shutterstock_259839023
China’s booming e-commerce industry has experienced another year of steep growth in 2014. The transaction volume of the e-commerce market totaled 16.39 trillion RMB ($2.6 trillion USD) in 2014, surging 60% YOY, according to data released by the National Bureau of Statistics (NBS).

Rapid Growth of 2B (To Business) E-commerce

China’s e-commerce frenzy is encouraging domestic companies, big and small, to jump on board with 2B online shopping. The report revealed that the transaction volume of e-commerce targeted at enterprises soared 62.8% YOY to 12.75 trillion RMB in 2014, of which 12.25 trillion RMB is attributable to products and 0.50 trillion to services.

The e-commerce market for individual customers was worth 3.64 trillion RMB in 2014, up 48.6% YOY from the preceding year. Of the total amount, consumer goods account for 2.88 trillion RMB and services represent 0.76 trillion RMB.

Home-grown Platforms Dominate E-commerce Market

E-commerce platforms can be divided into three categories:

1) home-brew online marketplaces built and operated by companies themselves, like the sales and CRM platform of Sinopec Chemical Commercial Holding Co., Ltd.

2) third-party e-commerce sites, eg: Taobao.

3) e-commerce sites that run both in-house and other’s businesses, like JD, which has 70% of its revenue from self-owned businesses and 30% from third-party retailers.

The data show that 8.72 trillion RMB or 53% of the total volume was generated from businesses’ in-house online stores, and 7.01 trillion RMB or 43% from third-party e-commerce platforms. The transaction volume of mixed platforms hit 0.66 trillion RMB in 2014, rising 41.1% YOY.

Third-Party E-Commerce Sites Form Monopolies

Data of third-party e-commerce platforms showed clear monopolies, with 90% of the total trade volume dominated by the top 20 e-commerce sites, including Taobao, Tmall and JD.

The widespread application of 4G networks and huge internet user base have been the major propellers for the swift development of e-commerce industry in China. Moreover, the nation’s economic slowdown in 2014 has pushed more enterprises to seek opportunities online in a bid to reduce costs in marketing, sales and production, according to Sun Qingguo, a representative from NBS.

The growth of e-commerce has triggered the fast development of related industries, like online payment and logistics. For example, China has delivered a total of 14 billion mail packages in 2014, up 51.9% YOY, overtaking the U.S. as the world’s largest country in terms of packages delivered. The bureau noted that it is the fourth year for China’s logistic industry to record an annual growth rate of over 50%.

Image credit: ShutterStock