The Internet is no longer an out-of-reach, outer-space know-how for technology freaks. The e-commerce boom has caught on – as 40% of the online population are using virtual technology to buy things they need (surveyed by Nielsen Company).
Some products are easier for online purchasing than others. Books retailers started their businesses early and have been enjoying a steady 7% growth in the last 2 years. On the other hand, wearing apparels suppliers as new entrants to this mode of selling are registering a dramatic 16% increase since 2005.
While South Koreans are leaders of Internet purchasing – buying once every three months, Chinese consumers come second. In a separate report by the China Internet Network Information Centre, Chinese Internet users have increased from 73 million in 2006 to more than 210 million, and nearly 50% of which were between age 18 and 30. Within this mass, about 22% of the online users (46 million) reported having made an online purchase in the last six months.
The reason why China did not come first in the survey can be explained by the constraints of making payment. Internet purchases are paid for by credit cards, PayPal or bank transfers. China has a relatively low credit card penetration, so buyers have been handicapped by the options they have to pay. To overcome this, ‘e-tailers’ in China go for the antiquated ‘Cash-On-Delivery’ system and the online purchasers welcome this because they have a chance to inspect the goods before paying.
Kaiser Kuo, Ogilvy China director, gave insights to the rising popularity of e-commerce in China. ‘Online retail channels for items like cosmetics and fashion are huge in these markets’ because customers can have a wider choice of merchandise than from local stores. Many consumers are finding brands which are not yet available in China, and some times cheaper as they may escape from ‘luxury tax’.
In China, the most popular Chinese online shopping site is TaoBao.com. They reported a 156% growth in 2007, with 53 million users. The website is a close cousin to eBay in their method of doing business – conducting auctions and operating virtual agency stores. They owe their success to the foreign brands still failing to wake up to the potential of the Chinese market.
E-commerce is growing fast to become a mainstream place for shopping, especially for geographical dispersed market. Traditional retailers should be aware of this and work hard to branch out to ‘e-tailing’ soon.
(Adapted from: Trends in Online Shopping –
The Nielsen Company, Feb 2008
B. Lowther, The TaoBao Phenomenon, Women’s Wear Daily, Feb 2008)
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