The Reality of China’s E-Commerce

on October 29 2013 | in Digital Trends | by | with No Comments


“E-commerce sales in Mainland China may be growing, but the actual order submission rate is still just 10 percent,” according to Mary Ransom, senior vice president at Borderfree, and reported by WWD.

The reality of online shopping in China is quite sobering. While e-commerce in China could potentially reach $182 billion from 1.3 billion consumers, and while China will gain 512 million Internet users and 100 new middle-class and affluent households within the next few years, the fact remains that the average per capita income is $3,504.

Surprisingly, the largest demographic of online shoppers is one with very modest income. Ransom’s survey found that 63 percent of online consumers are men. Most of them are between eighteen and thirty years old with a monthly income between 1,000 and 3,000 yuan (about $163.16 to $489.48). Average annual spending on apparel is just $144.

While 60 percent of Chinese Internet users are active on social media like Qzone, Sina Weibo, and WeChat/Weixin, many of the top international brands present on these sites do not yet have e-commerce capabilities. Smaller retailers are not getting much out of having an online presence either: Ransom found that of the 70,000 B2C sellers on Tmall, the average earnings before interest, taxes, depreciation and amortization margin for independent retailers is a negative 4 percent.

The five biggest apparel retailers in China control just 9 percent of the market, compared to the top five apparel retailers in the United States controlling 24 percent of the market. Alibaba is China’s top e-commerce marketplace, with 76.7 percent of the market share. The distant second-place site is with 5.1 percent. Amazon’s China site is ranked fifth, with 0.8 percent.

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