BEIJING: Ecommerce sales are expected to more than triple in China during the next four years, providing major opportunities for brand owners.
According to consultancy AT Kearney, 150m netizens in the world's most populous nation are buying goods and services via the internet.
This channel has recorded extremely rapid growth, having expanded from only $760m in 2004 to $55bn in 2010.
Sales are pegged to hit $83bn in 2011 and $176bn by 2014, when $105bn will be drawn from business-to-consumer expenditure, and $71bn from the business-to-business segment.
Currently, around 90% of revenues are attributable to the former category, suggesting B2B platforms like Alibaba may enhance their position going forward.
"In barely five years, China's ecommerce market … has become a formidable force," the study suggested.
Taobao, a portal similar to eBay but also hosting brand stores for firms like Adidas and Gap, processes 3m transactions a day, selling 969 items of clothing, 203 pairs of shoes and 164 accessories every minute.
Homewares, apparel, publications and consumer electronics constitute the largest online sectors in the country, and should maintain leading roles.
However, cosmetics and accessories are witnessing a surge in interest that could harden dramatically across the next four years.
Shoppers in Tier 1 markets and coastal regions remain the most profitable audience at present, AT Kearney argued.
In evidence of this, Shanghai yielded $2.6bn in 20009/10, standing at $18bn for Beijing, just under $1bn covering Shenzhen, $850m in Hangzhou, $740m regarding Guangzhou and $530m in Nanjing.
Moreover, the domestic middle class now incorporates 200m people, and is continuing to gain scale.
Indeed, personal disposable income stood at $1,500 in 2008 and is anticipated to reach $2,800 by 2014, a period in which the proportion of households earning at least $10,000 a year should climb from 3% to 8%.
Given that online penetration is less than 50% in China today, measured against 77% in the US, deepening the connected population is a key driver of the medium's future potential.
Rising engagement is also important, as the average user now dedicates over 20 hours a week to browsing the web.
As elsewhere, younger consumers display the greatest early enthusiasm for ecommerce, and women have proved more enamoured than men.
Cities in tiers two and three are an additional source of growth, as demonstrated by the fact Macau and Luohe saw spending levels multiply 10.5 times over in 2009/10, a number coming in at 9.3 in Ezhou and 7.7 for Simao.
One fundamental matter to be addressed is concerns about security, and although systems like Alipay, developed by Alibaba, have boosted perceptions, cash-on-delivery retains considerable appeal.
Distribution is equally vital, with 360buy.com enjoying 300% growth in the last five years after creating an "express" service promising same- or next-day delivery in Beijing, Shanghai, Guangzhou and Chengdu.
"Logistics will be a challenge as e-commerce players attempt to reach more customers over wider geographic regions while improving the quality of their offerings," the study said.
Another area to target is TV-based shopping, worth an estimated $2.5bn in 2009, with Acorn, HappiGo, OCJ and Seven Stars taking roughly 60% of the market.
Despite accounting for 0.2% of retail sales two years ago, AT Kearney predicted this figure could hit 5% during the next decade.
Data sourced from AT Kearny; additional content by Warc staff