Ask a Chinese consumer about shopping, and 45% will instinctively think about doing it online. A typical online shopper in China shops online three times more frequently than the global average according to PWC research.
Although many have heard the buzz around China’s massive eCommerce numbers such as the 417 million shoppers spending $250bn a year (AU$348bn);
the $14.3bn spent in 24 hours on Single’s Day and the 1.7 million
logistics staff who delivered them. But it’s not until you are on the
street in China and experiencing it, that you truly appreciate it.
Consumers in stores, in offices, on public transport and almost
everywhere are constantly on their smartphones perusing products and
reviews. City streets are crowded with fully-laden delivery men on
electric bikes, and office foyers and workstations are piled high with
packages bought online.
The world’s largest eCommerce market
didn’t happen by accident, there are a series of interrelated factors
that have driven China’s soaring adoption of online shopping:
1. Retail infrastructure
On the surface, many Chinese cities look sleek and modern. But
scratching the surface, you will find retail infrastructure
significantly less developed that in Western countries. Retail in China
has developed regionally, with a large portion of retail being ‘Mom
& Pop’ stores, contributing to a very fragmented retail environment.
In America, the top-100 bricks & mortar retailers account for 57%
of total retail spend. In China, the top-100 are less than 8%, meaning
there are few retailers that come close to nationwide coverage.
eCommerce, on the other hand, accounts for 12-16% of total retail
depending on whose estimates you use. Alibaba’s platforms account for
around 80% of total spend, meaning its share is greater than the top-100
physical retailers alone.
eCommerce’s growth has been supported by significant investment in
logistics from partners. Although they still have some way to come,
seven cities can expect same day delivery and 88 next day delivery
through Alibaba’s partners. China’s second-most popular platform JD, has
213 warehouses in 50 cities, and in total 5,367 delivery stations and
pickup stations. Infrastructure is now so advanced, that someone in
Shanghai can order Oregon cherries and receive them within 24-48 hours
of being picked – faster than someone in Florida.
China’s mobile infrastructure and usage has probably been the biggest contributor to eCommerce growth, with more than 90% of all online Chinese connecting through their mobiles. The ability to shop, simply, from anywhere means that more than half of all online sales now happen through a mobile. More