E-commerce potential still robust in most Chinese cities

Shenzhen, Guangzhou and Hangzhou are the top three e-commerce cities in China, according to a report by AliResearch, a research organization affiliated with Alibaba Group Holding Ltd, that was released on Wednesday.

The report, termed the Alibaba E-commerce Development Index, looked into the online business development of 294 cities in China. The results were based on internal data from Alibaba's own e-commerce platforms, including Taobao and Tmall.

Cities in China's eastern and coastal regions lead the e-commerce wave, with higher ratios of both online buyers and sellers in their respective population, the data showed.

"Our index report focuses on evaluating the actual development of e-commerce in these cities regardless the population," said Sheng Zhenzhong, e-commerce expert with AliResearch and one of the report's lead authors.

According to Sheng, previous e-commerce reports focused on the overall online transactions of each city. "Some cities with large population usually end up with higher rankings on such lists," he said, adding that his report analyzed the "density" of online retailers and shoppers.

Apart from the top three cities, Beijing, Shanghai, Jinhua in Zhejiang province, Zhuhai in Guangdong province, Xiamen in Fujian province, and Suzhou and Nanjing in Jiangsu province also ranked high - from fourth to 10th, respectively, in terms of their overall development of e-commerce.

More than half of the top 100 e-commerce cities on AliResearch's list came from six provinces. Zhejiang province and Jiangsu province had 11 cities each on the list. South China's Guangdong had 10 cities, while East China's Fujian province had nine, followed by Shandong province and Taiwan province, each of which had six cities in the top 100.

At the same time, China's inland cities also have shown stronger growth momentum in terms of online shopping. In the top 25 cities with the highest online shopping density - reached by dividing the number of online shoppers by their city's population - six cities were from central and western China, including Wuhan in Hubei province and Taiyuan in Shanxi province.

Zhou Pei, an expert with AliResearch, said inland cities and third- and-fourth tier cities all have greater potential in terms of e-commerce.

A lack of business infrastructure, such as shopping malls, is what is mainly driving consumers there to shop online, said Zhou.

Findings from the Alipay Annual 2013 China Spending Report, released in January, also showed that consumption growth is gradually migrating from the wealthy coastal provinces to the less developed but rapidly growing interior sections. And people from those inland cities are quickly adopting mobile phones as their primary tool for shopping online.

In 2013, the highest per-capita concentration of Alipay mobile users was in a rural area of western Qinghai province, where Alipay mobile had a 38.3 percent penetration rate, according the Alipay report.