Between 2005 and 2016, China’s retail ecommerce transaction value increased from 1% to 42%, surpassing the rest of the world.
“The Chinese ecommerce market is booming, with more than 20% growth expected for the online B2C market in the coming year,” says Stefanie Ros, director of Dr2 Consultants Shanghai.
The Chinese ecommerce market’s success stems from factors including government support, the growing power of the middle class, increasing hi-speed network access and rapid adoption of new technology. For example, China’s leading payment system’s processing capacity is three times that of US online payment systems. While the number of Chinese online shoppers has been increasing steadily since 2009, the growth rate is slowing down.
Chinese online shoppers are increasingly moving from PC to mobile; in 2011, 98.5% of consumers shopped on PC, decreasing to 45.1% by 2016. “With 61.8% of all transactions occurring via mobile devices, Chinese consumers are much more tech-savvy than their American and European counterparts,” comments Ros.
Cross-border online purchasing is also increasing every year, making up 5.5% of online retail sales in 2017. The US is the most popular shopping destination, attracting Chinese consumers with quality and brands. David Zhou, CEO of Rkylin Ecommerce, identifies “the logistics system, payment system, internet and mobile networks” of other countries as challenges for cross-border ecommerce.
Another challenge for online retailers is cultural differences between China’s regions: “For example, some regions in China might have a lower consumption rate, but consumer loyalty is much higher. The various regions in China differ greatly in terms of ecommerce consumer demand and ecommerce business models,” explains Prof. Tang Bingyong, Chairman of China Cross-border E-Commerce Application Appliance.
56% of China’s online shoppers find the potential discrepancy of product size and colour a challenge, making it the greatest challenge followed by poor customer service and non-existent or overly complicated refund policies. In China, quality of goods is more important than price.
Moving forward, domestic enterprises need to build trust with consumers through increased transparency, better quality product information and improved customer services.
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