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China set for fast online growth as the 'superpower' of ecommerce

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Online sales in China are set to power ahead over the next five years, growing from $118bn (£73.9bn) in 2011 to $356bn (£223.1bn) in 2016, a new report suggests.

Forrester’s Asia Pacific Online Retail Forecast, 2011 to 2016, says China is enjoying ecommerce growth “unlike any other market in the world” and will continue to grow by a compound annual growth rate of 25% over the next five years.

The study also forecasts that sales in India will grow almost tenfold from a small base, notching up a compound annual growth rate of 57% by 2016. Still in the early stages of development, with sales currently focused mainly on consumer electronics and software, the market is set to reach $1.6bn (£1bn) in 2012.

Meanwhile, it says, Japan, South Korea and Australia are mature markets, growing its online shoppers and their spending on a par with the US or Western European markets, at around 11 to 12% a year by 2016. It puts Australia's ecommerce market at $23.2bn in 2012 and growing to $35.4bn by 2016, Japan's at $63.9bn, growing to $97.6bn by 2016, and South Korea's at $16.8bn in 2012.

Author Zia Daniell Wigder describes China as “the region’s ecommerce superpower” where “sales doubled between 2010 and 2012 and will double again by 2016.” She said: “The average amount spent per online buyer in China continues to increase by several percentage points every year, a remarkable feat in a market where the number of online buyers in every category is skyrocketing and more mass- market consumers are coming online.” Some 9% of mobile owners in metropolitan China buy over their mobile device almost once a month, she added.

Chinese shoppers are already showing behaviour typical of mature ecommerce markets, she says, buying not only consumer electronics and books online, but also clothing and groceries. But she predicts that domestic Chinese ecommerce businesses, such as Taobao and Tmall, will continue to dominate the market for the next few years.

Daniell Wigder says European and US brands looking to expand online into Asia will often have international experience but are likely to find new challenges they have not encountered elsewhere. “From the heavy reliance on cash-on-delivery payment options to the fact that beauty products are a frequent online purchase for men in markets such as China and South Korea, companies will likely encounter certain trends for the first time in the Asia Pacific region,” she said. For this reason, she said, it’s important to remember category purchases will vary widely by country, and to understand what core areas of the offering must be localised. Websites, for example, need to be translated while payment types must be specific to each market.

“Most will continue to tackle new international markets with a templated approach,” she said. “This strategy can be a successful point of departure if core areas of the online offering are localized from the start.”

Photo: Shanghai, China, used under a Creative Commons licence.
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