The e-commerce market in China will be boosted by the high growth in internet population coupled with rise in online shopping. The report begins with an introduction to the market which comprises of an illustration of the e-commerce operational model wherein it depicts the work flow of all the stakeholders involved in the market space. Another detailed illustration about the transaction flow in online commerce is also included in the report so as to provide a better picture of the overall transaction system. This is followed by the market overview of e-commerce in China, providing details on the industry size in terms of transaction volume and its growth. It also mentions the popular e-commerce business models, providing an overview, market size and competitive landscape of each type. The report discusses the technical specifications, important features and website design and development stages. It offers value added information regarding the building and hosting of a successful e-commerce website. The various segments in the e-commerce market namely online retailing, online advertisement, online travel, online digital downloads, online financial services, online stock operations and online paid subscriptions have been analyzed and a brief overview of each segment is included. Demand and supply perspective section in the report lists the benefits of e-commerce to both the vendors as well as the consumers. It comprises of an in-depth analysis of both the vendor perception and consumer objectives. It also lists the vital requirements for the vendors as well consumers in order to conduct commerce over the internet. Factors driving the growth of e-commerce market in China have been covered and include increasing internet use, emerging middle class, rise in online shopping, extensive usage of plastic money, enhanced e-payment services, rise in mobile commerce, growing social network base and rise in target industries. The players operating in the market also face challenges which are impeding their development and growth. Major challenges identified are logistics challenges, huge online counterfeit market, psychological barrier and adaptive difficulty, security issues, system lacks talent and information resources, and entry barriers are also hampering the growth of the market. The government policies and initiatives have been covered. Emerging trends in the e-commerce market have been highlighted and include geographical spread of online shopping, group buying, initiatives by players, internal logistics network, favourable demographics, traditional stores opting for online stores, availability of greater funding and rising popularity of e-books. The competition section outlays the competitive landscape of the e-commerce industry in China providing information regarding the major domestic and foreign players existing in the market. This section provides a ranking of the players based on the revenue and profits followed by a 3 dimensional ...

1. E‐commerce Market –
E commerce Market China
November 2011

2. Executive Summary
 E‐commerce market in China has been demonstrating rapid growth and development over the past few years
Market  China’s e‐commerce will continue to exhibit speedy growth with annual sales volume growth of at least x % y‐o‐y
from 20‐‐ to 20‐‐
Drivers: Challenges:
‐ Increasing internet use ‐ Logistics challenges
‐ Emerging middle class ‐ Huge online counterfeit market
‐ Rise in online shopping ‐ Psychological barrier and adaptive difficulty
Drivers & ‐ Extensive usage of plastic money ‐ Security issues
Challenges ‐ Enhanced e‐payment services ‐ System lacks talent and information resources
‐ Rise in mobile commerce ‐ Entry barriers
‐ Growing social network base
‐ Rise in target industries
 Geographical spread of online shopping
h l d f l h  Favourable demographics
bl h
 Group buying  Traditional stores opting for online stores
Trends
 Initiatives by players  Availability of greater funding
 Internal logistics networks  Rising popularity of e‐books
 Government Policies and Regulations (20 )
Government Policies and Regulations (20‐‐)
Government
 Government Policies and Regulations (20‐‐)
Initiatives
 12th Five Year Plan (20‐‐ ‐ 20‐‐)
 International players like Company 1 and Company 2 are boosting their investment in China, indicating tougher
and more fierce competition for the domestic players
and more fierce competition for the domestic players
Competition
 Some of the major domestic players in the market are Company 3, Company 4, Company 5, Company 6, Company
7,Company 8, Company 9, Company 10 and Company 11
E‐COMMERCE MARKET IN CHINA 2011.PPT 2

3. •Introduction
•Market Overview
Market Overview
•Market Segmentation
•Demand and Supply Perspective
D d dS l P i
•Drivers & Challenges
•Government Initiatives
•Trends
Trends
•Competition
•Key Takeaways
K T k
E‐COMMERCE MARKET IN CHINA 2011.PPT 3

4. Operation Model of an E‐commerce System
f e d
g c
a
b
h
E‐COMMERCE MARKET IN CHINA 2011.PPT 4

5. China’s e‐commerce sector is predicted to experience the
fastest growth rate in Asia
E‐commerce Market – Overview Market Size and Growth
• China is the world’s x largest e‐commerce market USD bn
 More than y mn internet users, including z mn online shoppers
y , g pp 3,000 a7
along with p mn Chinese middle class population boosts 2,500 +30.9% a6
further growth in the sector 2,000 a5
1,500 a4
• In 20‐‐, more than q mn people were directly employed a3
1,000 a2
by the Chinese e commerce companies
by the Chinese e‐commerce companies a1
500
 No. of people indirectly employed reached more than r mn 0
and is expected to grow to s mn by 20‐‐ 20‐‐ 20‐‐ 20‐‐e 20‐‐e 20‐‐e 20‐‐e 20‐‐e
E‐commerce Registered Accounts E‐commerce Paying Accounts
mn mn
300 +16% c4
20,000 c3
+21% b4 250
b3 c2
15,000 200 c1
b2
10,000 b1 150
100
5,000
50
0 0
20
20‐‐ 20 e
20‐‐e 20 e
20‐‐e 20 e
20‐‐e 20
20‐‐ 20 e
20‐‐e 20 e
20‐‐e 20 e
20‐‐e
E‐COMMERCE MARKET IN CHINA 2011.PPT 5

6. Type 1 transactions dominate the e‐commerce market in
China
Type 1 E‐commerce Market Size and Growth
• Type 1 refers to an online market for online business USD bn
deals 3,000 a7
 In Q1 20‐‐,Type 1 revenue amounted to USD x mn, y‐oy 2,500 +30.9% a6
growth of y% 2,000 a5
• No. of Type 1 companies reached z in 20‐‐, y‐o‐y growth 1,500 a4
of p% a3
1,000 a2
a1
 I 20 thi
In 20‐‐, this sector received USD q mn in capital from r
t i d USD i it l f 500
investors, which includes s VCs and two IPOs that raised a 0
combined USD t mn and five mergers 20‐‐ 20‐‐ 20‐‐e 20‐‐e 20‐‐e 20‐‐e 20‐‐e
Competitive Landscape (20‐‐) Revenue Break‐Up (Q1 20‐‐)
Company 1 c4%
Trade by small‐ c3%
Company 2 b6% and medium‐sized
Company 3 enterprises
Company 4
Company 4 b5% Trade by large
Trade by large c1%
b4% enterprises
Company 5 b3%
b1% Online shopping c2%
Others b2%
accounts
Airfares and hotels
E‐COMMERCE MARKET IN CHINA 2011.PPT 6

7. G segment boom in China is giving serious competition to
the traditional G outles
Segment 1 Segment 1 Sales
• G sales in China amounted to ~USD x tn in 20‐‐, and USD bn
are expected to grow by ~y% in 20‐‐ 200
• Segment 1 represents the next major segment for +25.4% a4
150 a3
retail growth in China
a2
• China had z mn online stores as of Dec 20‐‐ 100 a1
• With increasing prosperity and easily access to the
With increasing prosperity and easily access to the 50
Internet, Segment 1 sales is expected to surge in the
coming years 0
20‐‐ 20‐‐e 20‐‐e 20‐‐e
Share of Goods Sold Online (20‐‐) Number of Segment 1 Users
Online Retail Users Penetration
Type 1 mn %
Type 2 200 +49% 1,0
b1% c3
Others b3%
150 c1
100 0,5
50 c2 c4
0 0,0
b2% 20‐‐ 20‐‐
E‐COMMERCE MARKET IN CHINA 2011.PPT 7

8. Drivers & Challenges – Summary
Drivers Challenges
Increasing internet use Logistics challenges
Emerging middle class Huge online counterfeit market
Psychological barrier and adaptive
Rise in online shopping difficulty
Extensive usage of plastic money Security issues
System lacks talent and information
Enhanced e‐payment services
resources
Rise in mobile commerce Entry barriers
Growing social network base
g
Rise in target industries
E‐COMMERCE MARKET IN CHINA 2011.PPT 8

9. Trends – Summary
Geographical spread of online shopping
Group buying
p y g
Initiatives by players
Internal logistics networks
Trends `
Favourable demographics
Traditional stores opting for online stores
Availability of greater funding
Rising popularity of e‐books
E‐COMMERCE MARKET IN CHINA 2011.PPT 9

10. Major Domestic Players in the Market (1/8)
Company Snapshot: Company 1
Corporate Information Financial Performance
Headquarters City 1
Cit 1 Revenue Revenue Profit/Loss
USD mn USD mn
Profit/Loss
Founded 20‐‐ a4
400 5
Product 1, Product 2, Product 3, Product 4, 300 0
Products a3
Product 5 200 ‐5
a1 a2
Key People Person 1 ‐Executive Chairperson 100 ‐10
0 ‐15
20‐‐ 20‐‐ 20‐‐ 20‐‐
Business Highlights
Business Highlights
• Company 1 has focused on selling product 1online and later expanded into select product 5 category, through its
website x.com
 In addition, it operates the x.com marketplace program, which enables third‐party merchants to sell their products alongside products
sourced by the company
db h
• As of March 20‐‐, it has sold more than y product 1 along with other media products, the largest selection available
from any single retailer in China both online and offline
• It has z logistics centers strategically located throughout China
• In Q2 20‐‐, company started the operation of the P fulfillment center and expanded the new facility in Guangzhou
fulfillment center, resulting in total warehouse space to q square meters
E‐COMMERCE MARKET IN CHINA 2011.PPT 10

11. Other Major Domestic Players in the Market (1/6)
Company Snapshot: Company 2
Corporate Information Business Highlights
Headquarters City 2
Cit 2 • Company 2 is a family of Internet‐based businesses
Company 2 is a family of Internet based businesses
 It includes online marketplaces, retail and payment
Founded 19‐‐
platforms, shopping search engines and data‐centric
cloud computing services
Product 1, Product 2, Product 3, Product 4,
Products  It’s subsidiaries include x.com, y Marketplace, z Mall, p ,
, ,
Product 5, Product 6, Product 7
q Cloud computing, r and s
Key People Person 2 ‐chairman • x.com operates as a subsidiary of the company 2
 x.com operates as a business‐to‐business e‐commerce
company in the PRC and internationally
– Company offers platforms for international,
domestic, and retail trade
 In Sep 20‐‐, company plans to raise as much as USDe mn
from the listing of its website‐designing unit in the U.S
• In Oct 20‐‐, company announced its latest plan to
In Oct 20 , company announced its latest plan to  In Feb 20‐‐,company bought f% stake in Sinosoft
Technology Plc, Chinese export‐services software maker,
invest USD h mn to its B2C subsidiary, z.com (z Mall),
with an investment of USD g mn as an effort to enhance
in an effort to assist small and medium sized
it’s customer service
enterprises
E‐COMMERCE MARKET IN CHINA 2011.PPT 11

12. Websites
SAMPLE
Online Traffic Specifications (1/7)
Online Traffic Statistics
Global Traffic Rank – p Traffic Rank (China) x1
Daily Pageviews*
Daily Pageviews* x2
x.com
Daily Visitors* x3
Time spent on site (minutes) x4
Global Traffic Rank – q Traffic Rank (China) y1
Daily Pageviews* y2
y.Com
Daily Visitors* y3
Time spent on site (minutes) y4
Global Traffic Rank – r Traffic Rank (China)
( ) z1
Daily Pageviews* z2
z.com
Daily Visitors* z3
Time spent on site (minutes) z4
E‐COMMERCE MARKET IN CHINA 2011.PPT 12

13. Thank you for the attention
E‐commerce Market ‐ China report is a part of Netscribes’ Information Technology Industry
Series.
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E‐COMMERCE MARKET IN CHINA 2011.PPT 13