Trending this month



October 15, 2014

How Chinese Online Retail is driving more consumption,without affecting offline retail Sales

Research on Online  Retail Spending in China by McKinsey :how this is aiding future consumption..

share of online retail spending in China :Backward areas vs Upmarket areas



China's e-tail revolution | McKinsey & Company: China  have become the world's largest online retail market in 2013, and has marched ahead of the US. Chinese  Online shopper numbers reached 302 million, and the online retail transaction volume in 2013 exceeded 1.85 trillion yuan, equivalent to 7.8% of total retail sales

Astoundingly around  90% of Chinese electronic retailing occurs on virtual marketplace and online market and e-commerce platforms where manufacturers, large and small retailers, and individuals offer products and services to consumers through online storefronts  similar to  eBay or Amazon, Ther are the the Local Chinese Giants   include PaiPai, Taobao, and Tmall, which in turn are owned by bigger e-commerce groups. A large and growing network of third-party service providers offers sellers marketing and site-design services, payment fulfillment, delivery and logistics, customer service, and IT support."

One of the most interesting insights on the Chinese Online Retail Revolution is that " online retail is not substituting  or affecting offline sales , however they are spurring more consumption that is spurring more consumption across both the lower and middle classs

As China moves towards online retail based consumption ,it has enabled China’s shift from an investment-oriented society to one that’s more consumption driven A recent McKinsey research conducted by analyzing consumption patterns in 266 Chinese cities accounting for over 70 percent of online retail sales, found that a dollar of online consumption replaces roughly 60 cents of sales in offline stores and generates around 40 cents of incremental consumption (Exhibit 1).

The research suggests E-tailing in China as the research indicates, is not simply a replacement channel for purchases that otherwise would have taken place offline. Instead, it appears to be spurring incremental consumption, particularly in less developed regions