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Differences in the E-commerce environment between China and Western countries

In 2018, the percentage of the consumers who made at least one purchase online in the last 12 months grew to 93% of internet users in the U.S., 97% in the U.K. and 98% in China[1]. The market of developed countries is in its maturity phase and the competition among e-commerce players is extremely high and cost intensive. That in mind, Europe still sees B2C ecommerce turnover grow at around 13% in 2019[2].

It’s no secret that China’s e-commerce market (cross border and domestic) realizes double-digit growth rates every year. Official sources even mention that in 2018 retail imports reached up to 67.2 billion yuan, up 53.7% compared to the previous year! And It is predicted that sales from online retail will reach a staggering 9.6 trillion yuan by 2020, 31.3% triggered by social e-commerce sales[3].

Let’s zoom into the recent months of November and December. Of course, there is the immensely popular ‘Single’s Day’ (double 11) that generates massive sales through high discounts and uses new trends like direct internet broadcasting using a KOL. December follows with ‘Double 12’ and is seen as the last biggest e-commerce shopping festival of the year. Founded by Taobao and JD.com, it provides a great opportunity to do some end of year branding and mainly focused on online retailing.

In Western markets, November typically will see big sales through Black Friday and Cyber Monday. Across the European region, Black Friday stood out compared to other retail events in 2018. The number of daily retail transactions that took place on this day put Black Friday ahead of more traditional holiday season discount opportunities such as Christmas and Boxing Day sales[4]. Mostly, these retail festivals focused more on offline channels.

What are the reasons behind the difference? Here is the analysis from Aliresearch:

  • Compared to America, Chinese offline market is not at a maturity phase that can’t meet all the needs of customers. The coverage of offline channels is relatively insufficient and mostly consists of independent retail channels with low efficiency.
  • Chinese ecommerce has advantages on coverage and efficiency. Calculating the turnover of 1 yuan input through 2011 data, the online turnover is nearly 4 times of offline turnover. Offline market mostly consists of independent retail stores, which makes a unconcentrated and complicated system.
  • China’s unique infrastructure creates favorable conditions for the development of efficient express delivery and logistics services. In 2016, there were about 720,000 couriers in the United States, while nearly 2.03 million couriers in China. At the same time, China’s population density (people per square kilometer) is more than four times that of the United States. These basic environments create favorable conditions for the rapid development of e-commerce in China.[5]

In 2014, China’s e-commerce penetration surpassed that of the United States for the first time. By 2016, China’s e-commerce penetration was more than 1.5 times that of the United States. Expanding your business to markets in different countries, it is necessary to consider these environmental differences.

Want to know more about differences in doing cross-border e-commerce business between China and Europe? Dr2 is your trusted partner! Contact us at shanghai@dr2consultants.eu!

 

Sources:

[1] Statistica

[2] European Ecommerce Report 2019

[3] Agency China

[4] Statistica

[5] Aliresearch