China's e-commerce boom brings shopping revolution

As shopping malls in Beijing were gearing up for the Christmas sales with dazzling decorations and price promotions, Lin Fangfang instead glued her eyes on her favorite online shopping site.

"With just a mouse click, you can buy high-quality stuff online at much cheaper prices, so why bother to go to shopping malls in the freezing weather and spend more?" asks the 31-year-old employee of an advertising company in China's capital.

Lin's online bargains ranged from a pair of leather gloves to a refrigerator, from organic vegetables to cooking utensils. The prices were at least half those found in shopping malls, and she even managed to buy some of them at 70 percent off the regular price.

"Online shopping has become an important part of my life, and I even downloaded an online shopping app to my mobile, so that I am free to shop wherever I am," Lin grins.

SHOPPING REVOLUTION

Lin's shopping preferences in the festive season sum up an excellent year for e-commerce in China, and a significant shift in consumers away from the high street as online vendors are expecting bumper Christmas sales.

She is just one of the millions of online shoppers who contributed to more than 1 trillion yuan (160 billion U.S. dollars) in revenue reaped in the first 11 months of 2012 by China's two biggest e-commerce platforms, Tmall.com and Taobao.com -- both affiliated with China's e-commerce giant Alibaba Group Holding.

Alibaba took in 19.1 billion yuan (3.06 billion U.S. dollars) on China's Nov. 11 'Singles' Day,' dubbed the world's largest online shopping spree. The revenue was twice that of this year's Cyber Monday, the United States equivalent.

A total of 6.4 billion yuan (1 billion U.S. dollars) was taken by 5,000 shopping outlets in Shanghai during the seven-day National Day holiday this year, and that amount was topped by Alibaba within half a day on Nov. 11, according to the company's own statistics.

Global research group Euromonitor even predicted in a recent study that Alibaba's Tmall will overtake Amazon in revenue by 2015, making Tmall the world s largest e-commerce site. Tmall's revenues should hit 120 billion U.S. dollars by 2017, according to Euromonitor, when Amazon's revenues will likely be 100 billion U.S. dollars.

Besides Alibaba, China's other e-commerce players have also reaped bountiful harvests in 2012. Three million orders were taken during a three-day burst of promotions from Nov. 9 to 11 on Suning.com, the website of China's top home appliance retailer. And Dangdang.com, one of China's biggest e-commerce sites, received orders worth 20 million yuan (3.2 million U.S. Dollars) on Singles' Day.

"We can call it a revolution to traditional shopping style," says Yang Bin, president of Beijing-based Analysys International. "The new age of e-commerce has already brought challenges to traditional retail as well as driving the domestic economy and creating jobs."

Indeed, e-commerce in China has become a behemoth worth many hundreds of billions of dollars. A total of 193 million Chinese regularly shop online, and by 2015, official statisticians expect, that number will have grown to 350 million -- half of China's forecasted online population.

Even the Chinese government is putting its weight behind e-commerce in its latest five-year plan, implementing policies in the hope of quadrupling annual e-commerce volumes from 2010 to 2015 to 2.9 trillion U.S. dollars, which will account for 9 percent of all Chinese retail. The number stood at 5 percent at the end of 2011.

If Alibaba is anything to go by, this aim is achievable. About 800 million items are on sale via stores on its two online platforms, luring more than 60 million visitors a day. As many as 48,000 items are sold every minute on Taobao.com alone.

But the opening-up of the online marketplace also brings risks. Nearly one-third of China's online shoppers fell victim to fraudulent websites during November promotions, costing them 4.7 billion U.S. dollars, according to the China Electronic Commerce Association.

Its data also showed that 8,160 complaints about online vendors were submitted in November, with 54.3 percent of them about false consignments, promotional fraud and slow delivery.

"Currently, most online shops compete on the basis of low price instead of focusing more on excellent service and building credible brands. This will harm the sustainable development of China's e-commerce," points out Cao Lei, director of the China Electronic Commerce Research Center.

"A legal system is needed to rein in fraudulent websites while e-commerce companies also need to discipline themselves to build up loyal customers," he adds.