(Ecns.cn) – The booming e-commerce industry is rewriting China's business structure, Xinhua reports.
A total of 160 million online shoppers spent over 500 billion yuan ($79.3 billion) shopping online in 2010, according to a report from the China Chain Store & Franchise Association.
The total sales volume will go up to 763.4 billion yuan ($121 billion) by the end of 2011, predicts China E-Business Research Center, while data from Taobao.com indicates that in each month of the first half of this year there were more than one million consumers spending over 5,000 yuan ($792.6) on China's largest online trade platform.
Taobao.com's statistics also reflect a distinctive increase in West China. The sales volume for the first half of 2011 in the Xinjiang Uyghur Autonomous region soared by 259% year-on-year, with the average growth rate in the whole area reaching 98%.
E-commerce has enabled people living in remote areas like the Qinghai-Tibet Plateau to find whatever they need on the Internet, making life as convenient as in developed coastal cities.
E-commerce has also attracted more senior shoppers, with over 100,000 consumers of Taobao.com aged over 60. Compared to young shoppers, their interest lies more in health products, home appliances and daily necessities.
The year 2011 has also seen a leap in China's group-buying business. According to Analysys International, an independent e-commerce research institute, the number of Groupon-like companies in China rocketed from 2,612 to 5,300 in the first half of this year.
Industry analysts estimate that the Chinese group-buying market will record a turnover of 60 billion yuan ($9.5 billion) in 2011, increasing by 40% from the previous year.
Meanwhile, commodities sold online are becoming more diverse. For webstore owners in the Xinjang Uyghur Autonomous Region, 20% of their revenues come from selling local fruit products. Opened on Taobao.com in 2006, "The Secret of Kroran" is an online shop selling jujube which had a turnover of 25 million yuan ($3.96 million) in 2011.
The promise of riches is drawing many well educated entrepreneurs into this lucrative market. Ruan Huajun, who holds a PhD from Fudan University, has successfully introduced e-commerce to his pearl farming and processing empire. Now his Fenix pearl powder is a best-seller on the Internet, and online retailing accounts for 60% of total sales.
However, e-commerce is not developing without a hitch. In October 2011, disgruntled vendors carried out a series of attacks on Taobao.com after it announced it would quintuple its service fees.
Many Chinese consumers still lack confidence in online shopping, especially in the group-buying sector, and are sometimes deceived by misleading advertisements, false prices and fake goods.
Statistics from Analysys International show that the number of complaints about group-buying mishaps came to 2,090 in the first half of 2011, more than the total amount of 2010.
Consumer rights advocacy groups in 21 cities across China have conducted investigations into online group-buying services to protect consumer interests and rights. In the meantime, many of the Groupon-like websites have failed to survive the heated competition.
The second half of 2011 has witnessed the closure of more than 1,800 group buying sites, which accounted for 40% of the total number during the heyday of the industry.
For the manufacturing business, e-commerce is still a new attempt. A salesperson at a famous home appliance company based in Zhuhai, Guangdong Province, said brick and mortar stores remained their main sales channel, though they had already launched virtual shops on major business-to-consumer sites.
E-commerce also faces major logistics challenges. Shop owners on Taobao.com secured orders worth 3.36 billion yuan ($528 million) during promotions on November 11, but the enormous amount of orders pushed couriers to the limit and led to a massive delivery delay. To tackle the problem, VANCL and Dangdang, two Chinese online retailers, have built their own logistics networks across the country.
Lin Ya, secretary general of the Beijing E-commerce Association, says the development of logistics networks will improve the industrial chain of online shopping.
