China’s online retail sales are projected to jump to 785 billion yuan ($126 bil.) in 2013 as leading business-to-consumer (B2C) platforms consolidate their advantages, according to projections by a leading research firm.
“Tmall and Jingdong Mall have gradually become the driving force of the nation’s e-commerce industry, replacing the customer-to-customer model represented by Taobao.com,” said Analysis International analyst Chen Shousong.
For the month of November the two online malls accounted for over 70% of all B2C traffic, according to the NetEase e-commerce data analysis site Huihui.cn.
China’s online B2C sector is projected to hit 470 billion yuan ($75.4 bil.) in 2012, a 95.8% jump over 2011.
Part of the growth has been fueled by furious price wars seen as the most intense ever seen in the sector. The price wars kicked off in mid-August continued through a series of year-end promotions.
“Intensified competition among large platforms will further narrow retail profit margins,” said Chen. “However, it also helped set the tone for the nation’s B2C sector with large shopping platforms set to dominate the market in the years to come.”
The online surge has also induced brick-and-mortar chain store operators like Suning Appliance Co Ltd and Gome Electrical Appliances Holdings to enter the e-commerce fray, according to the report. While their market shares remain small for now, in the long run they are expected to challenge leaders like Tmall and Jindong Mall.
Jingdong Mall has announced plans to introduce new services based on mobile and cloud computing technologies to continue its growth. Tmall parent Alibaba Group has committed to growing in China’s third and fourth-tier cities with huge untapped purchasing power capacity.
Alibaba recently announced that the cumulative sales of the group’s Taobao.com and Tmall.com e-commerce subsidiaries passed 1,000 billion yuan ($160.5 bil.) during the first 11 months of the year as demand grew in small and mid-sized cities. The share contributed by Tmall.com was around 200 billion yuan ($32.1 bil.), according to Alibaba’s chief risk officer Polo Shao.
Still the report projects continuing declines in the growth rate of China’s e-commerce sectors as retailers find it increasingly difficult to attract new customers. From 2013 to 2014 the growth is expected to slow to 67%. For the following year growth is projected to slow further to 51.6%.
