The Chinese E-Commerce Dragon

E-commerce in China is growing at almost 30% per year, much more quickly than the economy overall, and is projected to exceed even American e-commerce in value by 2015. With e-commerce representing a rapidly increasing share of the Chinese economy, it makes just as much sense to focus on online sales in China as it does in the United States.

One of the factors contributing to the spectacular e-commerce growth is the low cost of broadband internet access, just $15 per month, and there are already 145 million people in China online.

The Taobao online marketplace, owned by internet trading giant Alibaba, has set the pace in Chinese e-commerce with a stunning average 48,000 products sold per minute. Taobao is a customer-to-customer marketplace where any individual can sell products, the equivalent in many ways to eBay or TradeMe.

In analysis of Chinese Internet shoppers the group often highlighted are the people referred to as ‘heavy users’, those who spend over NZD$2,000 per year online. While this group accounts for just 14% of online shoppers they represent 40% of the total spend. Typically these users are under 35, upwardly mobile and have been online for four or more years. They want quality products and are not afraid to spend money to get the genuine article.

A characteristic of e-commerce in China that might surprise foreign readers is that in a recent survey the biggest concern expressed by Chinese online shoppers was the risk that the product they receive might not be genuine. This is just not a case of fakes being passed off as originals on dubious websites; there have been many reported cases of fakes being exchanged for original products somewhere in transit between vendor and customer. Reliable delivery all the way to the door remains one of the biggest challenges to be faced in selling online to customers in China.

At the other end of the delivery-service spectrum, the Taobao CEO said last year his goal was to be able to deliver products to customers in just 8 hours from the time of online order. There’s a service level in stark contrast to that provided by your average kiwi online seller!

I will be in China in coming weeks working to extend our sales and marketing capabilities there. Contact me at [email protected] if you would like to discuss how we can help your products reach customers in China.

 

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