- About Us
- Client Service
- Priority Service Lines
- Insights & Publications
- Contact Us
China already has almost 200 million online consumers. And it’s just getting started.
Liu Xiang is one of China’s richest and most popular athletes. Not to stretch a metaphor too far, perhaps that is because the Olympic champion embodies two characteristics of modern China. Liu is fast (a world record holder) and his specialty is leaping over hurdles. Which brings us to China’s e-commerce market.
The first thing to know about it is that it is growing very fast, almost doubling in size, year after year, as tens of millions more people join in. There are already about 190 million online consumers (more than in the US). By 2016, we estimate that there will be 351 million online shoppers in China, ringing up 2.2 trillion renminbi (US $3.48 billion) in revenues. At that point, Internet penetration will be 80 percent in the cities, and China will surpass the US as the world’s largest Internet retail market.
The key to this growth is simple: Once Chinese consumers try online shopping, they tend to like it and become repeat customers; only 6.2 percent shop once and are then done, according to industry research. In 2011, almost 85 percent of online shoppers said that online buying was as good or better than offline. That explains why, in all the major categories we looked at, we see online market share rising strongly —from 7 percent of apparel sales in 2010, for example, to perhaps 20 percent by 2016; from 13 percent for consumer electronics to more than a third (see Exhibit 2 in PDF). As consumers get more experienced with click-through shopping, they are buying a wider variety of things online
Typically, apparel is the first item people buy online, then they extend their range into home improvement, books, and consumer electronics. They also start clicking well beyond Taobao, a platform for online businesses that is China’s largest online shopping portal by far (2011 revenues: $85 billion). About 95 percent of Taobao consumers first used Taobao, and then became willing to try out other sources. And finally, mobile shopping is emerging, including the use of mobile coupons; 15 percent of online consumers have actually used them and two-thirds of the rest say they are willing to try.
According to conservative estimates, the online retail market growth rate is three times that of the retail market, driven in large part by rising incomes outside the Tier 1 cities (Beijing, Guangzhou, Shanghai and Shenzhen). Add in a rapidly developing secondary market and an ever-expanding product mix, and it’s clear that fast growth is not a thing of the past, but also the future.