February 28, 2014

West meets East

From InternetRetailer.com

West meets East

Big challenges aren’t preventing U.S. companies from staking a claim in China, now the world’s largest national e-commerce market, according to the newly published China 500. They’re diving into a market that is exploding, but that’s also very different from online retailing in the U.S.

Mark Brohan
Research Director

China’s e-commerce market is big, fragmented and dominated by a single marketplace operator that accounts for about 80% of all online retailing transactions. But none of that is preventing U.S. companies from staking a claim in China, which some analysts believe will soon be the world’s largest national e-commerce market.

In fact many U.S. retail companies and consumer brand manufacturers are beginning to attract customers and generate sales, on their own e-commerce sites or on China’s big online shopping malls, or both, according to data published in Internet Retailer's 2014 China 500. In fact the data on U.S. web merchants selling online in China reveals that it isn’t only the biggest names in U.S. retailing building a base in China, such as Amazon.com (No. 4 in the China 500) and Apple (No. 12). Other U.S. companies such as Coach, No. 488 in the China 500, also are beginning to sell successfully online in China.

Overall the 30 U.S. companies ranked in the China 500 grew their combined web sales in China 36.7% to $5.64 billion in 2013. That total accounted for about 7.7% of all combined China 500 sales of $73.58 billion.

The biggest U.S. merchant ranked in the China 500 was Amazon.com, which grew its Chinese web sales 38% to an Internet Retailer-estimated $3.0 billion in 2013. The fastest-growing web merchant among U.S. China 500 companies was online computer and consumer electronics retailer Newegg Inc., which grew its sales in China in 2013 by 66% to an Internet Retailer-estimated $664 million. Newegg has been selling online in China since building a base in 2003.

Despite such growth, retailers from the U.S. and elsewhere are finding that China is a complicated market, but one that is big and getting bigger. The number of online shoppers in China has grown by 125% from 108 million Internet users who made at least one online purchase over 12 months in 2011 to 242 million in 2012, says the China Internet Network Information Center, a government-sanctioned research organization. That helped fuel 42% growth in China’s e-retail sales in 2013 to $305.74 billion, from $215.31 billion in the prior year, Beijing Internet research firm iResearch estimates.

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