Cross-border shopping poised for big growth

By He Wei in Shanghai | China Daily USA | Updated: 2017-05-19 10:52

Cross-border e-commerce is set to become the next big thing in China, industry observers said.

The sector is expected to post an annual growth rate of 15 percent from 2016 to reach 1.3 trillion yuan ($188.5 billion) by 2021, according to market research firm Mintel.

The Ministry of Commerce said recently that consumption patterns in the country are changing too. Online consumption of services such as tourism, dining and entertainment has continued to rise, with sales of travel and take-away food rising by 64 percent and 163 percent respectively.

Online retail sales in China jumped 32.1 percent year-on-year to hit 1.4 trillion yuan in the first three months of 2017, according to the ministry.

In March, sales of imported goods from the US through Shanghai customs grew for the fifth consecutive month to hit a record 25.3 billion yuan. Analysts said this growth is in part driven by a soaring number of Chinese bargain hunters who crave an authentic taste of "Americana" and that haitao, or shopping directly from overseas sites, is likely to be more relevant to brands looking at initial market entry.

Matthew Crabbe, Mintel's Asia-Pacific director of research, suggested that retailers and brands should play to their national specialties when attempting to differentiate themselves from their competitors.

Meanwhile, China's central and western regions exhibited even stronger growth in online spending as the number of online shoppers in third- and fourth-tier cities explodes.

"Ten years ago, people said e-commerce would not take off in China. But as soon as you overcome the payment barrier, consumers here are so much more ready than those in other countries to take it on," said Richard McKenzie, a partner at consultancy Oliver Wyman.

Another trend the Ministry of Commerce has observed is that online players such as Alibaba Group Holding Ltd and Inc are expanding offline to improve the consumer experience, with convenience stores forming an emerging market.

In February, Alibaba and Shanghai-based retail conglomerate Bailian Group Co announced a partnership to jointly design brick-and-mortar stores to deliver enhanced customer services through technologies such as geo-location, facial recognition and big-data driven customer management systems.

In a similar move, Alibaba's major rival JD is planning to open more than 1 million convenience stores across the country in the next five years, with half of them located in rural areas.

According to JD CEO Liu Qiangdong, shop owners could order goods, including consumer electronics, home appliances, clothing and home furnishings, through JD's app and have them delivered to their stores.

"Physical and online stores don't have to go against each other. That means more connection and integration, which is not simply for retailers but also affects consumer behavior, manufacturers and other areas of industry," said Vishal Bali, managing director of Nielsen China.

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