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E-Commerce Trends in China: By the Numbers

A presentation by Mary Ransom of Borderfree shows that while the potential for sales is huge, e-commerce is still in its infancy in Mainland China.

NEW YORK — E-commerce sales in Mainland China may be growing, but the actual order submission rate is still just 10 percent.

 

And while the 5 biggest apparel retailers in China control just 9 percent of the market, that’s compared to the top 5 in the U.S. controlling 24 percent of the market.

Those are just two data points noted by Mary Ransom, senior vice president at Borderfree, at her firm’s presentation Thursday morning on “China E-commerce Trends” at the Andaz Hotel here.

As for other categories, the top five largest retailers in health and beauty hold just 3 percent of the online market share, she said. Apparel and accessories represent 80 percent of sales in China through Borderfree’s shopping service. The service allows consumers to buy at an international brand’s site, but with the Borderfree interface that automatically does currency conversions and is in the language of the country where the consumer is located, as opposed to going directly to the brand’s home site, where consumers do their own currency conversions.

Shirts and tops rank first, followed by dresses, shoes, outerwear, pants and handbags in top categories for sales year-to-date, but when calculated by units sold, more shirts and tops were sold than any other category, followed by dresses, pants, shoes, outerwear and then handbags.

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The top brands sold online occupy the luxury space, such as Gucci, Michael Kors, Tory Burch, Giorgio Armani, Kate Spade, Marc Jacobs, Prada and Stella McCartney.

Ransom culled data from a variety of sources, including proprietary information from a test partnership with Tmall.

By demographic, 63 percent of online consumers are male, with the average age range for those who did the most shopping online between 18 and 30 and an income range of between 1,000 and 3,000 yuan a month, or $163.16 to $489.48 at current exchange.

Data also showed that retailers need to modify specs for apparel because consumers in China require a smaller fit. The average waist size for a male in the U.S. is 37 inches, but it’s 31 inches in China. For a female, the average is 34 inches in the U.S., but 28 inches in China. And while the average height is about the same for males and females in the U.S. and in China — 68 to 69 inches for males and 64 inches for females — that’s not the case for weight, which averages 191 pounds for U.S. males compared with 145 pounds for Chinese males and 155 for U.S. females and 125 pounds for Chinese females.

Chinese consumers also want detailed images for sizing when shopping online, and instant chat, at 58 percent, is the preferred method for customer service interaction, Ransom said.

Nearly 60 percent of Chinese Internet users are active on social networks, such as Qzone, Sina Weibo and WeChat/Weixin. Many of the top international brands have a presence online for information gathering, and do not yet have e-commerce capability. The beauty firms are the most advanced in terms of knowing how to position their brands, with Estée Lauder ranking first for its digital IQ, according to L2, a think tank focused on digital innovation. Lauder has a presence on six Chinese social platforms and 1.6 million fans.

While there’s the potential for $182 billion in e-commerce spending in China from 1.3 billion consumers, with at least 512 million Internet users and at least 100 million new middle-class and affluent households over the next few years, the reality is that average per capita income is $3,504, Ransom said. The average spend on apparel per year is a mere $144, and while there’s more than 70,000 B2C sellers on Tmall, the average earnings before interest, taxes, depreciation and amortization margin for independent retailers is a negative 4 percent. Tmall is the largest B2C platform in China, with more than 500 million registered users and 40 million unique visitors a day. Brands such as Adidas, Uniqlo, Gap, Nine West and Olay have a significant storefront presence on the site, according to Ransom.

In contrast, Alibaba is the top e-commerce marketplace at 76.7 percent, beating out JD.com at 5.1 percent. Amazon’s site in China, which is fifth among the top five, has a 0.8 percent market share.

Year-over-year merchant sales in China grew 167 percent, but the year-to-date submit rate — the purchase carts that were started at a site that actually resulted in a placed order — is 10 percent.