Amidst the headlines of Google's
probable exit from China, the
young and prosperous Chinese populace is relying more and more
on the ubiquitous World Wide Web to buy stuff like daily wear to
kitchenware, and toys to latest electronic gizmos. Thanks to the growing online
craze among Chinese buyers, e-commerce sites like Taobao.com are
flourishing like anything. The website, which was set up in 2003 and has been
witnessing rapid growth in the traffic in recent times, is expected to account for
the lion's share of the business. According to the China Internet Network
Information Center (CINIC), and as reported by Xinhua News Agency, annual
consumption from online shopping will reach more than 250 bn yuan ($37 bn)
this year, and 80% of this would be carried out through Taobao.com. What is
driving the online shopping boom in China is the low cost. An online buyer can
buy a product sometimes at 1/8th of its
price at a local retail outlet. For instance, a facial cream may cost a buyer just
204 yuan on an online shop, as against 1,680 yuan her neighborhood
shop would charge. According to the Beijing-based research firm iResearch
and China's leading e-commerce portal Taobao.com, online sales jumped by
a whopping 128.5% to 120 bn yuan in 2009. The increase was
witnessed across all web properties, including e-shopping, e-ticketing, gaming and
advertising. In the process, China also dethroned the US in online revenues.
At over 338 million, China now has more Internet users than any other country
in the world.
The tremendous popularity of online goods does not exclusively derive
from the e-commerce portals alone, as open-source e-commerce engines like
Virtual Mart, content management systems like Joomla and Mambo, search
engines like Baidu.com and Google Commerce Search, and product guides
like Productopia and e-Smarts, which provide product reviews and
comparisons that give the consumer a better idea about the products, too are looking
to cash in on the surge in web-shoppers' traffic. According to Tony Gu Tao,
Executive Director, E-Commerce Association of Singapore, "Product
innovation holds the key for any online shopping portal as younger generation are
willing to accept new products either for lower price or better quality." He
suggests, "Any web entrepreneur who offers
innovative products or existing products at a lower price can sell to any ready
shopper through popular e-commerce platforms like Taobao.com, dangdang.com
and 360buy.com." "Users are getting more and more familiar with Internet
shopping and they now have got some guarantee with the emergence of the
third-party payment companies," noted Liu
Ning, Analyst at BDA China, a research firm. Growing Internet penetration too is
fueling the craze for online shopping in China. "As younger generations are
major online spenders, they intend to buy more consumer products like
daily goods, clothes and digital products at lower price compared to items in
street shops," says Tao. He predicts,
"There will be more and more B2C (Business to Consumer) transactions and
as more and more merchants realize the power of Internet as a distribution channel,
there will be more online spending in the Second Tier cities."
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