China Online Shopping Market Survey Report

China Online Shopping Market Survey Report China Online Shopping Market Survey Report，2009 1. Objective of the Research: As the number of Chinese netizens increases rapidly, shopping online has become a part of more and more people's daily life. In 2009, the ratio of online shopping transactions to total retail sales of social consumer goods increased to 1.6% and 1.9% respectively in 2009 from 1.3% in 2008. In addition to consumer’s increasingly preference to online shopping, financial crisis is also in favor of online shopping development. The purpose I did this research is to analysis the real reason why online shopping is gaining popularity in China. 2. Description of the Market: Online shopping is the process consumers go through to purchase products or services over the Internet. An online shop, e-shop, e-store, internet shop, webshop, webstore, online store, or virtual store evokes the physical analogy of buying products or services at a bricks-and-mortar retailer or in a shopping mall. Online shopping is a type of electronic commerce used for business-to-business (B2B) and business-to-consumer (B2C) transactions. But compared with B2B and B2C, C2C (Customer to Customer) appears to be more active because of more participants, a wide coverage, abundant types of products in great amounts and flexible trading patterns. A growing number of Chinese netizens are accustomed to online shopping due to its apparent price and convenience. Currently, around one in four netizens in China select online shopping, while it is two in three netizens in countries with high Internet penetration such as European countries, the United States and South Korea. Therefore, the potential of China’s online shopping market has not been fully liberated yet. 3. Market Metrics: It is estimated that till 2010, the registered customers in China's C2C e-commerce market will amount to 72 million, including 27 million active customers, and the trading volume is likely to amount to RMB110 billion yuan. In China, the three main China’s C2C market players are: 1) Taobao –A C2C Marketplace operated by Alibaba.com, a local Internet company in which Yahoo bought 40% stake in Sept. 2005. Alibaba.com also boasts the world’s largest B2B marketplace. 2) eBay Eachnet –eBay’s 100% owned China operations 3) Paipai –a new launched C2C marketplace operated by Tencent, which owns QQ, China’s most popular instant messenger. For example, recently, CNNIC made a C2C Shopping Market Survey, which involves Random Sampling Telephone Survey and Online Survey. Random Sampling Telephone Survey: 1) Covers C2C shoppers in 3 cities –Beijing, Shanghai and Guangzhou 2) Number of valid respondents: 1,856. Online Survey: 1) Conducted on 3 C2C marketplaces –Taobao, eBay, and Paipai 2) Surveyed both buyers and sellers 3) National coverage 4) Number of Valid Respondents: Buyers –3,299; Sellers -1,775. The basic findings I acquired including: 1) 3.3 million people have shopped Online (both B2C and C2C) in the 3 cities surveyed. Penetration rate is 25.5% of total online population. 2)2 million people in the 3 cities have shopped on a C2C marketplace (auction Website). Nationally, C2C shoppers are estimated to exceed 10 million people. 3) According to number of shoppers and their shopping frequency, Taobao and eBay had a market share of 67.3% and 29.1%, respectively, in the 3 cities over Year 2009. Random Sampling Telephone Survey C2C Online Shopping in the Three Cities C2C Shoppers in the 3 Cities C2C Shoppers in the 3 Cities Who Have Shopped: C2C Online Shopping 3 Cities vs. China Total Expressed as % of China Total: 4. Competitive Analysis: The difference between traditional shopping and online shopping are the following: When you do traditional shopping, you must carry what you buy and drive to the store where you want to buy it. But the good thing about traditional shopping is you can see what you want to buy. When you do online shopping, you will not carry any load or weight from the items you purchased. You will just wait for it to be delivered. You cannot feel or touch what you are buying. There's a risk that it might be defective. You can have great discounts using coupon codes. You can select from a wide range without hassle. Simply, clicking your mouse in browsing the different products. And you also can enjoy unique features like wish cards, wish lists and other more. The main advantage of online shopping is that it allows people to browse through many items and categories without leaving their house, to compare the prices of as many shops as they want, and also to order as many items as they can afford without having to worry about how they will transport them, because the online shopping websites also deliver the things to the buyer's home. Furthermore, the Internet is open 24 hours a day, 365 days a year, so you don't have to hurry or worry about finding a parking spot. If you plan on shopping from the Internet then first use a search engine to find online shops. If you want fast deliveries and low shipping fees then try to search for the shops that are in your country. You can use a shopping directory that contains categorized links to stores from a specific region or from all over the world, together with reviews from other customers. If you live in a big country you'll be surprised to find out that there are thousands of online shops available where you live, and these shops sell everything that can be sold, from baby products to dog houses and motor oil. Most of the online shopping websites have the same pattern, first you choose the category under which your item is listed, and then you can select the item that you're looking for, and add it to your shopping cart. If you want to buy other items, you click the "add to cart" button near them, and when you're finished you check out. After that you can see a list with everything that you've ordered, and the total amount that has to be paid. You can also remove items from your shopping cart if you desire to do so. Payment is usually done by credit card. The buyer enters the data on the credit card and the shop charges the price and then delivers the items to the buyer's house in a few days. The transaction is perfectly safe and the credit card data you send is encrypted so it can't be stolen. After you've done some online shopping you'll see how easy it is and you'll quickly get used to it. Soon you will know what the best shopping websites are and you will be able to buy the things you need very easy and fast, saving a lot of time and trouble. Online shopping is the most practical, economical and fun method of shopping, that is perfect for everyone. Some people said once that among the many advantages that the Internet gives us, one of the main ones is online shopping, an activity that many have become addicted to. Shopping is a necessity for all of us, some of us really enjoys it, and others try to keep it as simple and short as possible. Well, online shopping is the best solution for both those who consider it a chore that they try to avoid and for those who do it on a daily basis. 1) Benefits of online shopping: (Strengths& Opportunities) 1. Bargaining power of consumers. They enjoy a wider choice 2. Supplier power. It is more difficult for consumers to manage a non-digital channel. 3. Internet increases commoditisation 4. Threat of new entrants. Online means it is easier to introduce new services with lower over-heads 5. Threat of substitutes 6. Rivalry among competitors. It is easier to introduce products and services to different markets 2) Customers: In general, shopping has always catered to middle class and upper class women. Shopping is fragmented and pyramid-shaped. At the pinnacle are elegant boutiques for the affluent; a huge belt of inelegant but ruthlessly efficient “discounters” flog plenty at the pyramid’s precarious middle. According to the analysis of Susan D. Davis, at its base are the world’s workers and poor, on whose cheapened labor the rest of the pyramid depends for its incredible abundance. Shopping has evolved from single stores to large malls containing many stores that most often offer attentive service, store credit, delivery, and acceptance of returns. These new additions to shopping have encouraged and targeted middle class women. In recent years, online shopping has become popular; however, it still caters to the middle and upper class. In order to shop online, one must be able to have access to a computer, a bank account and a debit card. Shopping has evolved with the growth of technology. According to research found in the Journal of Electronic Commerce, if we focus on the demographic characteristics of the in-home shopper, in general, the higher the level of education, income, and occupation of the head of the household, the more favorable the perception of non-store shopping. An influential factor in consumer attitude towards non-store shopping is exposure to technology, since it has been demonstrated that increased exposure to technology increases the probability of developing favorable attitudes towards new shopping channels. Online shopping widened the target audience to men and women of the middle class. At first, the main users of online shopping were young men with a high level of income and a university education. This profile is changing. For example: Online Survey Findings Buyers’ Report Buyers Most Popular Shopping Categories in 2009 Female Buyers Most Popular Shopping Categories for Female Shoppers in 2009 Buyers Online Behavioral Pattern: 1. Purpose for the Goods Bought: 1) More than 95% are for personal use 2) More than 30% are for gifts to others 2. In Choosing a Seller: 1) More than 75% of buyers are concerned about the price or the price-to-quality factor 2) More than 75% of buyers are concerned about the seller’s feedback scores and transaction records 3) More than 55% of buyers are concerned about the quality of goods 4)39% Taobao buyers place emphasis on how they feel in communicating with the seller. 3. Communication Tools between Buyers and Sellers: 1) 89% Taobao buyers use Wangwang 2) 61% eBay buyers use Email?93% Paipai buyers use QQ 3) Logistics: (Strengths) Consumers find a product of interest by visiting the website of the retailer directly, or do a search across many different vendors using a shopping search engine. Once a particular product has been found on the web site of the seller, most online retailers use shopping cart software to allow the consumer to accumulate multiple items and to adjust quantities, by analogy with filling a physical shopping cart or basket in a conventional store. A "checkout" process follows (continuing the physical-store analogy) in which payment and delivery information is collected, if necessary. Some stores allow consumers to sign up for a permanent online account so that some or all of this information only needs to be entered once. The consumer often receives an e-mail confirmation once the transaction is complete. Less sophisticated stores may rely on consumers to phone or e-mail their orders (though credit card numbers are not accepted by e-mail, for security reasons). 4) Payment: Online shoppers commonly use credit card to make payments, however some systems enable users to create accounts and pay by alternative means, such as: , Debit card , Various types of electronic money , Cash on delivery (C.O.D., offered by very few online stores) , Cheque , Wire transfer/delivery on payment , Postal money order , Reverse SMS billing to mobile phones , Gift cards , Direct debit in some countries For example: Buyers Online Payment in China: Online Payment: 94% of Taobao users vs. 63% of eBay users and 87% of Paipai users Online Bank Account:1) More than 50% use ICBC (Industrial and Commercial Bank of China) 2) 15% use CMB (China Merchants Bank) 5) Design: (Strengths) Why does electronic shopping exist? For customers it is not only because of the high level of convenience, but also because of the broader selection; competitive pricing and greater access to information. For organizations it increases their customer value and the building of sustainable capabilities, next to the increased profits. 6) Market share: For developing countries and low-income households in developed countries, adoption of e-commerce in place of or in addition to conventional methods is limited by a lack of affordable Internet access. For example: C2C Shoppers in the 3 Cities Market Shares in 2009 7) Concerns: (Weaknesses & Threats) Given the lack of ability to inspect merchandise before purchase, consumers are at higher risk of fraud on the part of the merchant than in a physical store. Merchants also risk fraudulent purchases using stolen credit cards or fraudulent repudiation of the online purchase. With a warehouse instead of a retail storefront, merchants face less risk from physical theft.Of course, there still are many other reasons may lead buyers feel unpleasant when doing online shopping. For example: Buyers Unpleasant Online Shopping Experiences (Multiple selections are accepted) To conclude, although the benefits of online shopping are considerable, when the process goes poorly it can create a thorny situation. A few problems that shoppers potentially face include identity theft, faulty products, and the accumulation of spy ware. Most large online corporations are inventing new ways to make fraud more difficult, however, the criminals are constantly responding to these developments with new ways to manipulate the system. Even though these efforts are making it easier to protect yourself online, it is a constant fight to maintain the lead. It is advisable to be aware of the most current technology and scams out there to fully protect yourself and your finances. 5. Additional: 1) Consumer expectations: (Strengths) Rather than supporting the organization’s culture and brand name, the website should satisfy consumer's expectations. Many researchers notify that the uniqueness of the web has dissolved and the need for the design, which will be user centered, is very important. Companies should always remember that there are certain things, such as understanding the customer’s wants and needs, living up to promises, never go out of style, because they give reason to come back. And the reason will stay if consumers always get what they expect. McDonaldization theory can be used in terms of online shopping, because online shopping is becoming more and more popular and website that wants to gain more shoppers will use four major principles of McDonaldization: efficiency, calculability, predictability and control. Organizations, which want people to shop more online for them, consume extensive amounts of time and money to define, design, develop, test, implement, and maintain website. 2) Trends: (Strengths& Opportunities) One third of people that shop online use a search engine to find what they are looking for and about one fourth find websites by word of mouth. Word of mouth has become a leading way by which people find shopping websites. When an online shopper has a good first experience with a certain website, sixty percent of the time they will return to that website to buy more. are one of the things bought most online. However, clothes, Books shoes, and accessories are all very popular things bought online. Cosmetics, nutrition products, and groceries are increasingly being purchased online. About one fourth of travelers buy their plane tickets online because it is a quick and easy way to compare airline travel and make a purchase. Online shopping provides more freedom and control than shopping in a store. From a sociological perspective, online shopping is arguably the most predictable way to shop. One knows exactly what website to go to, how much the product will cost, and how long it will take for the product to reach them. Online shopping has become extremely routine and predictable, which is one of its great appeals to the consumer. For example: C2C Shoppers in the 3 Cities Concerns About C2C Online Shopping: (Multiple selections are accepted) C2C Shoppers in the 3 Cities Based on your own experience, will you Recommend C2C online shopping to others? C2C Shoppers in the 3 Cities 6-Month Intention to Buy More on: (Multiple selections are accepted) Dangdang and Joyo are two of leading B2C Websites in China. Joyo is now 100% owned by Amazon.com. 6. Conclusion: For example: Buyers Based on your own experience, will you Recommend C2C online shopping to others? Buyer Ratings Ratings for Overall Performance Taobao received the highest ratings for overall performance, regardless of what sites the respondents are from. Each site’s highest rating is given by its own respondents. The lowest ratings for Taobao and Paipai are given by respondents from eBay.com.cn .eBay’s lowest rating is given by respondents from Taobao.com.In Taobao respondents’opinion, eBay is no better than Paipai. In Paipai respondents’opinion, Taobao is much better than eBay. According to data from authoritative organizations such as China Internet Network Information Centre (CNNIC), the report elaborates the development and influencing factors of China’s online shopping industry, analyzes the market size, layout, regional distribution, and market share of online shopping websites. In addition, it focus on analysis of the 19 websites, in point of market share, acquired venture capital, logistics, performance, and competitiveness, as well as probes into future development trend of China’s online shopping industry. Insiders note that online shopping has become another new pillar of China's Internet industry after portals, computer games, text messages and search engines. ——周琪 0073131 07英语,2,班