Opportunities and Challenges of E-commerce Development in China - Essay Example

China has the potential to be the largest market for about everything and e-commerce is no exception. E-commerce is the trend which is opening an opportunity for companies if they capture the quickly changing marketplace. It is not very hard to estimate how big this market can be. In 2010, Chinas e-commerce sales exceeded RMB 460 billion. The expectations are that this figure will triple in the next three years and exceed RMB 1.5 trillion. China might overtake the US in three years as the world’s largest e-commerce marketplace.

Its online market would grow to 7% of all retail trade. In 2011 this trade was only 3% which lags the e-commerce activity in the US and Europe.Taobao.com dominates the marketplace in the consumer to consumer (C2C) trade. It holds 80% market share compared to 20% of business to consumer activity. But rapid activity regarding business to consumer (B2C) is underway. And this will have a huge impact on the e-commerce industry in China. Big businesses are realizing the potential of e-commerce and names such as Walmart are gearing up to seize this opportunity.

They have already opened the China e-commerce headquarters in Shanghai.To understand how the dynamics of e-commerce work in China a study by Bain & Company surveyed 600 Chinese shoppers. It inquired what motivated them to online buying and what the drawbacks of this trend were. The survey suggested that convenience was the second most important factor in price that motivated them to shop online. The majority also showed their interest in the product variety they got while shopping online.

In fact, 19% of the participants stated that convenience was their primary reason for shopping online and 15% stated that variety inspired them to shop online.