China E-Commerce by the Numbers

by | Feb 16, 2016 | Chinese Market, Emerging Markets | 0 comments

When talking about numbers, there’s no doubt that China will always be impressive. With a total population of 1.371 billion individuals, it doesn’t take many Chinese to reach heights that overwhelm the rest of the world. However, China is particularly notable when it comes to being online.

There are 668 million Chinese online, approximately half of the total population, according to Tech In Asia. That’s almost 28 times the total population of Australia and double the population of the U.S. In fact, digital media accounts for more than half of the time that Chinese adults spend consuming media, indicating a huge shift to online entertainment, shopping, and usage.

Chinese Digital Growth

Beyond the extraordinary numbers, it’s necessary to look at China’s growth. The good news is that China is continuing to grow year-over-year digitally. From 2014 to 2015, over just 12 months, China recognized remarkable growth according to a report by We Are Social.

  • 6% increase (36 million more) in active Internet users
  • 2% increase (14 million more) in active social media users
  • 8% increase (94 million more) in mobile phone users
  • 15% increase (77 million more) in mobile social users

Internet Use in China: Rural vs. Urban

However, one area that could use the greatest improvement is the saturation of Internet use and digital technology in rural China. There’s only 30% Internet penetration amongst China’s rural population; that’s only 186 million active Internet users living in China’s rural areas. It’s a relatively low number that can be improved by increased Internet access, mobile penetration, and delivery in rural markets.

To better reach the rural market, many e-commerce companies have created rural-focused events, websites, and campaigns. For example, Alibaba created “Taobao Village” and “Spring Festival Shopping Fair” to help with penetration into the rural market. Logistic package delivery companies are also trying to increase the market as evidenced by the coverage rate reaching 70% in 2015.

Chinese Mobile Market

As stated above, an active mobile market provides additional opportunities to reach more Chinese citizens online, and China is heading in that direction. China has even more unique mobile users than Internet users, approximately 675 million Chinese, and in 2015, mobile devices accounted for roughly 1/3 of the time Chinese adults spend consuming media. However, the saturation of the mobile market online still has room for growth.

Only 594 million Internet users use mobile devices, about 89% of the population. While this might seem impressive, there’s no doubt that China’s mobile saturation could reach new heights. Currently, only 62% of all mobile phones are smart phones, but that number is quickly growing. In the first quarter of 2015, 90% of all phone purchases were smart phones. But what are these mobile users doing? Besides checking the weather (22%), purchasing a product using a mobile device was the second most common activity, tied with social networking and instant messaging—all at 20%.

While only 270 million Chinese use mobile devices to make purchases, that number is making a big difference for search engines and e-commerce companies. Baidu, the most-used search engine company in China, in Q3 of 2014 finally had more traffic from mobile than it did from desktop computers, and 36% ($792 million US) of its total revenue was from mobile. As for Alibaba, one of China’s largest e-commerce companies, June 2015 was the first time that mobile revenues accounted for 50% of its total commerce revenues in China. Specifically, mobile accounted for $1.288 billion (US) and 51% of the company’s revenue.

Mobile e-commerce and usage is continuing to grow, but what does China’s e-commerce market look like overall? Are the numbers as striking?

Chinese E-Commerce Spending

In the first half of 2015, Chinese online consumers spent $253 billion (US), approximately 10% of the total retail sales in the nation. According to China Internet Watch, the Chinese e-commerce market was expected to reach 16.2 trillion yuan ($2.53 trillion US) in 2015. And by 2018, Kantar Retail expects the e-commerce market to reach 24.2 trillion yuan ($3.8 trillion US).

As for where the Chinese are making their purchases, in the first quarter of 2015, Jingdong led the e-commerce market with 39.4%, followed by Alibaba at 18.1%, and Suning at 10.9%. Other companies and popular online purchase platforms include Amazon China, Gome, Yihaodian, and Dangdang.

And these purchases are happening both on desktop computers and mobile devices. Desktop research and purchasing still has the lead with 18% of the population using a computer to research products and 29% using their computer to make a purchase. However, mobile isn’t far behind.

Mobile purchases account for half of all e-commerce purchases—an 85% increase in mobile e-commerce from 2014. Overall, 15% of the population uses their mobile phone to research products and 20% use their mobile to make purchases.

china ecommerce popular buy
Beyond where the Chinese are making their purchases, what are they purchasing? Most online purchases were business-focused, accounting for 80% of all only purchases or $2.01 trillion (US). Since 2010, China’s enterprise online marketplace is experiencing its fastest growth, in large part thanks to the Chinese government encouraging and supporting e-business and e-commerce facilities, and the saving potential of online shopping for office supplies such as printers, computers, and desks. In fact, the most popular purchases online were:

  • 3% computers
  • 7% office supplies
  • 16% mobile devices
  • 4% digital products
  • 7% commercial electronic appliances
  • 4% networking equipment
  • 59% other

However, according to Kantar, the most robust mobile commerce industry is manufacturers in the baby category. Mobile sales for 70% of baby manufacturers accounted for at least 30% of total online sales. The healthy and beauty category ranked second with 58% of manufacturers having mobile business exceeding 30%.

As for Chinese e-commerce outside of China, 35% of China’s online shopping customers bought cross-border products in 2015. For most customers (73%), they revealed that price was the main reason for the out-of-country purchase while 56% believed that imported products are more credible and have a higher quality. According to the Chinese Commerce Research Center, cross-border online shopping is expected to reach 35.6 million by 2018 and reach $16 billion (US).

Chinese Package Delivery

Additional evidence of the explosive and successful Chinese e-commerce market can be found in package delivery. Over 20 billion packages were delivered in China in 2015, an increase of 48% year-over-year from 2014. At its peak, 160 million packages were delivered daily.

In fact, 2015 saw 22,000 delivery trucks added and 60,000 smart express collection boxes installed in major Chinese cities. To encourage this growth, there have been continued collaborations between e-business platforms and logistic and supply chain companies to come up with a win-win solution.

The numbers don’t lie. It’s clear that the Chinese e-commerce market is doing well and it only has further to grow.