China Online Shopping Maintains High Growth in Q3 2014

• Source:iResearch December 3, 2014, 3:24 PM
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According to the China online shopping market data in Q3 2014 released by iResearch, GMV of the market amounted to 454.76 billion Yuan in Q3，up 42.4% compared with Q3 2013. From the aspect of market structure, B2C occupied 36.6%, almost the same as Q2. From the aspect of market share, Tmall accounted for 51.1% and JD led the independent B2C market with a share of 45.0%.
Online Shopping Market Size
According to iResearch, China online shopping GMV reached 454.76 billion Yuan in Q3 2014, increasing 4.0% QoQ and 42.4% YoY. According to the data released by National Bureau of Statistics of China, the total social retail sales amounted to 5.8 trillion Yuan in Q3 2014, with YoY growth rate of 13.4%. The proportion of online shopping in total retail sales of social commodities was 7.8%, rising 0.5% over Q2. The growth rate of online shopping GMV was 3.2 times higher than that of total social retail sales.
iResearch analyzed that China online shopping GMV maintained impressive growth in Q3 and its YoY growth rate was over 40%, which far surpassed that of total social retail sales in the same period. On the one hand, along with rising Internet penetration in lower-tier cities, online shopping is gradually penetrating into third tier and four tier cities and cultivating local netizens’ habit to shop online. On the other hand, major online shopping players diversified their marketing methods by tapping into multiple channels including TV media, online platforms, outdoor advertising and mobile devices to cover different user groups. Their marketing efforts spurred online consumption and expanded user base which became a catalyst for growth of online shopping market.  

Market Structure
iResearch data shows that B2C (including B2C shopping websites launched by C2C) GMV in China online shopping market totaled 166.26 billion Yuan in Q3 2014, making up 36.6% of total online shopping GMV in China. The share rose by 5.6% over the same period of last year. The YoY growth of B2C market stood at 68.1% which surpassed that of online shopping sector and C2C market.
iResearch ascribes the remarkable growth of B2C market to two factors. First, online shoppers are more likely to favor B2C platforms due to better product quality and vendor reliability over C2C platforms. Second, under increasing influence of e-commerce, numerous traditional enterprises set up their online storefronts on B2C platforms. Therefore, they relied heavily on B2C platforms, hence indirectly driving up the growth of B2C market.

Market Share
The concentration of B2C market intensified with a small rise in the market share of major operators. Top 10 players accounted for 89.7% of total B2C GMV in China, rising by 1% over the previous quarter. Tmall consolidated its leading position with a share of 51.1%, followed by JD at 17.5%.
JD made up 45.0% of independent B2C GMV and its market share increased steadily for three consecutive quarters. Among second-tier players, Suning captured a share of 11.3%, which dropped 1.3% over the previous quarter. Based on its current performance, Suning’s strategy of same price online and offline and multi-channel operations has not worked out. In addition, the market share of Amazon China, Yixun, Vipshop, Yihaodian, Dangdang and Gome rose by varying degrees in the third quarter.
After the price war in the second quarter, major e-commerce operators began to focus on platform. In the POP platform convention held in July, JD presented four supporting plans including logistic, technology, finance and service to vendors for overall promotion of its POP platform. Meanwhile, Suning launched sop.suning.com in September which provided vendors with a whole set of retailing solution including logistic, promotion, customer service, after-sales service, finance, IT, etc. free of charge. iResearch believes that open platform will become an important development trend in the future for B2C market. For the main participants, how to attract vendors is the key point. Being the first participant, Tmall has got the upper hand. How will the followers compete with it? JD and Suning have respectively advantageous in logistic and supply chain procurement, thus they will make full use of their advantages to attract vendors and online shoppers.

Data From iEcTracker
According to the measurement data of iEcTracker, JD and Tmall made up of over 80% of B2C mobile phone sales in July 2014 and their mobile phone GMV picked up since June. Market share of Yixun and Suning dropped marginally in July with a combined share of less than 11%.
iEcTracker is a third party measurement product which provides retailing data of major e-commerce platforms in China. Through measuring retailing data of online shopping platforms, it provides e-commerce operators and brand manufacturers with reference and suggestions on industry structure, their advantages and disadvantages, user’s behavior, R&D and design of products, as well as marketing plans.