Four key facts about e-commerce in China

E-commerce in China is booming. With the largest internet user base in the world, it is hardly surprising that in China online shopping has taken off. In 2013 B2C e-commerce sales alone were estimated at $181 billion and are expected to reach $439 billion by 2016. China is the leading the way for e-commerce in Asia, with 60% of the total e-commerce spending coming from the country (source: Go-Globe).

Here are four key facts you need to know about this lucrative and highly promising growing market.

China online shopping spends just as high in low developed, rural areas

In China Tier 1 cities have the largest GDP at the highest political significance. At the other end of the scale Tier 4 cities are smaller and less developed and not as economically thriving. People in the third or fourth tier cities are on lower income and yet are matching or even exceeding their 1 and 2 counterparts in terms of their online spending. The average online spend by a consumer in a Tier 2 city was just under 5000 yuan in 2011. Consumers in Tier 4 cities, despite lower incomes, were spending 4,500 yuan in the same period – 10% more of their disposable income than was spent by their Tier 2 counterparts (source: Mckinsey).

Chinese consumers are careful yet trusting

The growth of the e-commerce market shows just how lucrative these relationships in China can be, as once trust is established Chinese consumers have demonstrated they are willing to put faith in you and your network of suppliers. Chinese consumers have no qualms with using their smart phones to make payments, and are comfortable with third party payment systems and delivery services (source: Bain & Company).

Growing popularity of China online shopping causing investment boom

Having adequate space and the right technology is vital if China’s e-commerce is to continue to grow. In the West, the success of Amazon is partly down to the availability of strong storage and delivery infrastructure. If China’s e-commerce market continues to grow, the country could find itself lacking the correct infrastructure. It is estimated that in the next 15 years China will need to invest $2.5 trillion in land and warehouse construction, equating to 2.4 million square metres of storage space (source: Reuters).

Ecommerce in China supported by brick and mortar stores

While online sales may be rapidly increasing, Chinese consumers are still using brick and mortar stores in order to validate their purchases. Chinese shoppers spend a lot of time comparing prices both online and offline. A large number of consumers still prefer to browse and make their selection of products in brick and mortar stores before moving online to make the actual purchase. 70% of consumers have been into a physical store in order to see their chosen product in person before returning home to make the actual purchase (source: Bain & Company).

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