3 E-commerce Trends to Watch in China in 2013

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3 E-commerce Trends to Watch in China in 2013
http://www.techinasia.com/ecommerce-china-trends-2013/

[RomanKoshelev]

3 E-commerce Trends to Watch in China in 2013
Julia Q. Zhu
China’s e-com­merce sec­tor has grown rapid­ly over the course of the past five years. By the end of the third quar­ter of 2012, the total trans­ac­tion vol­ume of China’s online retail mar­ket reached $125 bil­lion (781 bil­lion Chi­nese yuan), which account­ed for 5.2 per­cent of China’s total retail sales for con­sumer goods. Mov­ing for­ward into the new year, what can we expect from China’s e-com­merce sec­tor in 2013?

1. China could over­take the US to become the world’s largest online shop­ping mar­ket
China’s 12th five-year eco­nom­ic devel­op­ment plan list­ed e-com­merce as one of the pri­or­i­ty sec­tors to devel­op. Its Min­istry of Com­merce announced that China is going to become the world’s largest online retail mar­ket by 2013. Regard­less of whether this occurs in 2013 or 2014, given the vast neti­zen base in China and its con­stant­ly improv­ing e-com­merce ecosys­tem, China will become the largest e-com­merce mar­ket soon­er or later. Accord­ing to a recent study that was con­duct­ed by my com­pa­ny 1, in 2013, China’s online retail trans­ac­tions are pre­dict­ed to reach $251 bil­lion – extreme­ly close to $252 bil­lion in the US. In terms of the num­ber of online con­sumers, China has already sur­passed all other nations, by pos­sess­ing 228 mil­lion online shop­pers – equiv­a­lent to approx­i­mate­ly 73 per­cent of the entire US pop­u­la­tion. Whether or not China tops the world in 2013, the point is e-com­merce has already sig­nif­i­cant­ly trans­formed the tra­di­tion­al retail land­scape in China, and online shop­ping has become a cen­tral char­ac­ter­is­tic of Chi­nese con­sumers’ shop­ping habits.

2: Lower-tier cities will be more impor­tant in China’s online shop­ping land­scape

photo: techzb.com

Accord­ing to data released from Aliba­ba Group, the e-com­merce con­glom­er­ate had an annu­al turnover of $160 bil­lion (1 tril­lion Chi­nese yuan) in 2012. Sales in China’s lower-tier cities increased over 60 per­cent while the growth rate in first-tier cities includ­ing Bei­jing, Shang­hai and Guangzhou was less than 40 per­cent year on year.

China’s inland provinces pos­sess the great­est num­ber of poten­tial online shop­pers. These shop­pers are migrat­ing online for the first time, learn­ing from their coun­ter­parts in China’s major metrop­o­lis­es.

More impor­tant­ly, with the improv­ing logis­tics capac­i­ty in remote areas and improve­ments in online shop­ping safe­ty, online chan­nels will become increas­ing­ly pop­u­lar among Chi­nese con­sumers from rural areas. The inter­net enables lower-tier con­sumers to access more prod­ucts and brands, which may not be avail­able in their local stores. This is espe­cial­ly good news for West­ern brands that want to try to reach more Chi­nese con­sumers given that build­ing brick-and-mortar out­lets in China’s cen­tral and West­ern provinces is risky. E-com­merce there­fore is a more flex­i­ble and cost-efficient approach to reach­ing the major­i­ty of Chi­nese con­sumers.

3. Mobile com­merce in China is set to thrive in 2013
While many declared 2012 as the begin­ning of the mobile com­merce era in China, m-com­merce is set to explode in 2013. In the first half of 2012, accord­ing to the China Inter­net Net­work Infor­ma­tion Cen­ter (CNNIC), 37.5 mil­lion online shop­pers in China pur­chased prod­ucts via their smart­phones, which increased 59.7 per­cent year on year. Turnover of mobile pur­chas­es account­ed for rough­ly five per­cent of the total trans­ac­tion vol­ume of all online shop­ping, and this share is expect­ed to reach 15 per­cent by 2015.

Mobile phones have replaced desk­top com­put­ers to become the main devices for access­ing inter­net in 2012 2. Due to the over­all increase in usage of mobile devices includ­ing smart­phones and tablets, mobile com­merce will keep on gain­ing pop­u­lar­i­ty and grow in sig­nif­i­cance. In addi­tion, bar­ri­ers that hold back the devel­op­ment of mobile com­merce in China are dimin­ish­ing, and improved 3G net­work capa­bil­i­ties will con­sid­er­ably advance user expe­ri­ence for shop­ping via mobile devices. More­over, mobile pay­ment in China is evolv­ing rapid­ly as well. Mar­ket research com­pa­ny iRe­search, pre­dicts in the fol­low­ing three to five years that China’s mobile pay­ment mar­ket will increase at a rate of over 40 per­cent year-on-year.

China’s e-com­merce sec­tor will only grow in strate­gic impor­tance for West­ern and Asian firms alike. As we begin 2013, these three trends will undoubt­ed­ly be key dri­vers for its growth over the course of the year. Com­pa­nies and entre­pre­neurs seek­ing to cap­i­tal­ize on the poten­tial of China’s e-com­merce sec­tor should keep these trends in mind as they exe­cute on their busi­ness plans for 2013.

Dis­clo­sure: I’m a con­tribut­ing ana­lyst for the Mul­ti­me­dia Research Group, the com­pa­ny behind this study.

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388 mil­lion Chi­nese neti­zens access the inter­net via their mobile phones while the num­ber of Chi­nese who access the inter­net via desk­top com­put­ers was 380 mil­lion.

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