China set to unseat US as top e-commerce market

PUBLISHED : Monday, 05 March, 2012, 12:00am
UPDATED : Monday, 05 March, 2012, 12:00am


China will overtake the United States as the world's largest e-commerce market next year, when its annual online sales hit 1.5 trillion yuan (HK$1.85 trillion), according to global consultancy Bain & Company.

At that point, online sales in China would represent as much as 7 per cent of the country's total retail sales, versus a 3 per cent share of the total last year.

Growth in online sales would be fuelled by an expected increase of more than 60 per cent in the total number of online shoppers and a projected 40 per cent or more surge in their spending, Bain said. Currently, consumer-to-consumer (C2C) shopping portals such as take 80 per cent of China's online market share, compared with the 20 per cent take by business-to-consumer (B2C) sites.

'An explosive B2C growth is under way, fuelling the expansion of China's entire e-commerce industry,' said Serge Hoffmann, a partner at Bain and author of the report. 'Many big traditional retail names are gearing up to seize the opportunity, including Wal-Mart.'

Wal-Mart, the largest supermarket operator in the world, announced last week it had taken a controlling stake in Shanghai-based shopping website, a move to test the waters in the fast-growing e-commerce sector on the mainland.

A survey conducted by Bain found that more and more Chinese shoppers are shifting online for the sake of convenience and variety, although price is still the primary motivator. Around 19 per cent of 600 respondents said convenience was the most important reason for them to purchase goods on the internet, and 15 per cent pointed to variety as the major reason.

According to the survey, the most popular categories for first-time online buyers are electronics, apparel, and groceries.

Around 40 per cent of shoppers in first- and second-tier cities plan to increase their spending this year. Nearly half of the respondents decide where to shop online largely based on word-of-mouth recommendations and search engine results.

Despite increasing competition from B2C retailers, the overwhelming leader,, is still one of the fast-growing players. The site is using its 370-million-user base to feed traffic to Tmall, its entry in the B2C market, which it hopes to build into China's largest B2C site.