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ECONOMIC OBSERVER (China), ECONOMIC DAILY (Taiwan), MCKINSEY GLOBAL INSTITUTE

Worldcrunch

BEIJING - While many of the traditional retailing giants have been struggling lately in China, another form of consumer sales is thriving. According to a new report by the McKinsey Global Institute, China’s online retail revolution has exploded, as the country has just become the world’s second-largest e-tail (electronic retail) market with estimates as high as $210 billion for revenues in 2012 and a compound annual growth rate of 120% since 2003.

Betting on this new consumer trend are the American department store Macy's and the largest chain warehouse store Costco. Rather than brick-and-mortar operations, both plan to enter China this year by opening online storefronts. This comes just weeks after German electronics chain Media Markt announced it is shutting all its stores in China, and Walmart shutters operations at three of its Chinese locations, the Economic Observer reported.

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According to the McKinsey report, in 2012, China's year-on-year e-commerce growth was 64.7% with a colossal online shopper population of 247 million people. That figure is expected to reach 310 million by the end of 2013.

If forecasted growth rates continue, China’s e-tailing could generate anywhere from $420 billion to $650 billion in sales by 2020, and the market may equal that of the United States, Japan, the United Kingdom, Germany, and France combined today. A recent Reuters report has said that China's largest e-commerce firm, Alibaba, is already selling merchandise this year worth more than that sold by Amazon and eBay combined.

However, as the Economic Daily pointed out, unlike the other countries where online shopping is largely led by few mega size B2C (business to consumer) websites, nearly 70% of China’s e-tailings are C2C (consumer to consumer). This highlights the important contribution that small and medium-sized enterprises have played in this growth.

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