LONDON--(BUSINESS WIRE)--Technavio analysts forecast the business-to-consumer (B2C) e-commerce market in China to grow at a CAGR of over 30% during the forecast period, according to their latest report.
The research study covers the present scenario and growth prospects of the global B2C e-commerce market in China for 2016-2020. The report also segments the market into two categories based on devices used for shopping and three categories based on different types of customers. The report also segments the market into seven product categories.
Technavio consumer and retail analysts highlight the following three factors that are contributing to the growth of the B2C e-commerce market in China:
- Growing Internet and smartphone penetration and rise in online spending
- Growing seasonal sales
- Free shipping and hassle-free returns
Growing Internet and smartphone penetration and rise in online spending
As of 2014, approximately 673 million people in China were Internet users which is the largest number globally. An average Internet user in China spends nearly 45 hours online per week, which is 10 hours more than the global average. A digital consumer in the country spends more than 15 hours a week on average on online transactions such as shopping, payments, ticket bookings, and other transactions. Broadband penetration has also increased with the growth of both fixed and wireless connections.
The rise in smartphone use has also contributed to online retail growth. As of 2015, more than 50% of mobile phone users in China used smartphones. This smartphone penetration presents significant growth opportunities for e-retailers in China. As consumers get more comfortable with m-commerce, online shopping will grow at a much faster pace.
The average amount of money spent online per transaction and the number of transactions that take place online is also on the rise. The ease and time-saving aspects of online shopping and the wide range of products available on online retail platforms are additional factors that work in its favor. “With e-retailers providing better security features for online payments, free delivery options, improved online customer service, and customer-friendly, easy-to-navigate shopping websites, a growing number of consumers are likely to use these portals in the next five years,” says Brijesh Kumar Choubey, a lead analyst at Technavio for retail goods and services.
Growing seasonal sales
Online sales during festive seasons and holidays have increased in recent years and are contributing to the growth of the market. Online holiday retail sales in China crossed USD 80 billion in 2014, an increase of over 13% over 2013. Offers such as free shipping and steep price discounts have motivated consumers to make more purchases online. Holiday sales through B2C e-commerce during November and December amounted to over USD 50 billion in 2014.
Days that see high traffic in online shopping include the Chinese New Year (Spring Festival), Lantern Festival, Zhonghe Festival (Blue Dragon Festival), Shangsi Festival, Duanwu Festival (Dragon Boat Festival), Qixi Festival (The Night of Sevens, Magpie Festival), Ghost Festival, Double Ninth Festival (Chongyang Festival), Dongzhi Festival (Winter Solstice Festival), and Laba Festival. Apparel, footwear and accessories, consumer electronics, computer hardware, and toys are the largest gaining product categories during the holiday season.
Free shipping and hassle-free returns
Free shipping has become the standard for many online retailers in China. These retailers are also offering hassle-free return policies to attract customers. Approximately 90% of online retailers in China offer free shipping and in-store pickup. Retailers like Alibaba, Tmall, JD.com, Dangdang, Suning, and Vipshop offer free shipping on all orders during holiday seasons.
“Convenient returns and exchange policies rank high in terms of importance to customerswith approximately 67% of consumers looking at return policies before making a purchase,” says Brijesh. Zalora, an apparel e-retailer in China, offers free delivery for orders above USD 40 and provides free returns for 30 days after purchase.
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