Aug 29, 2011
Comscore recently published its report on Global ecommerce related internet traffic throwing up some really interesting data. Amazon accounted for 20% of the worldwide ecommerce traffic. Ebay accounted for 16%. And here is the surprising one: Alibaba.com accounted for 11% of the global ecommerce traffic. That 11% translates to a whopping 160 million unique visitors.
Alibaba.com is the company which owns Taobao.com, China’s version of Ebay, and almost owns 75% of the Chinese Ecommerce market with it. Approximately USD 60 billion worth of transactions happened on Taobao.com in 2010.
In China, in the online space, C2C is significantly larger than B2C. However, overall ecommerce business is approximately worth USD 110 billion for 2011 – 12. And the other players having a stake in the pie are Paipai.com, 360buy.com, DangDang.com and Xiu.com The Ecommerce industry is growing at compound annual growth rate (CAGR) of 90%. AT Kearny estimates that by 2014 it would be a USD 175 billion market. With numbers like that you have to take notice of the possibilities that await a market with a population of 1.3 billion, and a middle class of 200 million and some 160 million internet users.
I recently met a very senior IBM executive, based out of Shanghai and he was telling me how almost everyone in his office buys groceries online and gets it delivered at an hour time slot convenient to them, typically the hour before the end of the office hours. You know the ecommerce market penetration is super high when people are buying groceries online.
A big part of the Chinese ecommerce growth has also been also due to the Logistics industry growing along side it. In the 4 large cities in China, that is, in Beijing, Shanghai, Guangzhou and Chengdu same day deliveries are increasing quite rapidly. However, the logistics is nowhere near the same efficiency levels when it comes to tier 2 and tier 3 cities, where rising income levels is fueling ecommerce.
So the large ecommerce players are investing a lot of money in bigger warehouses and some are venturing into starting their own distribution systems. Some are in the process of buying out a few of these logistics companies. Whats heartening is that the ecommerce companies are realizing that logistics can make-or-break their businesses, and are seeing it as a huge competitive advantage in the time to come.
In India, I believe we’re probably 3 – 4 years behind the Chinese ecommerce market in terms of the ecommerce environment to mature to the levels that we see in China today. However, there is a sheer possibility of serious innovation in the Indian ecommerce market in terms of scaling up rapidly and the entire eco-system growing with the knowledge of learnings from global markets.
It is indeed an exciting time to be in this market. Can’t wait to get all my grocery shopping done on my android phone on my way home from work, and the order being delivered to me within the hour. That would keep the Mrs happy.
Murali Balan is the CEO of Tenovia Solutions, an Ecommerce product and services company. Its product, 10Commerce, can be viewed at 10Commerce.com.