ECommerce is big business
Anyone who’s been paying attention to the news of late knows that China’s eCommerce giant, Alibaba, has filed for an IPO – and in that filing it came to light that the company predicts that China’s eCommerce market will double in size by 2016.
Alibaba expects to see sales increase from last year’s 1,841 billion yuan ($295 billion) to a mind-melting 3,790 billion yuan in 2016 thanks to more Chinese shoppers deciding to get their purchases online. This estimate puts the eCommerce market in China at more than the nominal GDP of Sweden or Switzerland in 2013.
That may sound maddening, but it’s worth noting that it’s already dwarfing the economies of Egypt and Finland.
So, where will all this extra money and business come from? The expanding Chinese middle class seems like a likely candidate, but Alibaba has different ideas. In fact, the company predicts that as more families in smaller inland cities become wealthier, they’ll start shopping online due to gaining internet access and having limited access to traditional retail outlets.
This isn’t as fa-fetched as it seems as, despite around 618 million internet users residing in China, little less than half of those shop online regularly. That means that despite having the world’s largest population of internet users, the share of those who shop online is much lower than developed markets around the world.
Alibaba also believes that the increase of cheap smartphones in the region is the key to unlocking more online spending. There are 500 million mobile internet users in China – as of the end of last year – and the more widely available smartphones become, the more they’ll shop online.
“We believe this growth in mobile users will make access to the Internet even more convenient and will accelerate the adoption of e-commerce,” the company said in it’s IPO registration statement.“Increased mobile Internet access through mobile devices will allow Internet users to shop anytime, anywhere.”
It adds up to, as Alibaba’s average customer spend has increased over the last year. Order numbers climbed to 49 per customer, compared to 39 in 2012 and 33 in 2011.
It’s clear that China is the place to look for future eCommerce growth, but perhaps it’s still worth looking West.
[Image: theseyoungarchies - Flickr]