Online shopping in China is booming.

According to PricewaterhouseCoopers (PwC), since two years ago, China has replaced the US as the world’s largest e-commerce market, with a market value of $306 billion. Just the sales figure of Alibaba (taobao.com) alone is equal to the entire US online selling.

By the end of 2013, there are around 8 million stores on Taobao.com selling nearly 800 million different products, ranging from helicopters to cotton shoes handcrafted by village grannies.

Ele.me, an online food delivery service, is expanding rapidly across the country. About two weeks ago, the company raised $350 million from both Chinese and U.S. investors.

E-commerce in China and the US

Chinese today are perhaps the world’s No.1 online shopaholics, willing to buy virtually anything online, from furniture to food, not just for cheaper prices but for great convenience.

Factors that Contribute to China’s Fast E-commerce Growth

There are many factors that drive China’s e-commerce development, and the followings are just some of them:

• The first and foremost factor is of course the growing use of smartphones across China that helps e-commerce to connect online and offline (O2O) services. By now China is making more online purchases and payments using mobile devices than the US;

• The second is China’s tradition to work beyond a nine-to-five Mon-to-Fri routine. In China, most stores, including post offices and banks, are open 7 days a week. In fact, commercial activities are much more thriving at night and over the weekends than the normal office hours;

• Thanks, at least partly, to such a working tradition, China’s online shopping delivery service is the best to none in the world. Many goods are delivered within 24 hours of online purchasing (including weekends), and often free of charge, and always to buyers’ doorsteps;

• China’s huge labour force, in particular, the so-called “peasant workers”, also helps. In the past, most of “peasant workers” would primarily seek a job in a construction site. Now as property development slows down, there is a vast human resource pool for the online delivery industry to draw upon;

• The final but not the least contributing factor is the growing ownership of the motor vehicle in China, that have equipped many job seekers to take up delivery work.

Problems with Online Shopping in China

China’s speedy growth of e-commerce does not come without a catch. According to the data released by China Consumer Association, of 20,135 complaints that the organisation received, 92.28% are related to e-commerce, with telecommunications products, clothing and motor vehicle parts topping the list.

A recent survey conducted by a Chinese media asked the following question to online shoppers: how often were you unhappy with the products purchased online?

Nearly half of the respondents admitted that they found the quality of products was not to their satisfaction 1 in every 5 purchases, with further a quarter cited they were unhappy at least 1 in every 20 items they bought online.

Among all online complaints, half are related to copycat problems (blue column).

On the other hand, Chinese online shoppers’ attitudes towards poor products are not helping resolve of the problems. The survey found, when they purchased a fake or poor-quality product, instead of seeking for refund or repair, 40 percent of the respondents would just leave the issue behind and try another online store next time.

The new Chinese consumer regulation now allows unconditional money back within 7 days if purchased online. However, with the hassles to go to a post office or find a courier to send the item back at their own cost, how many online shoppers will bother to take advantage is still uncertain.

Outlook for China’s E-commerce Development

Despite being the world’s largest online shopping market, the potential of China’s e-commerce may still yet to be fully leashed for the following reasons:

• With a less developed retail network in China’s numerous small cities and county towns, the need for e-commerce from these backward regions is huge. A Taobao report reveals that in 2012, online purchases from small cities and towns were 3.6 times more than from large cities.

• A study by Dutch AC Nielsen has discovered well-educated Chinese young males are online stores’ most faithful patrons. As the younger generation born in the 90s and even 00s starts to grow more purchasing power, the demand for e-commerce in three to five years could be doubled or even tripled.

PWC predicts China will overtake the US to become the world’s largest retail market by 2018, with an expected market value of about $10.3 trillion, which is twice as what is projected for North America.

References: 

· finance.people.com.cn
· reuters.com
· v5.ele.me
· rt.com
· ce.cn