China e-commerce market to hit $1.1T by 2020
The Chinese e-commerce market will reach US$1.1 trillion in 2020, pushing the total online retail revenues of Asian markets to US$1.4 trillion.
Overall e-commerce income for China, Japan, South Korea, India, and Australia will nearly double from US$733 billion in 2015 to US$1.4 trillion in 2020. Currently, these five Asian online economies already outpace the combined online retail markets in the US, and all of Western Europe, according to Forrester, with China largest and fastest-growing market worldwide.
Having surpassed the US market in 2015, China remains the world’s largest e-commerce market, despite seeing its economic growth dip below 7 percent for the first time since 2009.
China to continue leading e-commerce market
“While the days of staggering year over year e-commerce growth in China are gone, current growth rates are solid and more consistent with other mature markets in the region, like Japan and South Korea,” wrote Lily Varon, lead author of the Forrester report and analyst for e-business and channel strategy.
She said China would continue to lead the region’s market, growing to be nine times larger than Japan’s US$122 billion market in 2020 and 17 times larger than South Korea’s US$65 billion.
The five markets had all of the characteristics of a mature e-commerce market, including high internet and broadband penetration, a large percentage of online shoppers, and high per-capita online spending. Each, however, had unique characteristics that e-commerce operators in the respective market would need to know and consider when crafting their offerings.
Taobao Tmall and JD take over China
One defining trend across the region, for instance, was the dominance of web-only retailers such as Taobao, Tmall, and Jindong in China. “Consumers have flocked to online pure-plays rather than their traditional retail counterparts,” Varon wrote. “In very few markets in the region do traditional retailers hold any dominant position, or even come close to competing with the web-only giants.”
With the significance of web-only players, the Forrester analyst noted that omnichannel functionality had not been as robust as markets such as the US or UK. This, though, was starting to shift as more traditional retailers move towards e-commerce. Suning in China, for example, considered omnichannel its top business priority.
Mobile will also keep playing a key role in Asia’s e-commerce landscape, though, mobile usage varied widely among the markets.
Currently, mobile accounted for a small percentage of overall online retail revenue, but this was changing rapidly, according to Forrester. Mobile devices contributed 38 percent of Taobao and Tmall’s gross merchandise volume last year, compared to just 7 percent in 2013.
Mobile commerce represented nearly 50 percent of online retail sales in India, compared with 48 percent in China and 34 percent in the US. “Given Tmall’s dominance in China, for example, many brands will look for other marketplaces in the region as points of entry.”
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