Market report: E-Retail in China

25Dec2012

In China, words like online purchasing, Internet, B2C, C2C and B2B are already prevalent in people’s daily lives. The increasing popularity of internet in mainland China, the maturation of goods delivery services and the rise in the varieties of goods all make online shopping a growing fashion trend in China. By the end of 2011, there were already over 51 million netizens in mainland China, and over 19 million people have online purchasing experience.

According to a news conference held by China E-Business Research Center, the total trade volume of China’s e-commerce reached 5,000 billion yuan, a year on year growth of 13.7%. And the trade volume of online retailing reached 760.9 billion yuan, with a extraordinarily large year on year growth of 34.5%.

In the first half of 2012, e-retail in China continued to grow despite the slowing trend of the economy as a whole. According to Suning(苏宁), its increase in profits were almost all attributed from the e-retail sector. According to the estimates by the CNNIC (China National Network Information Center), the trade volume of e-retail in the second quarter of year 2012 was about 250.3 billion yuan, a year on year growth of 41.1%.

E-retailing challenging traditional brands in clothing market

According to the Vancl(凡客) website, its most important product for this coming winter is super light down jackets, which are priced at only 199 yuan. This is attracting much attention. Since e-retailing exempts people from geographic restrictions and provides customers with lower prices due to lower storage costs, more and more consumers are choosing to purchase their clothes online. Due to the slowing economic growth in China this year and the influence from the changing exchange rates, other big traditional brands such as ZARA, H&M, and UNIQLO all lowered their prices to respond to challenges brought by China’s domestic brands and their growing e-retailing sectors.

China’s big retailing companies expanding their business online

E-retail in mainland China has great potential and companies must take advantage of it if they want to see significant growth in the Chinese market. According to the estimates by the Ministry of Industry and Information Technology of China, by the end of the twelfth ‘five year plan’, e-retailing will account for about 9% of the country’s total retailing volume, reaching about 3,000 billion yuan.

According to a report by China Chain-Store & Franchise Association on traditional retailers’ attempts to set up online businesses, 59 of the top 100 retailers in China have started e-retailing business as of June 2012. These companies include some very well-known brands such as Gome(国美), Suning(苏宁), Yintai(银泰), Baisheng(百胜), Bailian(百联) and Tianhong(天虹). Among these 59 retailers, 26 are department stores, and 22 are supermarkets.

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