E-Commerce will be making quite a leap in sales over the next three years. A projected 25% growth rate will move sales to $718 billion by 2017, according to a new study by A.T. Kearney. Currently the market is at $390 billion.
The factors underlying the increase are:
More online shoppers The number of online shoppers continues to grow. China has 600 million Internet users—after 53 million new users connected in 2013. However, at only 46%, Internet penetration is still low compared to 83% in the United States.
More purchasing power. Personal disposable income per capita reached $3,000 in 2013 and is expected to rise to more than $5,000 in 2018.
More online security When Web 2.0 arrived, e-commerce sites in China began tracking and publishing credibility records of online sellers, reducing the risk of fraud.
A challenge to the expanding market is the scarcity of high-quality logistics providers in China, according to the report . This causes problems for e-commerce firms, including late deliveries, damaged and lost parcels, negative attitudes from delivery people, slow cash-on-delivery processes, poor return procedures, and no special services such as installation or the ability to try on purchases.
“As the overall geographic coverage of the Chinese e-commerce market expands, the ability to offer reliable and consistent services and delivery will be the major source of competitive advantage,” says A.T. Kearney partner and study co-author Mui Fong Goh.
"The research group offers e-commerce companies three options to solve these issues: build their own logistics networks, outsource to third-party providers, or form partnerships and acquire existing providers.