Ecommerce booms in China

17 October 2012

BEIJING: Ecommerce sales are continuing to rise rapidly in China, where competition is also intensifying greatly, research from Analysys International has argued.

In a new report, the insights provider stated that online retail revenues increased by 45% year on year in the second quarter of 2012, reaching RM279bn overall.

Taobao and Tmall, two platforms owned by Alibaba focusing on business-to-business and consumers respectively, took 76% of the market, the report added.

Elsewhere, 360buy, the electronics site, claimed a distant second place having accrued 5.5% of value sales, ahead of Tencent, one of China's largest internet companies, on 4.5%.

Suning, another electronics group, logged 1.2% on this metric, beating Amazon, the US operator, on 0.8% and Dangdang on 0.7%.

Yihaodian, in which Walmart holds a stake of more than 50%, yielded just 0.3% of returns during Q2 2013, according to Analysys International.

A major trend observable in the Chinese ecommerce sector at present is intense price competition, as rival firms seek to attract members of the country's growing digital audience.

McKinsey, the consultancy, has estimated that Chinese online retail revenes will hit RMB2.2tr in 2016, versus RMB400bn in 2010, with the number of ecommerce buyers rising from 190m to 351m.

Various companies from Neiman Marcus and Macy's to Levi's and Zara are all trying to tap into these shifts, though most could have some distance to go before making an impact on Taobao.

"Taobao is the absolute leader in the Chinese ecommerce sector," said Yujun Qui, an analyst at Planet Retail. Taobao's success lies in its low prices and wide range of products, especially those not commonly available through other channels."

Data sourced from Reuters, Planet Retail; additional content by Warc staff