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With the world’s largest online population, China’s eCommerce sales is projected to reach USD $529 billion by 2018. In 2015, the country ranked 2nd place after the US on the Global eCommerce Index (A.T. Kearney). China’s eCommerce cross-border sector, particularly for inbound goods, is showing rapid growth, indicating a rising demand for international goods and opportunities in cross-border commerce and logistics.

11 eCommerce Facts

eCommerce in China: 11 eCommerce Facts© 2015 Singapore Post Limited. All Rights Reserved.For more information, visit www.specommerce.com/knowledge-centre

THE INCREASINGLY AFFLUENT CONSUMER

China’s middle class will grow from 200 million to 800 million people over the next 20 years, with the average annual income projected to increase 20% to USD $9,936 from 2013 to 2018, one of the highest globally. This trend is also reflected in third and fourth-tier cities such as Guilin and Shantou, where customers shop online to gain access to luxury brands.

Increased Spending Among Chinese Consumers

of households earn > USD $16,104

annually by 2025

60%59%surveyed buyluxury goods

online

MOBILE COMMERCE IS ON THE RISE

In 2014, Forrester projected online spending via mobile to grow at a compound annual growth rate of more than 40% by 2019. In fact, Alibaba’s Gross Merchandise Volume by mid 2014 topped USD $71 billion, representing about 87% of all mobile retail GMV across China.

UNDERSTANDING THE CHINESE SHOPPER

Nielsen reported growing sophistication among Chinese online shoppers who demand value-added services besides competitive pricing. Thus, eCommerce players need to address customer concerns such as product authenticity and reliability of product sizing.

Concerns of Chinese Online Consumers (2014)

Product Authenticity

78%

70%Inability to Test Product

55%Wrong Product Size

48%Delivered Product is Different

38%Complicated Return Policies

41%Site Reliability

THIRD-PARTY PAYMENTS IS KEY FOR ONLINE TRANSACTIONS

As access to mobile payments increased to 55% in 2014, 70% of online transactions were completed using online payments while 30% were done via Cash on Delivery, China Briefing reported. It also found that third-party online payment usage is particularly high – more than 60% of Chinese online users have used it at least once, with a significant proportion reporting a 4-8 times monthly usage. As such, the Gross Monthly Volume of China’s third-party online payments surged 64.1% in 2014, with Alipay dominating the market at 87.6%.

Key Players in Third-Party Payments (2014)

Source: 2015 China E-Payment Users Report, iResearchChina

Source: 2015 China E-Payment Users Report, iResearchChina

87.6%

Alipay

2.9%

ChinaPay

4.9%

Others

1.5%ChinabankPayments

1.8%Tenpay

1.3%

99Bill

POPULARITY OF MARKETPLACES

The growing popularity of marketplaces has made it a key feature of the Chinese eCommerce landscape. B2B site Alibaba and B2C site Tmall top the ranks with 52.8% and 61.4% market share respectively. During the Singles’ Day sale, the Alibaba group earned a total of USD $9.3 billion through its Tmall and Taobao marketplaces. Nonetheless, many brands, particularly fashion and luxury labels like Topshop and Louis Vuitton, have localized sites to create distinct brand experiences for their end customers.

Percentage of Online ShoppersBuying Products Online (2014)

Top eCommerce Players By Market Share (2014)

POPULAR PRODUCT CATEGORIES

Fashion and apparel is the most frequently bought product category online, while electronics lead in terms of overall sales volume. With increasing affluence amongst consumers, certain product categories such as personal care, lifestyle, healthcare, electronics and baby products are expected to grow as income levels rise (Nielsen).

A RAPIDLY DEVELOPING CROSS-BORDER ECOMMERCE SECTOR

There is an increasing number of Chinese shoppers engaged in cross-border eCommerce. The total (B2C) cross-border eCommerce transaction value reached 74.4 billion yuan in 2013 and is expected to hit 160 billion yuan in 2018 (China Internet Watch). 87% of Chinese online shoppers reported to have purchased from a foreign site before; top importer countries markets are the US (84%), Hong Kong (58%) and Japan (52%). This reflects an increasing demand for nternational goods, alongside growing opportunities in cross-border commerce and logistics.

Top Markets For Inbound Goods (2014)

84%US

58%

HongKong

52%

Japan43%UKGovernment Initiatives for

eCommerce Development

STRONG GOVERNMENTAL SUPPORT FOR ECOMMERCE DEVELOPMENT

Since the end of 2012, seven cities were designated pilot zones for cross-border eCommerce: Shanghai, Zhengzhou, Ningbo, Hangzhou, Chongqing, Guangzhou, and Shenzhen; bonded warehouses were also established as a fundamental part of its implementation. The government has actively reduced barriers to entry to eCommerce, such as deferred duty and tax payment for imported goods and lower capital investment benchmarks. These initiatives have since gained traction – eCommerce trade volume in the first half of 2015 was already equivalent to the whole of 2014.

89%Books

87%Services

96%Electronics90%

Groceries

97%

Fashion & Apparel

TopB2CSites

TopB2BSites

52.8%

15.9%

61.4%

18.6%

Deferred payment of duty and tax for foreign goods

Lowered market entry requirements for foreign retailers

State online stores facilitate cross-border sales

SOURCES:

Acquity Group, China Briefing, China Internet Watch, Colliers International, eMarketer, Forrester, IMF, International Business Times, iResearchChina, McKinsey Global Institute, Mobile Commerce Press, Nielsen, Out-Law.com, Sekkei Studio, Statista, Tech Crunch, Tech In Asia, We Are Social

Want to learn more about how SingPost eCommerce can support your online business in China and the Asia Pacific region? Contact biz@specommerce.com

96.5%

3.4%

TopC2CSites

Source: Forbes

ECOMMERCE MARKET VALUE AND GROWTH POTENTIAL

China’s eCommerce market is expected to top USD $1 trillion by 2019. In an eMarketer report, 71% of online shoppers prefer online shopping to in-store. Online retail sales is projected to reach USD $298.61 billion by 2015 and USD $528.88 billion by 2018.

eCommerce Retail Sales Projection (As of 2014)

2015 2016 2017 2018

USD $299billion

USD $377billion

USD $456billion

USD $529billion

WORLD’S LARGEST INTERNET POPULATION

As of 2015, China is home to 649 million active internet users who spend an average of 3 hours and 52 minutes online daily. Average internet penetration at 47.4% (2015) is expected to increase to 52.1% in 2016, with the spread of government-subsidized internet access in rural areas.

daily internet consumption

3 hours52 minutes

47.4%internet

penetration

649 active internet

users

million

Online Shopping On Mobile Phones (Feb 2015)

25%made a

purchase

27%researchedon products

A HIGHLY SOCIAL NATION

Mobile is a key enabler of social media usage – 37% of Chinese are active mobile social users (We Are Social). As of March 2015, there were 629 million active social users in China (46% of population) who spent an average of 90 minutes on social media daily; 88% of them are active on at least one network. Local platforms dominate the social space, with QQ and QZone leading the market. With 38% of consumers making purchases based on social media reviews, businesses need to be in the social space and leverage on key opinion leaders.

Key Social Media Platforms (2015)

Blogging and media sharing social network

Text messaging, video and voice chat network

Social forum based on Baidu keyword search terms

Microblogging site

Text messaging, video andvoice chat network