Chinese shoppers might be the future of global consumerism, but China’s own retail future is digital.
The country’s e-commerce market is on track to top 2 trillion yuan, or $314 billion at current exchange, and possibly surpass the U.S. market by 2015, according to a report from The Boston Consulting Group titled “The World’s Next E-Commerce Superpower.”
“Companies that do not have an active e-commerce strategy are allowing a fast-growing channel to develop without exerting any control or influence over the process,” said the report, which is based on surveys with more than 4,000 online shoppers in cities of various size across China.
The number of people shopping online in China is growing rapidly. Forty-four percent of China’s urban population is expected to shop online by 2015, up from 23 percent last year and less than 10 percent in 2006.
E-commerce is expected to make up 7.4 percent of the country’s total retail market in 2015, up from 3.3 percent currently. By contrast, the Commerce Department said last week that U.S. e-commerce sales were 4.6 percent of all retail sales in the third quarter.
The Chinese online market grew quickly as the government sought to boost telecommunications capacity, escrow accounts eased payment concerns and firms took advantage of shipping costs about one-sixth of those in the U.S. For now, the market is dominated by the Amazon.com-like Taobao.
As in most other things, China’s sheer size sets it apart from other markets around the world and changes the dynamic considerably. And China’s online market could continue to grow geometrically.
The Boston Consulting Group report predicted there would be 365 Chinese cities with at least 100,000 consumers in the middle and affluent classes by 2015. By contrast, China’s largest retailers, Gome and Suning, have stores in only about 260 cities and Wal-Mart has stores in fewer than 120 cities.
“China is unusual in that Internet access has far outpaced the reach of the top physical retailers, which could mean that its e-commerce development will not necessarily mirror the pattern in other countries,” the report said. “It could progress as much as the country’s mobile phone industry has. China has more or less bypassed the landline phone system, leapfrogging from one phone per village to nearly one phone per person — and most of these are mobile phones.”
That means the country could leapfrog retail development and go right to a heavy reliance on e-commerce, the report said.