A Beginner Guide to The Complex & Unique Chinese Online Retail Landscape: China E-Commerce is 'Just the Beginning'

1. Opportunities and Challenges
E-COMMERCE
MARKET
THE CHINESE

2. OPPORTUNITY
THE CHINA ECOMMERCE
China’s eCommerce is growing faster than any country, but
traditional offline Retail is still 85% of the market.

3. 802 million users
are connected to the internet in China
21x the population of Italy
$1.33 trillion USD
of eCommerce revenue generated by China in 2018
source - digitalcommerce360.com
Accounting for 47% of global eCommerce
USA
$517B USD CHINA
$1330B USD
Source - China Internet Network Center， - digitalcommerce360.com
China’s Current Ecommerce Market Share

4. $1.33 trillion USD
=
26x WeChat Net Worth = 0.78x GDP of Canada359x L.A. Lakers Net Worth =
China’s Current Ecommerce Market Share

5. $1.6 trillion USD
In retail and C2C revenue expected by 2020
20.3% of sales
took place online
in the first four months of 2019
v
While China dominates
the global eCommerce market
the vast majority of sales continue to place offline
Offline Retail vs Ecommerce
source -iResearch.com

6. CITY TIERING
THE IMPACT OF
Don’t overlook cities below 3rd tier.

7. 854 million
people live in China’s smaller cities,
roughly 2.6x the population of the U.S.
25M
25M
70.9% of China’s population
lives in Tier 3 cities or lower
83M
The Emergence of Smaller Cities
Source – cnbc.com
3.3M

8. Tier Production
TIER 1
19
24.2 million
TIER 2
30
18.8 million
$25490B USD $17377B USD
TIER 3
70
218 million
$
$21718B USD
Others
30,000+
600+ million
$35000+B USD
CITIES
HOUSEHOLDS
$
=
30,100+
636.8+ million
$74095+B USD
Source: Wikipedia AMDR

9. 49.9%
183 million
257 million
50.1%
89%
62%
43%
61%
Tier 1 and 2
Tier 3 and 4Share of national GMV
E-commerce penetration
Online Shopper base
Online Shopper Growth
61% growth
of online shopping in tier 3 and 4 cities
18% more growth
than tier 1 and 2 cities
Source: Mckinsey.com
The Rise of Lower Tiers

10. The lower-tier cities already comprise 59%
of the country's GDP and
73% of its population, may
be bigger engines for spending to fuel
economic growth
Lower Tiers Income Increase
Source: Mckinsey.com

11. The Cities below 3rd Tier have higher consumption potential
Taobao Mobile‘s monthly active users reached
699 million, and annual active users reached
636 million, of which over 70% of new
annual active users came from sinking
market(cities below 3rd tier ).
Source: alibaba..com

12. TRADING
B2B vs B2C
A big portion of the trade in China is C2C.
But B2C is growing fast.

13. B2C roughly a quarter
15.4% of China’s ecommerce in 2018
B2B dominated
China’s ecommerce market in 2018
China’s Ecommerce Market Share
Source: -iResearch.com, chinainternetwatch.com

14. Trend
C2C B2C
In China, more than 60%
of online shopping is through B2C
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015 2016 2017 2018 2019 2020
China’s Online Shopping GMV Percentages
B2C vs. C2C 2011 - 2020
% B2C % C2C
Trading Takeaways
Source: -iResearch.com

15. $1119 Billion USD
generated in B2C ecommerce in 2018
40.9 % growth in B2C
Compared to a 15.7% growth in C2C
The Growth B2C
Source: -iResearch.com
B2C

16. BEHAVIOUR
DIFFERENTIATION IN TIER PURCHASE
The maturity and buying behavior between different tiers is very different

17. 99.9% of the population is online
*Older than 18
High Penetration
Can be seen across high tier cities
89% of online users
already shop online
High Tier Behavior
Source: -iResearch.com，- mckinsey.com

18. 160 million users online
Have yet to begin shopping online
Lower penetration
Yields higher growth rates and potential
62% of online users
shop online
Source: - mckinsey.com
Lower Tier Behavior

19. Android Apple Other
China
United States
Operating System Penetration
Source: - statcounter.com

20. Source walkthechat.com
WeChat Penetration
City Distribution of WeChat Commerce 2017 vs 2018
Shenzhen, Beijing, Shanghai, Guangzhou Hangzhou, Suzhou, Taiyuan,
Changsha ,Qingdao, Nanjing

21. MEGA EVENTS
SHOPPING
1 billion in first minute and 25 seconds of Singles Day(2018)

22. 12
12/12
Double Twelve
Revenue: 1.3 Billion USD
Volume: .9 Million
1/6
Children’s Day
Chinese New Year
11
11/11
Single’s Day
15/8
Autumn Moon Festival
2018
Revenue: 30.8 Billion USD
Volume: 10 Million
Revenue: 146 Billion
Volume: 3.4 Million
Revenue: 3.8 Billion
Volume: 2.3 Million
Revenue: 8.3 Billion
Volume: 4.9 Million
Top 5 Shopping Holidays

23. 90% on purchases
made on mobile
49.1 million transactions
Per second *maximum
$30.8 billion USD
In total revenue in 2018
0.82
3.04
5.8
9.3
14.3
17.8
25.3
30.8
0
5
10
15
20
25
30
35
2011 2012 2013 2014 2015 2016 2017 2018
Grossmerchandisevolume$BN
Alibaba’s Single’s Day Revenue
( USD BN)
Alibaba’s Singles Day
Source walkthechat.com,-tech2ipo.com,- techcrunch.com

24. In 20 minutes
Single’s day generated more revenue than
Total Black Friday online sales (6.5b)
2018 Single’s Day revenue 2.2x
Black Friday and Cyber Monday combined
0
5
10
15
20
25
30
35
40
45
50
2011 2012 2013 2014 2015 2016 2017 2018
Grossmerchandisevolume$BN
Black Friday, Cyber Monday and Single’s Day
Total Online Revenue (BN $)
Singles Day Cyber Monday Black Friday
Singles Day vs Black Friday & Cyber Monday
Source: -businessinsider.com

25. $30.8 billion USD
=
86x Boeing 747 = 2.0x GDP of Jamaica17,995x Ferrari LaFerrari =
Singles Day Revenue

26. PLATFORMS
PURCHASE
Tmall currently dominates the market, however new platforms
growing quickly

27. Platform Market Share

28. 58.2%
0.7%
0.2%
16.3%
5.2%
1.9%
Tmall and JD.com
Are the current largest marketplaces
58.2% market share
Owned by Tmall.com
1.8%
552 million
use Tmall.com
拼多多
Where They Shop?
Source: - statista,- chinainternetwatch.com
As of June 2018

29. DISTRIBUTION
Shopping
China’s shoppers love luxury brands, but until now their eCommerce
experience has not always measured up

30. 47.3% Daily use articles
46.5% Apparel & footwear
41.3% Computer & accessories
37.5% Food & healthcare
What They Buy?
Source: -Source Royal Mail, 2017