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China set to top online market

China set to top online market

Write: Yejide [2011-11-24]

China is expected to overtake the United States as the world's largest e-commerce market by 2015, according to a report released by the Boston Consulting Group (BCG) on Tuesday.

The country's e-commerce market is projected to grow at a compound annual rate of 33 percent to reach more than 2 trillion yuan ($314 billion) in transaction value by 2015, and the number of e-commerce shoppers will grow to 329 million during the same period, said the report.

China had 485 million Internet users by the end of June, of which 142 million shopped online, according to figures from the China Internet Network Information Center.

China set to top online market

"The affordable and widely available Internet across the country, the rapid growth in the number of Chinese consumers shopping online, and the relatively low cost of logistics are driving the growth of China's e-commerce industry," said Waldemar Jap, a Hong Kong-based partner at BCG and one of the primary authors of the report.

In 2006, less than 10 percent of China's urban population shopped online. That figure had jumped to 23 percent by 2010 and will nearly double to 44 percent by 2015, BCG estimated.

"There will be an astounding 30 million first-time Chinese consumers shopping online on average every year until 2015, making the total number of e-commerce shoppers hit 329 million," said Jap.

In addition, the e-commerce market will account for 7.4 percent of the nation's total retail value in 2015, jumping from 3.3 percent currently, said the report.

"In the US, it took 10 years to achieve that growth," said Jap.

Total sales of consumer goods jumped 17.2 percent year-on-year to 1.65 trillion yuan in October, while sales in the first 10 months hit 14.74 trillion yuan, a rise of 17 percent from a year earlier, the National Bureau of Statistics said on Nov 9.

According to the BCG report, China's e-commerce market has benefited from low transportation costs but has been impeded by an inadequate delivery infrastructure. That situation has resulted in online shoppers regarding delivery of their orders as their top concern.

At present, the logistical cost of e-commerce in China is an average $1 to ship a parcel weighing 1 kilogram, compared with $6 in the US.

Youchi Kuo, a Hong Kong-based project leader at BCG's China Center for Consumer Insight, said some Chinese e-commerce companies such as Taobao.com and 360buy.com have already responded to consumer concerns about delivery by making massive investments in distribution centers nationwide.

Taobao.com's parent, Alibaba Group Holding Ltd, announced earlier this year that it will invest between 20 billion and 30 billion yuan to build a nationwide network of warehouses over the next three to five years in a bid to improve logistics.

"Chinese online shoppers are not just concerned about cost or the risk of damage during delivery. An incredible 45 percent of surveyed consumers said they worry that their purchases will be swapped for fakes in transit," said Kuo.

The BCG report was based on a survey of more than 4,000 online shoppers across China.