwC in Hong Kong.

The findings, which are based on a survey of more than 11,000 online shoppers in 11 countries, underline the speed at which China has emerged as one of the world’s most wired retail markets.

In China, 58 percent of respondents in the PwC report said they shopped online at least once a week, for example. That percentage was by far the highest of any of the countries covered in the PwC survey. By comparison, only 42 percent of U.S. respondents, 41 percent of those in Britain, and 29 percent of German respondents said they shopped online at least once a week. The percentage was lowest in France, where only 13 percent said they made online purchases once or more a week.

China now has the world’s largest online population with over 130 million domestic broadband users. Chinese consumers shop online, using gadgets like smartphones and tablets, more frequently than their counterparts elsewhere. One possible reason for the boom in online purchases is that the infrastructure outside the major cities is still developing and access to traditional retail shopping is still limited for many Chinese consumers. Online shopping allows consumers access to all the goods they cannot purchase locally.

“Things are happening very fast here,” Ms. Yu said. “E-tailing has become a major focus for C.E.O.’s across all segments of retailing, whether it’s electrical goods, luxury goods or even groceries.”

The explosive growth of electronic shopping in China has led to the country’s emergence as one of the world’s busiest online shopping markets, both in terms of overall sales volumes and in terms of the frequency with which consumers shop online, Ms. Yu said.

Chinese consumers are also significantly more likely than their counterparts in other parts of the world to use smartphones or tablets, rather than PCs, to make online purchases. More than one third of Chinese online shoppers used such devices, about double the global average, the PwC report found.

The quest for lower prices has been a main driver of online shopping around the world in recent years, especially in the half-decade since the global financial crisis, when consumers in many parts of the world became more eager to save money, Ms. Yu said.

In China, however, the growth of online shopping has been given several extra kicks.The economy has continued to grow rapidly; wages have risen; and the country’s online population has ballooned along with better communications networks and the easy availability of online devices.

“In a nation where many other sectors are rapidly expanding, e-tailing stands out for its astonishing growth,” McKinsey wrote in a report published in March.

According to McKinsey, China was the world’s second-largest e-tailing market, after the United States, in 2011, with sales totaling $120 billion — well above the $107 billion in Japan, and more than twice those recorded in Britain, for example. By 2012, China came “very close to equaling the United States for the top spot” in terms of e-tailing volumes, McKinsey added.

With China‘s broadband penetration still at only 30%, and Chinese online sales projected to reach an annual $650 billion dollars by 2020, the future of e-tailing in China looks rosy for the considerable future.

Sources include: The New York Times, The McKinsey Global Institute


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