E-Commerce (China vs. US) Part 9 of 10
Mobile shopping spending will grow 91.1 percent from 2013 to 2014.
E-Commerce (China vs. US), Part 7 of 10
E-Commerce (China vs. US), Part 6 of 10
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.
- 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