China expected to overtake US for online sales market this year

China’s e-commerce market is expected to leapfrog that of the United States this year to become the world’s largest by total customer spending and could account for half of all Chinese retail spending within a decade.

The change in shopping habits comes as almost half of the country’s 1.3bn population now have direct access to the internet, and of that number nearly 80 per cent own smart phones or tablets.

China’s e-commerce market has grown at an average rate of 71 per cent from 2009 to 2012, versus 13 per cent in America.

The total size of e-commerce is expected to reach 3.3 trillion yuan (£348bn) by 2015, management consultancy firm Bain & Company said in a report released yesterday.

Total spending by Chinese consumers on online shopping reached $212.4bn in 2012, compared to $228.7bn in the US, the report said.

Chinese companies with retail outlets have had to realign their sales strategies to compete with online rivals who threaten to undercut them in an increasingly competitive market long dominated by e-commerce company Alibaba Group, and others like 360Buy Jingdong.

“It’s a massive change. It just means you need to be on the web, whether you like it or not,” said Serge Hoffmann, a partner at Bain and co-author of the report.

“Whether you’re an online player or an offline player, you need to have a meaningful, credible presence on the web.”

While still a small portion of total revenues, the growth of online sales is far outpacing offline sales growth.

Haier Electronics Group, which operates an online stall on Alibaba’s business-to-consumer site, saw its e-commerce revenue jump almost 500 per cent to 633 million yuan, or two per cent of its total revenue, in the first half of 2013, from 106 million yuan in the same period last year. Its total revenue grew 10.2 per cent.

Suning Commerce Group saw its e-commerce business rise to 10.6 billion yuan in the first half of 2013, an increase of 101 per cent on the same period last year.

Soon retail companies may have to take a leap of faith, shutting their bricks and mortar outlets to reduce overhead costs and hope that customers will turn to their online stores, said Nicholas Studholme-Wilson, a senior analyst at Sun Hung Kai Financial in Hong Kong.