China to spend 350bn online by 2015

Half a billion internet users and an economy which, although not immune to international economic pressures, is still on the up means that China is poised to experience a massive ecommerce boost.

Add in an anticipated 200-million more users and the Asian superpower could become the world’s biggest ecommerce market by 2015.

According to the Boston Consulting Group(BCG), the country’s online market could be worth as much as US$350-billion by then.

China already has more online shoppers than any other country — around 193-million — but overall spend remains higher in the US.

BCG warns, however, that although China may soon be buying more than traditional Western markets, its buying habits won’t be the same. This is one of the reasons China isn’t an easy market for outside players to crack.

Another reason is that three big players — Baidu, Alibaba, and Tencent — are already dominant in search, ecommerce, and social “and are working hard to consolidate their positions and move into new fields”.

More specifically, Alibaba has near stranglehold on the ecommerce market. According to The Next Web, its Tabao service is responsible for around 90% of consumer to consumer transactions. Alibaba.com meanwhile, has a 50% market share in the business to business sector.

BCG has previously outline five factors that make the Chinese online market unique:

1. Up to a quarter of e-commerce demand in China is for products consumers cannot find in physical stores—a circumstance unique to China, where the immensity of the country limits the coverage of physical retailers. In fact, there are many consumers, especially the younger ones, whose first contact with a brand or type of product occurs on the Internet.

2. The relationship between search engines and retail sites is different in China. In most markets, shopping begins with a Google search. In China, online retailing marketplace Taobao.com blocks the spider of the top search engine, Baidu.com. Therefore, most shoppers start their search within Taobao, which accounted for nearly 80 percent of e-commerce volume as of 2010. “Chinese shoppers are developing the habit of not relying on search engines to find products online,” said Jeff Walters, a Beijing-based principal at BCG and coauthor of the report.

3. Largely because of consumer wariness and distrust of merchants, Chinese consumers are the most likely in the world to check for product recommendations on social networking sites. Forty percent of online consumers in China say they’ve read and posted reviews—more than double the rate in the United States. Conversely, only 19 percent of consumers in China go to official brand or manufacturer sites, compared with 41 to 60 percent in Japan, the United States, and the European Union.

4. China’s shoppers are increasingly not just looking for discounted products as they shop online. Today they are also concerned with finding unique products that are not available offline, better customer service, convenience, and the pure fun of the discovery process that happens online.

5. The concentration of the Chinese e-commerce market by category is much lower than in other countries, with the top-five categories only accounting for half of the total market (while in the United States, Japan, and the United Kingdom, that ratio is nearly 70%).