Discuss China’s explosion in the eCommerce sector

Allegiances have shifted in eCommerce ecosystem. The newest players have gained taller stature. The newer markets for eCommerce witnessed higher levels of activity. We are talking about China. The most populous country in the world isn’t a stranger to commerce. A lot of their products found their way tothe other side of the globe. Chinese are no stranger to foreign goods as they are huge importers of Nike goods and Apple iPhone. Just like Olympics, China is one of the latest entrant in eCommerce and now they are the second biggest eCommerce market after US. A lot has to be discussed on what brings the change and if eCommerce challenges the survival of Chinese brick and mortar stores in coming years. This post intends to discuss China’s explosion in the eCommerce sector across various aspects.

Let’s talk numbers

China has 730 million internet users, accounting for 40% of global retail commerce. It’s mobile payment market was 11 times bigger than U.S. market in 2012. It is said to be 50 times more than U.S. market by 2016 and the ratio is expected to grow 3 times wider in 2019. 300 million middle class consumers with potential of rising incomes are driving China’s eCommerce explosion. In 2016-17, the online sales in China reached an all time high of $500 billion. By 2020, online sales in China is expected to reach $650 billion. This figure comes from products alone, excluding services.

Factors attributing to China’s explosion in the eCommerce sector

Chinese living in big cities are not comfortable going out. The traffic and parking issues are denting the comforts of life in the city. The ever growing population is not helping either. People like to order their essentials and even the mundane items online. Ele.me, a food delivery startup is considered reliable way of getting food through online. The busier streets like Shanghai and Beijing is driving the eCommerce trend in China.

The most populous country is moving towards a consumer driven economy. Rather than relying on exports, they are promoting diversity from within. The cheap courier charges in China indicates that the government favors this change. The diversity of products and the ease of purchase is what makes consumers favors eCommerce. The new trend of materialism is challenging the survival of local stores.

There is no scarce for market players in Chinese eCommerce market. The intense competition is what gets the industry moving. The eCommerce giants of China understand the market is bigger and stakes are higher. They are promoting their goods and services smartly to the netizens. Consumers comes across targeted and eye-catchy promotions on social media, where they spend considerable time. The companies keep expanding the list of retail categories to serve every need of consumers.

Inefficient service from brick and mortar system contributed to the Chinese eCommerce explosion. Very few retailers have impressive national presence. Non availability of products is always an issue in local stores. Even when they are available, they are expensive. In small towns, sought items are no where to be found. In tier four cities, more than 25% of disposable income is spent online.