Partner Article

China's entrepreneurial e-commerce economy

Last week we broke the news about a very exciting development in Ve Interactive’s growth - the opening of our Ve China office in Shanghai. China is the world’s fastest growing emerging market and unofficially the largest economy on the globe, with a theoretical market of 1.5 billion people.

Whilst the general consensus is that 2013 will not provide the economic upswing we all hope for from the Eurozone, China’s emerging economies are slated to potentially drive global growth, albeit cautiously. The country still faces substantial risk because of environmental issues, corruption and debt.

However, it’s certainly a region of tremendous boom where e-commerce is concerned. In the first half of 2012, Chinese online shopping hit $80bn in sales, according to a research firm in Hangzhou. And the Chinese Government projected this month that the country’s Internet population will soar to 800M users by 2015. To give this further context, on Cyber Monday 2012, 129M Americans logged on to shop online. In China on the same day, the number was 213M…

It’s therefore no suprise that China’s online retail market is at the top of the E-Commerce Index (2012 GRDI), as the country’s infrastructure continually improves and online purchasing behaviours evolve. With the largest online population in the world, its 242 million online shoppers are drawn in by lower online prices, promotions, and free shipping on transactions over a certain price. Infrastructure issues are China’s biggest challenge; only 42.1 percent of citizens use the Internet, primarlity because of a large rural population.

Here’s some interesting stats on Chinese netizens in 2012:

Total Internet population: 564M (TechWeb)

Internet penetration rate: 42.1 percent (TechWeb)

50.9M new users logged on in 2012 - (China’s Web registry regulator - Chinese Internet Network Infornation Center - CNNIC)

Mobile Internet users: 420M - (CNNIC)

Blog users: 309M - (CNNIC)

Online shoppers: 242M - (CNNIC)

Consumer electronics and apparel are the two most popular categories. Apparel attracts more than half of all online shoppers (both men and women) in metropolitan areas, a higher percentage than in the United States. (GRDI)

Beauty is also popular, as almost half of women online buyers in China’s big cities purchase beauty products online (GRDI)

The Chinese e-commerce boom is also birthing hunderds of courier firms, some of which have built a national prescence too. The quality of China’s transportation infrastructure varies outside of its metropolitan hubs, inhibiting deliveries. In tier 1 and tier 2 cities, online retail purchases are typically delivered by couriers, which are price-competitive with high-end express services offered by FedEx, UPS, DHL, and EMS.The $80bn spent online in the country during the first half of 2012, generated $6bn in revenues for these express mail firms, but the attention on this has back fired. Postal officials have proposed a tax on courier companies, that could fetch up to $160M in the first year. They claim that this would subsidise the cost of them delivering mail to remote regions. According to the Beijing Times however, this proposal has not been popular with the courier companies who are objecting.

Ve Interactive’s expansion into China joins the push of fellow British companies Marks & Spencer, (who are rolling out an e-commerce site for that region) and Net-a-Porter (who bought high-end fashion e-commerce site Shouke for £6.6M, relaunching it as theoutnet.cn for the Chinese luxury market). Retail expansion is increasingly occuring through online channels as a way to tap into growth markets, build brands and learn about consumers, while investing less capital than traditional formats. Chinese e-commerce already accounts for nearly 5 percent of total retail sales, almost the same as the United States.

And the advantage e-commerce retailers have in China? Physical retailers are highly fragmented, inefficient and barely visible outside of the big cities, so potentially e-commerce could overtake them in strides. And Ve China is now on the ground to support them with our multi award-winning basket abandonment, remarketing and optimisation software & services.

This was posted in Bdaily's Members' News section by Kathy Heslop .