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Is China the Neverland of E Commerce Sales?

On 11 November 2016, history was made when Alibaba alone reported that they had made online sales of USD 18 billion on Singles Day, the largest shopping event for China, similar to Christmas shopping for the US. In the first hour alone Alibaba had gotten in sales worth USD 5 billion! And another surprising thing was that 85% of these sales originated from mobile phones but that is another topic to ponder on. This article focuses on the Digital Marketing scene in China.

Is China truly the promised land for e-commerce?
Yes China is truly Neverland, a legendary land full of potential when it comes to e-commerce. And this is not just a bubble. If you glance back to 2012 when researching digital marketing and its results, you will notice that was when the most savvy digital marketers first had China on their radars. The shift from traditional brick-and-mortar stores to e-commerce has been consistent and quite fast when it comes to China. Compared to the US, Chinese are comparatively late adopters of e-commerce but they have taken to it much more fondly. Lets us back this claim with numbers.

Right now the Chinese account for almost half of the global online retail sales. Online retail sales amounted to USD 581.61 billion in 2015. This number means that sales grew by 33 percent compared to last year! Also industry experts are expecting a 20% annual growth in figure by 2020.  To truly gain an objective picture it is important to compare online sales to total retail sales. Online retail sales formed 11 percent of all sales in China (compared to 8% in the US) but the promise lies in the fact that this share is growing by an amazing 53% each year!  Thus the size of the opportunity is simply amazing!

And it is not just the numbers it also the type of consumer that is truly interesting. China’s consumers were a bit late to jump into the fray but their “maturity rate” is a lot faster. What do we mean by a mature customer? A mature customer is one who is not shopping online purely for the purpose of getting the lowest price. Such mature or also known as rational customers form almost 40% of all Chinese urban online shoppers. These mature customers are what a digital marketer should bank on for they bring with them the promise of repeat business. Mature customers see e-commerce as an avenue to find quality alongside “reasonable” prices and a lot better shopping experience than going through the hustle and bustle of traditional markets.

The Chinese online market is not just the largest but also one of the most evolved. The acceptance of online shopping is so high that people are even buying routine items such as instant coffee, razor and blade, baby food, breakfast cereals and toothpastes online.

Another important thing that should be repeated here is that a lot of this growth in e-commerce can be attributed to the growing penetration of smartphones. As per the last statistics, in 2015 71% of the urban online shoppers used mobile phones to shop online. In 2014 this figure was 51%. So one of the biggest factors that anyone with an iota of interest in digital marketing should take an interest in is the smartphone usage and how to tailor a shopping experience for smartphone users.

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