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China’s e-commerce market to reach US$718 billion in 2017

Nurdianah Md Nur | Nov. 13, 2014
Reports recommend retailers to adopt mobile commerce and social commerce, as well as to solve the lack of high quality logistics provider problem to benefit from the expected growth.

The Chinese e-commerce market will grow at annual rate of 25 percent to reach US$718 billion in 2017, predicted management consulting firm A.T. Kearney.

With the Chinese consumers' voracious appetite for online shopping, China is well on her way to meet that projection. For instance, Alibaba reported US$2 billion in sales within the first hour and 12 seconds of its 11.11 Shopping festival. Also known as Singles' Day, the 11.11 Shopping festival is a 24-hour online sale held on 11 November annually, which is similar to Cyber Monday and Black Friday in the United States .

Drivers of e-commerce in China
According to A.T. Kearney's study called China's E-commerce Market 2014: The Logistics Challenges, there are three factors driving China's e-commerce market.   

The first is increasing purchasing power. While personable disposable income per capita in China reached US$3,000 in 2013, the consulting firm expects it to rise to more than US$5,000 in 2018.

The second is increased online security. The study found that consumers are more confident to shop online after e-commerce sites in China began tracking and publishing credibility records of online sellers to reduce the risk of fraud.

The third factor is the high number of Internet users. As China has 600 million Internet users, e-commerce sites have a wide pool of consumers to target.

Future of e-commerce
Given the surge in mobile penetration and upgrades to mobile network connectivity, software company hybris expects consumers to prefer using their mobile devices to PCs to shop online. According to hybris' State of Ecommerce in China report, mobile commerce is expected to reach 1 trillion yuan (USD$163 billion) by the end of 2017. Retailers should thus develop a mobile-focused strategy to leverage this trend, advised hybris.

hybris also recommended retailers to have a social commerce strategy. This is because millennials in China are found to be greatly influenced by reviews and advice on social media sites such as Sina Weibo. "Chinese consumers are now more digitally connected, socially networked, and better informed than ever before," said Burghardt Groeber, hybris software's vice president of Greater China. "As China's retail world rapidly swings towards multi-channel formats, consumers will expect these interactions to happen seamlessly, with each new interaction personalised in the context of the last one. It is thus essential that local retailers, or those who are looking to gain a foothold in this burgeoning market, ensure that they deliver harmonised experiences to help attract, retain, and grow a profitable customer base."

Logistic problems hindering e-commerce growth
A.T. Kearney's study also revealed that the lack of high quality logistics providers in China is causing a headache for e-commerce firms.

 

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