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The Fast and Furious E-Commerce Market of China

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In This Article
  • E-commerce’s share of total retailing could reach 8 percent by 2015—a greater share than in many developed nations.
  • E-commerce in China has developed its own personality. The consumer-to-consumer market in particular has developed far differently than eBay and Amazon Marketplace in the West.
  • Online buying in China is quickly becoming a social experience, with consumers flocking to sites on which conversations about and comparisons of products are centerpieces.

In the past two years, Chinese consumers have opened their wallets and pocketbooks online. Online buying and selling, including group purchasing (through the Chinese equivalents of Groupon), is the second-fastest-growing activity, after microblogging.

Going Digital
These rapid rises in usage reflect more than just expansion from a small base. Online shopping is now the fourth-most-popular online activity in China, and two of the more popular activities—IM and online games—are declining in usage.

Online shopping is here to stay. Companies cannot have a major presence in China without having an online presence, not only to generate sales but also to engage with customers where they spend so much time. The Internet today in China is similar to television in the 1960s and 1970s in the West—the place where consumers congregate and companies need to locate.

China has 193 million online shoppers—more than even the U.S. with 170 million, more than double the number in Japan, and five times that of the U.K. By 2015, China’s e-commerce market will rival that of the U.S. Between 2009 and 2011, the share of Internet users who shop online rose from 28 percent to 36 percent and is likely to reach 47 percent by 2015. E-commerce’s share of total retailing could reach 8 percent by 2015. (See Exhibit 1.)


Except for teenagers, all segments of Internet users in China spend at least 1.6 hours a week shopping online. University students, young professionals, and young seekers are devoting at least two hours a week to it. University students and young professionals are devoting about 12 percent of their spending to online purchases.

One of the key challenges for companies is to encourage their customers to shop online, because, our research shows, once they make the leap, they quickly become avid Internet shoppers. In focus groups, consumers who had devoted only 5 percent of their spending to the online channel in 2008 said they had increased the share to more than 50 percent by 2011.

Even when they are not actually shopping online, many consumers research products online that they eventually buy in physical stores. Twenty-five percent of consumers research online before buying offline—almost as many as the 29 percent who both research and buy online.

While the market for the sale of physical goods is expanding rapidly, the sale of digital content is in a slower growth mode. Sales of online videos, music, games, e-books, and other digital content are expected to rise by 14 percent annually between 2011 and 2013—about one-third the rate of online sales. E-books make up slightly less than a third of the digital-content market and are expected to grow slightly faster than the market. Online video, the smallest slice of the market, is the fastest growing, expected to expand 64 percent annually between 2011 and 2013.

The research also found that 31 percent of consumers did both their research and buying offline and that 15 percent researched offline but purchased online.