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China set to overtake US in e-commerce

China set to overtake US in e-commerce.Increases the bookmark digg  Google  Delicious  buzz  friendfeed  Linkedin  diigo  stumbleupon  Qzone  QQ Microblog China is poised to surpass the United States to become the world's largest e-commerce market this year, according to consultancy Bain & Co.

With forecast 32 percent average annual growth, online shopping expenditures in China are set to reach 3.3 trillion yuan ($539 billion) by 2015, the consultancy said in a report.

The study was based on a survey of more than 1,300 shoppers in China across a range of cities, ages, educational backgrounds and income levels.

"While beating the US is a major milestone for e-commerce in China, there is no longer a meaningful distinction between retailers' brick-and-mortar, Web and mobile strategies," said Serge Hoffmann, a partner in Bain's retail practice in China and co-author of the report.

The study found that more than 70 percent of Chinese shoppers research products and compare prices online and offline, and across different e-stores, with half of them citing price as the top reason for online shopping.

The research suggested that two-thirds of buyers rely on smartphones to browse for or buy products, a proportion higher than the US.

The figure climbed to 75 percent for upper-income consumers, who have a monthly household income of more than 50,000 yuan.

"China's rising middle class has high expectations of consumer products and also a need for product verification.

"With the rise of e-commerce and social media, online marketing channels and Internet forums offer a platform for consumers to gather the intelligence they need to make informed purchasing decisions," said Robert Theleen, chair of the American Chamber of Commerce in Shanghai.

The potential is huge for business-to-customer sites to woo shoppers from customer-to-customer sites, said Hoffmann.

For instance, the compound annual growth rate for B2C platforms was 160 percent from 2009 to 2012, and the sector is expected to continue growing by 53 percent annually through 2015.

In comparison, Taobao.com, China's leading C2C platform, grew by a compound annual rate of about 65 percent throughout the period.


Increases the bookmark digg  Google  Delicious  buzz  friendfeed  Linkedin  diigo  stumbleupon  Qzone  QQ Microblog
Given a choice, 82.9 percent of shoppers would prefer an e-store with a brick-and-mortar presence over pure play sites like Jingdong Mall, which only runs digital stores.

"This indicates a significant growth opportunity for omni-channel merchants," said Hoffmann.

He identified two reasons for shoppers' preferences. One is the "touch and feel" of a physical shop. In general, Chinese consumers lack confidence in merchants because they are worried about being sold fake or low-quality products, especially online.

A majority of these shoppers also cited offline after-sales service and a general comfort level with physical merchants.

The survey found that websites successfully feed store sales. More than 60 percent of shoppers said that a retailer's e-store will increase their spending at the same retailer's brick-and-mortar stores.

Building a dedicated digital team and investing in a world-class website are critical to grab a foothold in the e-commerce territory. Hoffmann cited Uniqlo Co Ltd, the Japanese apparel brand, as an example of how to streamline entry into China's digital retail market.

Uniqlo outsourced development of websites for both its e-stores (the official Uniqlo site) and another on Tmall.com.

Hoffmann said that outsourcing accelerated Uniqlo's online launch by tapping into Tmall's knowledge, reducing IT costs and allowing the company to utilize its partner's established logistics and distribution systems.

Hoffmann suggested that 20 percent of the online products should be "special" ones, with the same price in stores that are not available to pure plays.

About 30 percent of online merchants offer the same price as stores but with different coding, which limits price comparisons.