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With the world’s largest online population, and an eCommerce market estimated to be worth nearly USD $2.5 trillion by 2020, China ranked 2nd place after the US on A.T. Kearney’s 2015 Global eCommerce Index. Marketplace proliferation, and the ever-growing affluence and savvy of Chinese online shoppers, presents rich opportunities in both the country’s domestic and cross-border eCommerce scenes.

11 eCommerce Facts

eCommerce in China: 11 eCommerce Facts© 2016 Singapore Post Limited. All Rights Reserved.For more information, visit www.specommerce.com/knowledge-centre

THE INCREASINGLY AFFLUENT MIDDLE CLASS

China’s middle-class consumer market is projected to be the world’s largest by 2020 – comprising 338 million households and worth USD $6.5 trillion – surpassing even the developed markets of the West (Boston Consulting Group).

Combined with rising levels of consumer sophistication and income growth, this represents a huge opportunity for businesses to market to Chinese online shoppers who are willing to pay a premium for luxury goods and foreign brands.

The Chinese Middle Class in 2020

THE SINGLES’ DAY OPPORTUNITY

2016’s Singles’ Day festival smashed all past records hours before midnight, wrapping at USD $17.8 billion and 657 million packages shipped (Forbes).

Key takeaways from this year’s Singles’ Day for brands and retailers targeting China are: mobile dominates (82% of this year’s Singles’ Day sales were on mobile), Chinese attitudes towards shopping as a sport mean customer experience is paramount, and the rising Chinese trend of live streaming should be leveraged.

UNDERSTANDING THE CHINESE SHOPPER

Nielsen reported growing sophistication among Chinese online shoppers who demand value-added services besides competitive pricing. Thus, eCommerce players need to address customer concerns such as product authenticity and reliability of product sizing.

THIRD-PARTY AND MOBILE PAYMENTS IS KEY

While cash on delivery remains a significant payment method in China, there is promise in the country’s third-party online payments market, which rose 6.5% quarter-on-quarter to RMB 4.65 trillion in Q2 2016, according to China Internet Watch. Alipay dominates the scene with 43.39% market share, followed by Tenpay (16.95%) and UnionPay Merchant Services (15.44%).

Alipay and Tenpay are also the leaders in China's third-party mobile payment market, with 55.4% and 32.1% market share respectively. The proliferation of Chinese mCommerce continues to show no signs of abating, with the market rising 25.68% quarter-on-quarter to breach RMB 7.5 trillion in Q2 2016.

Key Players in Third-Party Payments (2016)

POPULARITY OF MARKETPLACES

The growing popularity of marketplaces has made it a key feature of the Chinese eCommerce landscape. Tmall continues to rule among B2C marketplaces, with JD in second place and others such as Suning, Tencent, and Amazon China following at a distance (China e-Business Research Center).

(as of early 2016)

Top Marketplaces by Market Share

POPULAR PRODUCT CATEGORIES

Consumer electronics and small appliances lead in China’s eCommerce value penetration, according to McKinsey, while apparel continues to be the country’s most-purchased products online. With increasing affluence amongst consumers, other product categories such as personal care, healthcare, and baby products are expected to grow as income levels rise (Nielsen).

CHINA’S ECOMMERCE HOTSPOTS

High population, the presence of many eCommerce companies, and low-cost deliveries make Shanghai, Zhejiang, Jiangsu, Fujian and Guangdong the five most advanced eCommerce regions in China (China Internet Watch). During 2015’s Singles Day, the first three accounted for 25% of the country’s sent packages, and 50% of the country’s received packages.

In contrast, the least-developed provinces are Gansu, Qinghai and Tibet.

Top Markets For Inbound Goods (2016)

53.9%US

45.7%

Japan35.3%Korea

A DEVELOPED CROSS-BORDER ECOMMERCE SECTOR

According to iResearch, Chinese cross-border eCommerce is expected to grow by 64%, up from nearly US$18 billion, between 2015 and 2018 – reaching 7% of the country’s total eCommerce market. The top 3 countries Chinese purchase cross-border from are the US (53.9%), Japan (45.7%), and Korea (35.3%).

However, while China’s cross-border eCommerce scene is still rich in potential, new and increasing government regulations may present unforeseen challenges. New entrants are advised to have contingencies in place against changes in market dynamics (Oliver Wyman).

SOURCES:A.T. Kearney, Boston Consulting Group, China e-Business Research Center, China Internet Watch, eMarketer, Forbes, iResearch, McKinsey, Nielsen, Oliver Wyman, We are Social

Want to learn more about how SingPost eCommerce can support your online business in China and the Asia Pacific region? Contact biz@specommerce.com

338million

households trillion worth

$6.5USD

SINGLES’ DAY

2016

43.39%

Alipay

43.39%

Tenpay

15.44%

UnionPayMerchantServices

24.22%

Others

50.4%

20.7%

5.4%2.3%

5.7%

ConsumerElectronics &

Appliances

30%of total

retail sales

Apparel

~60%bought online

25%of China’s sent

packages

50%of China’s received packages

on Singles Day 2015

JiangsuZhejiangShanghai

ECOMMERCE MARKET VALUE AND GROWTH POTENTIAL

China’s eCommerce market growth remains solid, and is expected to top USD $2.416 trillion in 2020 (eMarketer). The country accounts for almost half of online retail sales worldwide.

Worldwide Retail eCommerce Sales2015-2020

WORLD’S LARGEST INTERNET POPULATION

As of 2016, China is home to 680 million active Internet users (49% of population) who spend an average of 3 hours and 24 minutes online daily (We Are Social). This is expected to increase further with the spread of government-subsidized Internet access in rural areas.

daily Internet consumption

3 hours24 minutes

49%Internet

penetration

680 active Internet

users

million

A HIGHLY SOCIAL NATION

Mobile is a key enabler of social media usage – 42% of Chinese are active mobile social users (We Are Social). As of 2016, there are 653 million active social users in China (47% of the population) who spent an average of 87 minutes on social media daily. Local platforms dominate the social space, with WeChat and QZone leading the market.

According to a 2016 McKinsey survey, social media is now a significant force among Chinese consumers for both researching and making purchases. Businesses need to be in the social space and leverage on key opinion leaders.

Key Social Media Platforms (2016)

China US Other

35.0%

22.2%

42.8%

32.3%

20.7%

47.0%

29.9%

19.4%

50.7%

27.5%

18.3%

54.1%

25.5%

17.6%

57.0%

23.6%

16.9%

59.5%

2015 2016 2017 2018 2019 2020

657millionpackages

37%purchases

frominternational

brands

$17.8billion

USD

82%sales onmobile

Blogging and media sharing social network

Text messaging, video and voice chat network

Text messaging, video andvoice chat network

What Chinese Online Shoppers Buy(China Internet Watch, 2016)

Quality-Conscious

MaleShoppers

FrequentFemale

ShoppersConcerned about quality and variety

YoungShoppers

Shop via keyword searches and social media

High-Income

ShoppersShop via keyword searches and social media

Concerned about price and credit

Middle-Aged

ShoppersPrefer shopping from home

Middle-Aged

ShoppersUse fewer shopping apps