China Digital Byte series
A new era in buying
Retail in China's digital age
Opportunities are ripe and plentiful
China's retail economy is booming and is set to reach RMB 32 trillion
(US$5 trillion) by the end of 2015.
China has the most rapidly growing consumer market in the world with
millions of people entering the middle class every year and has the most
mobile-centric population in the world (75% of internet access is over
mobile in China). At the end of June 2013, the Chinese online population
swelled to 591 million and is expected to reach 800 million by 2015. All of
these trends strongly indicate to retailers that their future success will be
defined by their approach to e-commerce and digital in an omni-channel
China's e-commerce industry is burgeoning thanks to third party digital
marketplaces that have made it very easy for the Chinese online shopper to
buy (e.g. Taobao, TMall, Jingdong). PwC's recent multi-channel retail report
highlights that 80% of consumers surveyed shopped online at least once a
week, tending to buy products directly from brands or manufacturers
through these online platforms.
Chinese online giant Alibaba Group leads the e-Commerce market with a
market share of 88% for C2C and 48% of B2C, with its Taobao and TMall
sites exceeding RMB 1 trillion (US$160 billion) in sales, making them the
largest e-commerce marketplace operator in the world.
The success of Taobao and TMall is partly attributed to its online payment
platform – Alipay – which gives its customers a seamless, convenient,
purchasing experience without the need to enter their credit card
information. Another attribute to their success is AliWangWang - an instant
messaging service that enables direct communication between online
shoppers and sellers which creates a reliable platform for both parties to
establish a trustworthy transaction.
Retailers, on the other hand, find themselves out in the cold with only 10%
of total transactions taking place between themselves and shoppers,
through either online pure-pay portals or brick-and-mortar businesses on
their own portals.