“In the U.S., e-commerce is just a dessert – it is supplementary. The infrastructure of the commerce is already so good. In China, e-commerce is the main course”, said by the founder of Alibaba (NYSE: BABA), Jack Ma.
Though relatively new to online shopping, Chinese consumers already make up for almost half of global online retail sales and are only growing in numbers. Online retail sales amounted to $581.61 billion in 2015, surging 33.3% from the previous year. The volume of online sales in China now exceeds that in the US, and online sales are expected to grow 20% annually by 2020. Furthermore, online shoppers represent the vanguard of China’s growth story, since they tend to be young, urban, and highly educated. They have a different attitude toward shopping than older generations, which were shaped as savers by more challenging political and economic circumstances. Younger shoppers are more willing to spend.
The distribution channels trend shift to the online stores in the same way. According to the data, the shopping experience of online-stores increased a lot while physical-stores experience the decrease. Around 80% online shoppers would visit the physical-stores before purchase. However, there is only around 15% physical-stores shoppers would visit online stores before.
China E-commerce Platforms
Tmall.com and JD.com are ranked as the top two largest e-commerce platforms in China. Combined, they maintain around 80% of online retail market share. There are also specialized e-commerce platforms in specific vertical markets such as the Dangdang online bookstore and Jumei (NYSE: JMEI) cosmetic marketplace.
China’s torrid growth in online shopping reflects increasing incomes, higher education, and more sophisticated consumption patterns of the typical consumers. Due to the expansion of online retail shopping and the necessary logistical services, e-commerce is at the frontier of consumption growth in China.
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