China’s slowdown to only 6.9% growth in gross domestic product in 2015, one of the lowest increases in decades, has been blamed for hurting the economies of trading partners in other countries. But China’s growing middle class keeps buying more online, and its thirst for foreign goods creates a big opportunity for overseas retailers and brands.
Chinese consumers purchased $589.61 billion worth of goods online in 2015, an increase of 33.3% from a year earlier, according to the National Bureau of Statistics in China. By comparison, U.S. online retail sales grew roughly 15% per year from 2011 to 2014 to $304.9 billion, according to the U.S. Commerce Department.
China’s 500 largest e-retailers grew their combined online sales by a stunning 60% in 2015 to $198 billion, according to the all-new Internet Retailer 2016 China 500, which ranks and provides a wealth of financial and operating data on the 500 leaders of the world’s largest and fastest-growing e-commerce market. And the data contained in Internet Retailer’s newest research report on e-commerce in China shows that the world’s biggest online market is rapidly consolidating, with the 500 largest competitors now controlling 33.6% of China’s e-retail market, up from 28% just one year ago.
Retailers and brands based outside of China shared in that growth. The 52 U.S.-based retailers ranked in the China 500, for example, grew online sales 24.3% to $17.77 billion last year—the bulk of that coming from Chinese customers. The 79 retailers based outside China, including those in the U.S., grew sales by 24.0%, to $21.31 billion in 2015.
The growing online retail sales for brands and retailers based outside of China is not surprising given the strong demand among middle-class Chinese for foreign goods, from Apple Inc. iPhones to food and household goods from Wal-Mart Stores Inc. Alibaba Group reported that 33% of Chinese consumers bought items from international brands during the 24-hour Singles’ Day event Nov. 11, with U.S. goods in the top spot. Singles’ Day is a marketing initiative that Alibaba created to spur single consumers to buy goods online for themselves, as opposed to other marketing days where consumers buy gifts for loved ones.
Among the factors driving online sales growth are increasing sales from consumers in China’s villages, and the steady growth in the number of Chinese shoppers who can access the web through mobile phones.
“In China, the major market drivers in the past year have been cross-border e-commerce, mobile shopping, omnichannel and e-commerce in villages,” China E-commerce Research Center senior analyst Zhang Zhouping says.
There were 668 million Internet users in China by June 2015, and about 89%, roughly 594 million consumers, could access the web through mobile devices, according to China Internet Network Information Center. During Alibaba’s Singles’ Day sale, Chinese consumers purchased $14 billion worth of products, and 70% of sales were generated on mobile devices, according to Alibaba.
Rural areas, where there are few bricks-and-mortar stores, also present huge potential for online merchants. There were 186 million Internet users living outside of cities as of June 2015, and 60% of them had never bought products online, according to China’s Ministry of Commerce. To encourage rural shoppers to order online, e-commerce firms are rapidly improving their facilities in those areas.
Alibaba, whose big marketplaces Taobao and Tmall account for about 75% of China’s online retail sales, has established about 14,000 rural service centers in small villages where consumers can go for assistance in using services that go beyond buying goods, such as travel, medical and financial services, the company says.
The Internet Retailer 2016 China 500 is available as a database and a separate Executive Report in PDF format. The database includes:
- 2015 e-commerce sales figures
- 69,500 customizable facts
- 139 data elements
- Features & functions of each China 500 e-retailer site
- Names and corporate contact information on 845 e-commerce executives
The downloadable Executive Report includes:
- Feature articles on e-commerce trends in China
- Case study on Puma SE’s entry into China
- Chart of Top 25 Fastest-Growing E-Retailers in China