China has made great strides in catching up to the level of industrialization in other major economies and has become the world’s second-largest e-tail market, with estimates as high as $210 billion for revenues in 2012 and a compound annual growth rate of 120 percent since 2003. In point of fact, most (about 90 percent) of Chinese online ecommerce happens on digital marketplaces, mega sites similar to eBay or Amazon. Contrasting what’s happening in China is the online retail in US, Europe and Japan. With this kind of explosive growth, China’s e-tail business is poised for continued exponential growth.
When it comes to retail, no sales channel is growing faster than e-commerce. Online sales continue to gain traction, enabling retailers to not only grow but to increase customer loyalty. And e-commerce is no longer restricted to developed markets such as the U.S. and UK; it is a global phenomenon.. The rapid path from retailing to online ecommerce is encouraging consumption and reshaping the industry. Online ecommerce is only one of many drivers that will contribute to China’s new model for economic growth, but it assumes larger significance as a new source of comparative advantage in the world.
By analyzing consumption patterns in 266 Chinese cities accounting for over 70 percent of online retail sales, we found that a dollar of online consumption replaces roughly 60 cents of sales in offline stores and generates around 40 cents of incremental consumption. In an economy known for astonishing growth, e-commerce stands out. Such businesses are also leveraging their broad access and widely recognized brands to expand their role in the financial-services sector. After all, they are the homes of Amazon, Apple, Facebook, Google, Intel, Microsoft, and Samsung – companies whose innovations transform the way other sectors, from financial services to telecoms and media, do business.
Other emerging markets are likely to follow a similar course. Chinese online merchants are already using their advantages in exporting products from the country’s factories to expand internationally. And enterprises in other countries are adopting a similar online business model. The ability afforded by online marketplaces to new players to attain national – and international – prominence without massive upfront investment will profoundly affect how retailers and manufacturers approach new consumer markets. Customer Services – e-Commerce puts additional burden on managing a good customer services. Also good customer services are one of the key success factors for any decent e- Commerce operations.
Moreover, China’s manufacturing sector is seen as an important factor in generating consumer pull as the nation’s factories can provide highly diverse merchandise. China is on an upward trajectory with economists estimating that by 2015, China will overtake the U.S. Gross National Product (GNP) to become an economic powerhouse. It has a booming consumer economy and rapidly growing middle class, and this is why merchants are starting to target China. From an online perspective, below are just a few stats why China is the new online target market:
• 485 million Internet Users projected to grow 69% to 700 million by 2015 (approximately double Japan and the U.S. combined).
• Currently, 185 Million Online Shoppers (already more than in the U.S.).
• Online spending projected to increase 15% annually through 2015 (double the rate of increased consumer spending).
• 44% of China consumers shop on websites from overseas.
Awepay can provide merchant accounts to both merchants in China as well as merchants targeting China consumers. To find out more, please contact us.