Unlike in US, e-commerce in China doesn’t begin with Google or Baidu searches

E-Commerce (China vs. US) Part 9 of 10

Part 9 of 10, E-commerce in US begins with a google search.   In China, it actually begins with TMall or Taobao and not Baidu.

Unlike most western countries, e-commerce in China does not begin with a general search on the popular search portal, (Baidu.com).   Instead, most consumers would go straight to Taobao, TMall or JD.  One of the biggest drivers is because unlike US where independent e-commerce sites are quite popular, China E-commerce adopted a strong market-place model.  Customers automatically associate online shopping with one of the the 3 largest market-place destinations.  Even though they do compare prices, they tend to only compare prices between vendors within these large market-place sites.
Part 8 of 10, M-Commerce adoption China > US
1.  55% of Internet users in China have made a mobile payment vs. 19% in US.
2.  US$51.62 billion spent via mobile commerce this year. That’s nearly double the m-commerce tally in 2013.
A new infographic by Go Globe compiles a bunch of the latest statistics about China’s mobile-based ecommerce sector. Aside from how much is being spent, it shows which sites they’re using, and how they’re paying up. A few figures to look out for:
  • Mobile shopping spending will grow 91.1 percent from 2013 to 2014.
  • Alibaba’s Taobao and Tmall sites still dominate the sector – accounting for 76.1 percent of ecommerce spending from mobile devices.
Here’s the infographic:
China's m-commerce spending to surpass $50 billion in 2014 (INFOGRAPHIC)

E-Commerce (China vs. US), Part 7 of 10

Currently, more than 50,000 transactions are taking place per minute on Taobao.  The average transacting amount is ¥120 (US$20).   US$540 billion is expected in 2015, or 10% of total retail transactions in China.  On 11/11/2014, China broke the record of the single largest one day transaction volumes in any country with US$9.3 billion.  Many analysts predict that total e-Commerce & m-Commerce in China will exceed US$1 trillion by 2019.

E-Commerce (China vs. US), Part 6 of 10

This is a 10-parts discussion on the key differences in E-Commerce between US & China.  If you are interested, please join this blog to learn more.  Will publish once a day.

Part 6 of 10 – Top e-commerce markets in China are actually not in big cities, but in 2nd & tier cities.   Shanghai, Beijing, and Shenzhen are actually only about 4% of total, 1.98%, 1.34%, and 0.75% respectively.   The biggest markets are actually Guangdong (12.2%), Jiangsu (7.3%), Shandong (6.5%), Zhejiang (62%).  Even Liaoning has bigger market presence then Shanghai at 4.3%.  It is true that Guangdong has 100+mm population and Shanghai only 23mm.  However, if you take population size into consideration, Guangdong province is still bigger market then Shanghai.

Part 5 of 10 – Chinese customers expect all e-commerce sites to equip with live agents 24/7.   Nearly 100% of e-commerce sites in China are equipped with LIVE agents and often would use pop-up windows to offer answering any questions while customers shop on-line.   Even the smallest e-commerce sites would have 1-2 agents available 24/7.  Alibaba now owns the world’s biggest live agents online e-center with thousands of agents.   This is necessary because (1) Chinese e-commerce is still at its nascent stage and a lot of people are still unfamiliar with the overall e-commerce flows, (2) There are too many counterfeit products and customers would only feel more secured if they have an opportunity to at least ask few questions to verify the authenticity, (3) the delivery and payment mechanisms are still not standardised and often require additional conversations to work out the detail arrangements, (4) Chinese customers would often try to “Negotiate” for discounts, free gifts, or no/lower delivery fees.  Unlike in US where more than 90% of transactions are done without the intervention of live agents, more than 75% of e-commerce transactions in China would involve a live agent.

Part 4 of 10 – Who is buying & how much?

Over 90% are aged 15-39, urban, income less than “¥6,000 per month” (US$989). 30% students, 28% white-collar, and 48% women.  Top 7% of online purchasers accounts for 45% of total volume.  They typically transact more than 50+ per year and spend more than RMB¥15K+.  The next 13% accounts for 35%.  They transact roughly 30+ times per year with annual spending between RMB¥5K-15K.  These 20% of heavy spenders account for 80% of total e-commerce in China.

Part 3 of 10 – C2C is 70% of China e-commerce, in US, C2C is single digit.   Majority of vendors on Taobao & T-Mall are still mom & pop shops.  Even though we are seeing more and more of large brand owners setting up their own T-Mall/Taobao sites, majority of transactions are still done by SMEs or individuals selling to end-users.  One thing to keep in mind is that unlike eBay in US, most C2C transactions in China are new (not second-hand) products.  I do expect B2C to eventually overtake C2C in China.  B2C is likely to cross the 50% threshold by early 2016.

Part 2 of 10 – China e-commerce is “market-place dominated.”  Unlike US and other western countries, independent e-commerce site find it difficult to survive.  “90%” of e-commerce are transacted via Alibaba’s (T-Mall, Taobao), JD, QQ Shop, and Suning.  The biggest foreign player, Amazon, has only 2% marketshare.  If you want to tab into the fast growing e-commerce biz in China, you have no choice but to join the market-place.

Part 1 of 10 – Chinese e-commerce users rely on product/site reviews almost 2X more than US.  Several reasons why this is happening,
  • Too many counterfeit products – users rely on each other to know the authenticity of the product offerings.  Most customers would only shop from seller with not only good, but many reviews
  • Most sellers online are small mom & pop shops.  It is much more difficult to trust and gain credibility

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