E-retail in China will grow 32% a year through 2015.
It was only a matter of time before Chinese consumers’ enthusiastic embrace of online shopping would make China the No. 1 e-commerce market in the world, surpassing the United States. That time has come, U.S.-based consulting firm Bain & Company says in a new report.
Chinese consumers spent 1.3 trillion yuan ($210 billion) online last year and that will reach 3.3 trillion yuan ($540 billion) by 2015, Bain says. The report says China’s e-commerce market grew at a compound annual growth rate of 71% from 2009-2012 and projects annual growth of 32% from 2013-2015. By contrast, Bain estimates U.S. e-retail growth at 13% for the entire period 2009-2015.
While the Bain report does not project 2013 e-commerce sales in the two countries in dollar terms, 32% growth in China’s e-commerce sales from 2012 would amount to $277 million in online sales this year. 13% growth from 2012 U.S. online retail sales of $225 billion, according to the U.S. Department of Commerce, would put U.S. e-retail sales in 2013 at about $254 billion.
The Bain report does explicitly predict that China will overtake the U.S. this year in e-commerce. “The year 2013 will be remembered as the one in which China surpassed the U.S. as the world’s largest digital retail market,” write analysts Serge Hoffman and Bruno Lannes in the report, “China’s e-commerce prize.” “Digital retailing has furiously transformed shopping and purchasing habits, opening up vast opportunities for retailers and brands that pay attention to the nuances of massively changing consumer behavior.”
Drawing on a survey of 1,300 Chinese online shoppers, Bain says Chinese shoppers spend more time online comparing prices than shoppers in other countries. The Bain survey finds more than 70% of respondents say they frequently go online to compare prices among web retailers and with bricks-and-mortar stores.
The report also makes these observations about Chinese online shoppers:
• They have little brand loyalty. They not only choose from multiple brands, but also purchase from different stores.
• Price is the No. 1 reason they shop online.
• They embrace technology, especially mobile phones. 60% of shoppers surveyed use smartphones to browse or buy products. By 2012, 66% of Chinese mobile users owned smartphones, compared with 53% in U.S.
• They often favor foreign products due to health concerns. Chinese customers purchased 10% of all infant formula and 7% of cosmetics from e-commerce sites outside of mainland China, such as in Hong Kong and Australia.