This document analyzes the characteristics and evolution of Chinese eCommerce users based on data from 2012-2013. It finds that the number of online shoppers in China reached 242 million in 2012, with an average spending of RMB 5,023. Online shoppers are increasingly purchasing overseas goods, with total spending reaching RMB 48.3 billion in 2012. The document also examines user demographics, spending habits, and preferred product categories in detail. Key trends include rising incomes levels, more purchases of luxury brands and international products, and growth of online shopping in lower-tier cities.

1. China
eCommerce Market
Analysis Report
2013
Chapter Two Characteristics and evolution of
Chinese eCommerce users
July 2013

2. Table of Contents
2.1 Characteristics and evolution of Chinese eCommerce users
2.2 New demand of Chinese eCommerce users
2.3 Chinese online users’
preference for
eCommerce sites

3. Table of Contents
2.1 Characteristics and evolution of Chinese eCommerce users
2.2 New demand of Chinese eCommerce users
2.3 Chinese online users’
preference for
eCommerce sites

4. 2.1.1 Key Note – Demographics and Evolution of
Chinese eCommerce users
Online shopping increases both in
frequency and amount every year
Strong demand for luxury brands
leading to great opportunities for
international brands
Users’
shopping frequency increases
- Unprecedented growth of online shopping among Chinese
consumers
- Online shoppers’
average spending reaches RMB 5,023,
narrowing the gap with the U.S.
- Age group and income level of the users rise continuously
- Proportion of affluent consumers from the third and fourth
tier cities increases
- Online shoppers demand for luxury brands are steadily
increasing
- Popularity of smartphone and social media drives the
penetration rate of online shoppers and trigger their
purchasing desire
－1－

5. 2.1.2 General Overview and Uptrend of China
eCommerce Market
The growth of internet user population slows down, but online shoppers still maintain its strong momentum:
- Total number of Chinese online shoppers reached 242 million, with the proportion of online shoppers
increased to 42.9%.
Online Shopper Population and Penetration Rate in 2006 - 2012
42.9%
35.1%
24.5%
22.1%
24.8%
37.8%
24202
28.1%
Number of online shopper
(in ten thousand)
% of Online Shoppers
19395
16051
10800
7400
4641
3357
2006
2007
2008
2009
2010
2011
2012
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
－2－

6. 2.1.3 New Online Shopper Population in China vs
International Markets
The number of new Chinese online shoppers surpasses the total population of other countries. With the increment
of per capita consumption, the market sees huge potential:
- In line with the data from CNNIC, Boston Consultancy Group remarked that the number of China’new
s
online shoppers hit 3.8 million, which exceeded Canada’total population.
s
Internet user population propels the rapid development of China’eCommerce market
s
Population in million
New internet users
100
88
New online shoppers
86
73
80
73
61
France’population
s
60
43
36
40
26
20
17
25
11
10
2006
2007
38
47
38
29
34
Korea’population
s
40
31
Canada’population
s
12
2005
50
48
0
2008
2009
2010
2011
2012
2013
2014
2015
The era of rapid growth of network connection…
…brought about the era of rapid growth in eCommerce
Data Source: BCG,
“The World’Next E-Commerce Superpower: Navigating China’Unique Online-Shopping Ecosystem”
s
s
,
November 2011
－3－

7. 2.1.4 Growth of Chinese Online Shoppers’
Per Capita Consumption (1)
In 2012, Chinese online shoppers’ capita consumption reached RMB 5,023, YoY growth 25%.
per
- The purchasing power of Chinese online shoppers was strong, with more than half of the users spending over
RMB 1,000 annually online.
- Most users spent about RMB 2,001 - 5,000 on online shopping, which is 22.6% of the total share.
Online Shoppers’
Annual Per Capita Consumption in 2012 (RMB)
Over RMB 50,000
1.1%
RMB 20,001－50,000
1.8%
RMB 10,001－20,000
3.9%
RMB 8,001－10,000
7.3%
RMB 5,001－80,00
4.8%
RMB 2,001－5,000
22.6%
RMB 1,001－2,000
14.5%
RMB 501－1000
22.3%
RMB 301－500
10.8%
RMB 101－300
7.0%
Under RMB 100
3.9%
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
－4－

8. 2.1.4 Growth of Chinese Online Shoppers’
Per Capita Consumption (2)
- Mega spenders (annual spending over RMB 10,000) occupied 7% of the total number of online shoppers and 40%
of the total spending of online shopping.
- Experienced online shoppers of the affluent class should be the main target consumers of eCommerce enterprises.
Online Shoppers Classification
Type
Small spender
Annual online shopping spending (RMB)
Distribution in 2010
14
<2,000
57
Moderate spender
21
2,000-5,000
24
Big spender
5,000-10,000
24
40
Mega spender
>10,000
12
7
Proportion of online
shoppers (%)
Proportion of consumer
spending (%)
Data Source: BCG,
“The World’Next E-Commerce Superpower: Navigating China’Unique Online-Shopping Ecosystem”
s
s
,
November 2011
－5－

9. 2.1.5 Growth of Chinese Online Shoppers’
Per Capita Shopping Frequency
In 2012, Chinese online shoppers’
shopping frequency recorded a substantial growth:
- Users’
bi-annual average shopping frequency reached 18 times, which is 3.5 times of the size in 2011.
- The proportion of online shopping with over 10 times bi-annually took up more than 50% and increased
substantially by 23.8%.
- As time passes by, online shopping beginners became experienced online shoppers on a steady pace.
According to the research conducted by PwC, the online shopping frequency of Chinese consumers surpassed
the average level of the world. In China, nearly 50% of online shoppers browsed online at least once a week,
while the average of around the world was 29%.
2011 - 2012 Online Shopping Frequency within 6 Months
54.5%
Year 2011
Year 2012
21.9%
21.0%
18.9%
18.5%
10.5%
1－2 times
30.7%
14.1%
3－4 times
5－10 times
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
Over 10 times
－6－

10. 2.1.6 Types of Goods Purchased by Chinese
Online Shoppers
Clothing, footwear and accessories, daily necessities and 3C products are the goods that are mostly purchased by
the users:
- In 2012, 81.8% of users had bought clothing, footwear or accessories via internet, mainly due to their strong
desire for personalization and the limited diversity and insufficient coverage of offline actual stores’
merchandise.
- Standardized products such as 3C products also have a higher purchase rate, mainly due to the price advantage
of online shopping.
Percentage of Online Shoppers Purchasing Various Commodities in 2012
Clothing, footwear & accessories
81.8%
Daily necessities
31.6%
Computers, digital communications products & accessories
29.6%
Home electrical appliances
22.9%
Books & audio-visual publications
18.4%
Virtual cards, e.g. prepaid cards, game cards
16.6%
Cosmetics & beauty products
15.2%
Food & health products
14.5%
Handbags & luggage
12.8%
Food & beverage service
8.5%
Movie & show tickets
8.5%
Maternity & baby products
6.9%
Stationery
6.8%
Jewelery & accessories
6.7%
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
－7－

11. 2.1.7 Factors Affecting Chinese Online Shoppers’
Consumption Behaviour
When more and more users are elevated to affluent consumers, they demand more upmarket goods to enhance the
quality of life:
- Categories related to personal care and lifestyle will develop rapidly along with the upgrade of the user class.
- Categories related to health care, 3C products and baby products will continue to grow as income level rises.
Consumption Pattern of Different Commodities and Income Groups
Turning point
Continuous growth
Per capita consumption (index)
Per capita consumption (index)
Low income group
Quasi-middle class
Emerging middle class
Middle class
Affluent consumers
Family Income
Skincare, clothing, footwear & accessories
Family Income
Vitamins, handsets, baby products
Data Source: BCG,
“The Affluent Will Be a Major Driver of Consumption Growth in China”November 2012
,
－8－

12. 2.1.8 Overview of Chinese Online Shoppers’
Consumption by Region
Consumers from the third and fourth tier cities have a higher demand for online shopping, which offers them a
greater variety of goods to choose from:
- The number of affluent consumers from the third and fourth tier cities had been gradually increasing. They
preferred online shopping because the coverage of offline actual stores in their cities was limited, particularly
that of the middle to luxury brands.
- The spending amount of the online shoppers in the fourth tier cities is similar to that in the second and third
tier cities, yet accounting for a larger share of disposable income.
Average Spending and Share of the Total Retail Spending in the Third and Fourth Tier Cities
Online spending per online shopper (RMB)
Percentage of online shopper’retail spending (share of disposable income)
s
Top tier
6,819
18
Second tier
4,922
17
Third tier
4,624
21
Fourth tier
4,467
27
Data Source: McKinsey Global Institute, China’e-tail revolution: Online shopping as a catalyst for growth, March 2013
s
－9－

13. 2.1.9 Analysis of Demographics and Purchasing
Behaviour of Chinese Online Shoppers (1)
- Chinese online shoppers had a tendency moving towards middle-age group, with 35.7% of users aged 31 or
above and increased by 9% as compared with 2011.
- Purchasing power of users from the middle age group is even stronger. They are interested in luxury fashion
brands, and maternity and baby products which are related to their next generation.
Age Group of Online Shoppers in 2006 - 2012
Year 2011
Year 2012
37.5%
34.4%
33.1%
30.3%
18.4%
14.9%
10.2%
6.2%
1.5%
7.1%
5.6%
1.0%
Under 18 years old
18 -24 years old
25 - 30 years old
31 - 35 years old
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
36 - 40 years old
Over 40 years old
－10－

14. 2.1.9 Analysis of Demographics and Purchasing
Behaviour of Chinese Online Shoppers (2)
With ongoing age growth of online shoppers and economic development in China, the income level of online
shoppers has been improved:
- The proportion of online shoppers with personal monthly income of RMB 8,000 or above has increased,
indicating that the number of users from the middle class or above has increased.
- The decline in the proportion of the low income group indicated that the economy of China’third and
s
fourth tier cities boomed and the income level of the local citizens improved.
Income Groups of Online Shoppers in 2011 - 2012
Over RMB 8,000
9.5%
12.9%
RMB 5,001 - 8,000
10.5%
12.6%
RMB 3,001 - 5,000
26.3%
29.7%
RMB 2,001 - 3,000
22.0%
19.2%
RMB 1,001 - 2,000
17.7%
12.6%
RMB 501 - 1,000
7.7%
7.0%
Under RMB 500
6.3%
6.2%
Year 2011
Year 2012
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
－11－

15. 2.1.9 Analysis of Demographics and Purchasing
Behaviour of Chinese Online Shoppers (3)
Users’
purchasing behaviours may vary from different demographics, in particular their preference on product
categories:
- Take gender as an example, men are generally more preferred with 3C products while women pay more
attention to cosmetics / personal care / baby products.
Top 10 Commodities Purchased by Chinese Male Online Shoppers in 2012
Top 10 Commodities Purchased by Chinese Female Online Shoppers in 2012
Clothing, footwear,
luggage, outdoor products
30.9％
Clothing, footwear,
luggage, outdoor products
47.3％
Mobile phone prepaid package
21.2％
Cosmetics & personal care
11.7％
Books & audio-visual publications
7.6％
Mobile phone prepaid package
11.4％
Home decor
5.8％
Home decor
7.0％
IT products
4.7％
Maternity & baby products
5.4％
Online lottery
4.6％
Books & audio-visual publications
3.9％
Maternity & baby products
3.9％
Fresh fruits & other food
2.9％
Communications products
3.5％
Small electrical appliances
1.8％
Cosmetics & personal care
3.3％
Digital products
1.5％
Digital products
2.8％
Online lottery
1.3％
Percentage (%)
Percentage (%)
Data Source: McKinsey Global Institute, China’e-tail revolution: Online shopping as a catalyst for growth, March 2013
s
－12－

16. Table of Contents
2.1 Characteristics and evolution of Chinese eCommerce users
2.2 New demand of Chinese eCommerce users
2.3 Chinese online users’
preference for
eCommerce sites

17. 2.2.1 Key Note – New Demand of Chinese
eCommerce users
Growing desire in international brands
- In the second half of 2012, online shoppers purchased
overseas goods from local eCommerce sites 4 times on
average
- User spent over RMB 400 for each purchase
Stronger demand for choosing more
brands with lower prices
Logistics and after-sales service
are key to success
- Purchasing overseas’
goods reveals the behaviour of the
affluent class - concern about brand and quality
- The major advantage of purchasing goods from overseas
is that users can choose from a wide variety of brands with
relatively lower prices
- The major problems in purchasing overseas’
goods are
long delivery time and lack of after-sales service
- Set up online store to reduce the cost of expanding actual
store. Provide worldwide after-sales service and acknowledge
the users by lowering the prices
－13－

18. 2.2.2 Market Scale of Chinese Online Shoppers
Buying Overseas Goods
Chinese online shoppers buying overseas goods are growing rapidly:
- In 2012, the amount spent on buying overseas goods hit RMB 48.3 billion, with an increase of 82.3% yearly.
- According to the estimation by China E-Business Research Center, the growth of buying overseas goods this
year will remain steady and the amount is expected to exceed RMB 70 billion.
Amount in purchasing overseas goods in China in 2008 - 2013
Transaction amount (in RMB 100 million)
744
483
265
120
24.1
2008
50
2009
2010
2011
2012
2013e
Data Source: China E-Business Research Center, China B2C E-Commerce Report 2013 Mid - year Report, February 2013
－14－

19. 2.2.3 Overview of Chinese Online Shoppers’
Buying Overseas Goods
The product categories of overseas goods reflect the needs from the affluent consumers:
- Clothing, cosmetics, baby products, 3C products and health care products are the major product categories.
- As the income level of online shoppers increases, there is a stronger demand for luxury brands which have
not yet entered the Chinese market. For foreign brands, they must seize the opportunity to enter the Chinese
market.
Common Overseas Goods Purchased by Chinese Online Shoppers
Clothing (including clothes & bags)
50.0％
Cosmetics & beauty products
26.8％
Milk powder, infant products
15.2％
Computers, digital communications
products & accessories
10.7％
Household products
5.4％
Health products
5.4％
Jewellery & watch
3.6％
Books, audio and visual publications
1.8％
Others
8.0％
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
－15－

20. 2.2.4 Analysis of Chinese Online Shoppers’Motives
and Demand for Overseas Goods (1)
Users choose to buy foreign products because of a wide range of different brands, low prices and better quality:
- Despite the tax, the domestic pricing of foreign products are cheaper than that when imported to China due
to markup of prices.
- 1/3 of Chinese online shoppers purchase overseas goods via local eCommerce sites because they are unable
to reach the foreign brands. To the foreign brands which have not yet entered the Chinese market, they should
be aware of this phenomenon and set up their own online store to expand their business in China.
- The food safety and product quality issues in China have caused the affluent consumers to look for foreign
goods online from the developed countries. The quality assurance of goods is the major considering factor
when the middle class or the upper class tends to purchase.
Reasons of Users’
Purchasing Overseas via Purchasing Agent
Cheaper than local pricing
39.3％
Favourite brands do not exist in China
33.9％
Guaranteed quality
30.4％
Trendy and fun
8.9％
Others
10.7％
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
－16－

21. 2.2.4 Analysis of Chinese Online Shoppers’Motives
and Demand for Overseas Goods (2)
The major problems of buying overseas goods are long delivery time and lack of after-sales service:
- Most of the couriers of the overseas eCommerce operators fail to deliver the goods on the next day, not to
mention the delivery time of the aircraft cargo and the time for custom check. Therefore, the average delivery
time of the goods purchased oveseas is usually more than two weeks.
- To foreign brands which aim for success in China, they should opt for setting up their own online store to take
the advantage of the low cost of China’speedy courier service to meet customers’
s
needs.
- To tackle the after-sales service issue, brand owners should consider providing worldwide after-sales service.
Opening an online store in China is also a strategy to meet users’
demand for sales service.
Major Problems Encountered when Buying Overseas Goods
Long delivery time
92.6％
Fail to return or exchange goods
22.2％
Unauthorized use of credit card overseas
7.4％
Quality issue of the purchased goods
3.7％
Damage or lost during delivery
3.7％
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
－17－

22. Table of Contents
2.1 Characteristics and evolution of Chinese eCommerce users
2.2 New demand of Chinese eCommerce users
2.3 Chinese online users’
preference for
eCommerce sites

23. 2.3.1 Key Note – Chinese Online Shoppers’
Preference
for eCommerce
Consistent growth rate of eCommerce
- New users are quickly taken up by top eCommerce operators
operators and network users
- The number of online shopping channels increases, driving the
loyalty towards a specific site decreases
Consistent low conversion rate
- The churn rate of top eCommerce enterprises is around 10%,
mainly because users are unable to locate the goods they want
induces business difficulties
- The conversion rate of eCommerce website is generally low.
Audience targeting is required to push product information
which match the characteristics of users’
behaviour
- In view of the significant cost increment for acquiring new users
in recent years, optimization and development are required for
customer relationship management
Different eCommerce operators need
different solutions to cope with
fierce competition
- For eCommerce platform operators, they need to improve online
sales conversion rate, tackle the churn issue of existing clients and
enhance the conversion rate of proprietary products
- For independent merchants, they have to face the challenge of
acquiring new users
- For newly established eCommerce operators, they have to enhance
brand awareness to rapidly expand the new user group in order to
strive for market share during a short period of time
－18－

24. 2.3.2 Increasing number of eCommerce Websites
in China
In 2012, the number of eCommerce websites in China increased by 20% as compared with 2011, reflecting the severe
competition of this industry:
- The number of eCommerce websites increased by nearly 20%, yet that of online shoppers increased by 24% only.
- New users were mostly attracted to top eCommerce websites, implying a bigger pressure for the newly
established eCommerce players.
- The emergence of new eCommerce players gave rise to a more scattered user base due to the increasing number
of choices. User loyalty to a specific website drops.
Growth of Chinese B2C and C2C eCommerce Enterprises in 2008 - 2013
Amount (in unit)
24875
25529
20750
15800
9962
5460
2008
2009
2010
2011
2012
2013e
Data Source: China E-Business Research Center, China B2C e-Commerce Report 2013 Mid-year Report, February 2013
－19－

25. 2.3.3 Loyalty Change of Chinese eCommerce Users
The increasing number of eCommerce websites has led to a greater diversity of options, causing the users to be less
loyal to a specific website:
- During 2009 to 2012, the proportion of online shoppers using only one shopping website has dropped
significantly.
- Users will compare the types of goods, brands and discounts from different eCommerce websites prior to their
purchase.
- Since the payment methods are relatively the same, the cost of users switching among eCommerce operators is
relatively low as well. To the eCommerce enterprises, brand differentiation of their products and price war
become the core strategies to retain customers.
Proportion of Using One Shopping Website
Only in 2009-2012
Proportion of Loyal Users of Major Shopping Websites in 2012
2012
89.2％
JD.com
8.9％
91.1％
8.6％
91.4％
6.3％
93.7％
6.2％
93.8％
4.8％
95.2％
1 The Store
2011
10.8％
Suning.com
2010
84.8％
VANCL
2009
15.2％
Amazon China
51.1%
50.8％
Dongdong.com
61.1%
49.2％
Tmall
72.7%
Taobao
PaiPai.com
80.0%
2.7％
97.3％
Users using one website only
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
Users using more than one website
－20－

26. 2.3.4 Change of Chinese Online Shoppers’
Browsing
Time of eCommerce Websites
Online shoppers’
average browsing time decreased, yet the conversation rate of each eCommerce operator did
not increase significantly:
- Average age of users rose. Average time for browsing the shops decreased significantly from 20 minutes to
17 minutes.
- The drop of users’
browsing time was not caused by the optimization of users’
experience of each
eCommerce website, which might help users save time for decision making. Data showed that the conversion
rate of each eCommerce enterprise did not show significant improvement.
Online Shopping Daily Coverage and Average Browsing Time per User
Daily coverage (in million persons)
8000
Daily Effective browsing time per user
68％
June 2010
7000
June 2011
6000
5000
-16％
4000
3000
2000
1000
0
Data Source: China E-Business Research Center, Data Analysis Enhances E-Commerce Conversion Rate, September 2012
－21－

27. 2.3.5 Analysis of Chinese eCommerce Websites
Conversion Rate
In an extremely competitive business environment, the conversion rate of top eCommerce websites, from the page
displaying the products to the payment confirmation page, was merely 1%:
- The conversion rate of top eCommerce enterprises remained low at around 1%.
- For the long-tailed independent merchants, they should broaden their client base by expanding the traffic and
reinforcing users’
purchasing power so as to improve the business. If eCommerce operators are able to attract
or direct users which match the characteristics of potential customers of products on their website, the client
base can be expanded and the website conversion rate will be enhanced simultaneously.
Visit Conversion Rate Data of Selected eCommerce Websites during 8-14 July 2012
Conversion
Dongdong.com
Product description
page
Shopping cart
Order
confirmation
Payment
JD.com
51buy.com
14.9％
4.5％
2.5％
1.3％
20.3％
30.2％
4.8％
23.6％
55.6％
4.7％
97.9％
27.1％
52.0％
1.4％
29.8％
4.6％
2.0％
1.0％
17.0％
43.5％
50.0％
Method of calculating conversion rate: Hitwise monitored the network visiting behaviours of over 10 million online devices. Based on users’
visiting
behaviours on the transaction milestone page, the purchase conversion rate was restored. Such data only included browser data via PC, excluding data
of mobile phones and APP. Statistics indicator is defined as Visits.
Data Source: China E-Business Research Center, Data Analysis Enhances E-Commerce Conversion Rate. September 2012; Hitwise,
Visit Conversion Rate Data of E-Commerce Websites, August 2012
－22－

28. 2.3.6 Overview of New Users of Chinese
eCommerce Websites
Most of the new Chinese online shoppers are absorbed by top eCommerce enterprises. Independent merchants
face the challenge of acquiring new users:
- Most of the new users choose top eCommerce platforms such as Taobao, Tmall and JD.com, etc.
- To tackle this challenge, on one hand the independent merchants can implement product differentiation, on
the other hand, they can fill the niche by catering to the users when the top eCommerce enterprise loses.
Percentage of New Users Using Various Shopping
Websites in 2012
Growth Rate of User Volume of Major Shopping
Websites in 2012
44.2％
27.6％
22.2％
22.1％
14.3％ 13.9％
15.3％
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
9.9％
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JD
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St
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11.1％ 11.0％ 10.6％
2.8％
St
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2.8％
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3.7％
VA
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4.6％
Am
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6.4％
Pa
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JD
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7.1％
12.4％ 12.3％
－23－

29. 2.3.7 Cost Change of Chinese Independent
Merchants in Acquiring New Users
The costs for Chinese B2C eCommerce enterprises to acquire new users increase year by year, with a rise of
several times in 5 years:
- The costs for independent merchants to acquire new users increase due to intense competition and
increment of advertising rates. The costs of acquiring a new user rose from around RMB 20 in 2009 to
over RMB 100 in 2012.
- To tackle this problem, independent merchants should be based on existing information to redefine
users’
characteristics by means of CRM. With such data, they can explore the source of new users by
audience targeting or marketing.
Data source: Interviews with industry professionals, March 2013
－24－

30. 2.3.8 Change of Repurchase Rate of Chinese
Online Shoppers
Except for some of the top eCommerce enterprises, the repurchase rates of most eCommerce websites in China
exhibit a downward trend:
- Chinese online shoppers’
monthly repurchase rates at most of the eCommerce websites show a downward
trend.
- Main reasons are the increasing number of eCommerce enterprises which lead to intense competition with
more options for users and their frequent switch from one website to another, resulting in the rise of churn
rate. In addition, some of the eCommerce operators are incapable of sustaining their business and expose
their weakness regarding product quality and integrity after running their business for a while.
China’Top 10 B2C eCommerce Websites with Highest Monthly Repurchase Rate in 1H 2012
s
Rank
Website
Monthly Repurchase Rate (%)
Monthly Repurchase Rate Relative Trend (Jan - Jun 2012)
1
Vipshop.com
82.41％
Fashion, clothing
2
OkBuy
68.60%
Footwear, bags & accessories
3
1 The Store
59.52%
General merchandise
4
Fclub.cn
57.89%
Fashion, clothing
5
JD.com
54.98%
General merchandise
6
Dongdong.com
53.48%
General merchandise
7
Mbaobao.com
51.49%
Footwear, bags & accessories
8
YouGou
51.46%
Footwear, bags & accessories
9
COFCO womai.com
50.91%
Food
10
LAFASO
47.65%
Cosmetics
Data source: iResearch,
“China Online Shopping Report in Q2 2012”July 2012
.
Website category
－25－

31. 2.3.9 Change of Churn Rate of Chinese Online
Shopping Website
The churn rate of China’ eCommerce websites was around 10%, the long-tailed independent merchants were
top
facing more user loss:
- In 2012, 6.5% of users stopped using the shopping website which they used 6 months ago. The differences
among different websites’
user loss varied, even the top independent merchants had a churn rate as much
as 10%.
Proportion of Major Shopping Websites’
User Loss vs.
Total User Loss in 2012
Churn Rate of Major Shopping Website in 2012
22.9％
37.5％
17.8％
14.0％
10.2％
14.8％
1.9％
7.2％
St
or
e
e
Th
1
uy
.co
51
b
Pa
i
Pa
i
CL
m
m
VA
N
co
ps
ho
p.
on
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
Vi
az
Am
N
.co
op
ew
eg
m
g.
co
m
1.9％
ne
La
ox
ec
M
1
Th
e
St
or
e
m
g.
co
on
gd
CL
Do
n
VA
N
l
al
Tm
Pa
i
Pa
i
on
az
Am
m
JD
.co
ba
o
11.5％ 11.0％
8.7％
3.2％
Ta
o
12.5％
6.4％
sh
7.0％
Vi
p
7.0％
－26－

32. 2.3.10 Analysis of Reasons Causing User Loss of
Chinese Online Shopping Websites
User loss of Chinese online shopping website is mainly due to incomplete product range, lack of quality assurance
and after-sales service:
- For eCommerce website, the way to enhance conversion rate and sustain users’
loyalty is to implement targeting
strategy which target potential users and push appropriate SKU of the products and enhance the conversion rate
of SKU of the proprietary products, so as to minimize users’
frustration in locating the products they want.
- Meanwhile, eCommerce enterprises should concentrate on developing sustainable business, ensuring product
quality and after-sales services even during promotional period / price war. Otherwise, users will have the feeling
of being deceived.
Reasons for Users to Stop Using Specific Website
Unable to locate goods they want
47.1％
Poor quality of goods
24.2％
Expensive pricing of goods
17.8％
Deceive consumers
8.3％
Dissatisfactory after-sales service
4.5％
Poor delivery service
4.5％
Unable to open the website
2.5％
Data Source: CNNIC,
“2012 Online Shopping Market in China Research Report”March 2013
,
－27－

33. Summary
- There is an unprecedented growth of online shopping among Chinese consumers. Online shopping
frequency and spending amount increase year by year. Online shoppers’
average spending is around
RMB 5,203, narrowing the gap with the U.S. each year.
- As the age group and income level of the users as well as the proportion of affluent consumers from
the third and fourth tier cities increase, Chinese online shoppers desire luxury brands which enhance
the quality of life, resulting in a trend of overseas online shopping through purchasing agent.
International brands should seize this opportunity.
- The increasing number of Chinese eCommerce enterprises gives rise to fierce competition in the market
and a war to fight for users and traffic. eCommerce enterprises are facing common challenges such as
increasing costs of acquiring new users and churn rate of existing users.
- To solve the fundamental management problems, different types of eCommerce enterprises need to
establish the right direction of running the business and implement appropriate strategic solutions.
－28－

34. Appendix – Definition of terms
- Internet users : Chinese residents who have used the internet in the past 6 months
- E-commerce: The trade of products or service via internet, mainly referring to the B2C and C2C
trading. Users search for the product information on the internet, send a purchase request via the
e-order service, and then complete the purchase via online payment or COD. Online travel booking
and B2B trading are not included.
- eCommerce consumer: Internet users who have purchased products or services online in the past 6
months.
- Independent merchants: A sub-industry or mini-market which operates an e-trading platform, and
provides a complete e-commerce solution to the industry. Independent merchants comprise of a
full range of services tailored to its consumers, providing a strong channel for sales and marketing
and branding promotions, for example, VANCL and LAFASO.
- eCommerce platform: A platform for corporations to provide online trading to individuals. Corporations
and merchants can make use of the shared resources such as basic infrastructure, payment platform,
security platform and management platform to operate their business activities in a more efficient
and low cost manner.
- Shopping website user loss: Refer to users stop using a specific website, that they used 6 months ago,
in the past 6 months
- Shopping website churn rate = user loss in the past 6 months / total user volume 6 months ago
－29－

35. China eCommerce Market Analysis Report
Chapter Two
Characteristics and evolution of China eCommerce users
END
Stay tuned for
Chapter Three
Strategies and Solutions for Chinese Online Shopping Practitioners
www.i-click.asia
weibo.com/iclickasia
－30－