E-commerce: USA vs CHINA
The continuing recent hostilities between the world’s two largest powers, the US and China, are reflected in every aspect of their respective economies. The trade war between the two largest retail markets in the world is making itself felt, especially in China. Together with the slowdown in the domestic car market, the trade war is damaging Chinese retail sales, especially in e-commerce.
E-commerce: USA VS China
E-commerce is now one of the most relevant factors in the economic and social scenario of a country. Last year 1.79 billion people in the world made at least one online purchase (60.2% of Internet users and 26.8% of the world’s population) for a value of $2,290 billion (10% of the total value of retail sales). According to eMarketer’s “Worldwide Retail and Ecommerce Sales” report, these numbers are expected to rise until 2021, reaching 16% of total retail sales value.
At the moment, the global e-commerce market leaders continue to be China and the United States. They account for 69.1% of the cake with sales of $1.584 billion in 2017 (up 18% from 2016). The Asia-Pacific region remains the world’s largest e-commerce market, led by China – the country alone accounts for approximately 83% of direct e-commerce sales in the Asia-Pacific region, with an estimated value of approximately $1.119 billion in 2017. This is followed by the United States, which in 2017 generated $409 billion in direct sales (+14% over the previous year).
E-commerce in China
China has the highest number of mobile users in the world and more e-commerce activities than any other country in the world. In 2017, Chinese consumers spent over $750 billion online, more than the United Kingdom and the United States combined.
According to digital data and the eMarketer research company, China’s retail e-commerce spending in 2019 increased 27.3% to $1,935 trillion, or 36.6% of total retail sales. The company also projected that retail e-commerce sales in China will maintain their strong growth until the end of its forecast in 2023.
The People’s Republic of China, a power in terms of convenience and customization, is dominating the e-commerce market with major players such as JD.com and Alibaba.
But how did China become the ultimate e-commerce power?
Customization has become a popular buzzword when it comes to meeting consumer demands, and Chinese companies have set themselves the goal of improving the customer experience. Chinese customers are spoilt for choice when it comes to delivery options and have an extensive menu of preferences. Many Chinese retailers build their technology systems from the ground up to improve their ability to customize their shopping experiences and then make the most of the great data to study customers and make high-speed decisions.
This explains why events like Single’s Day, Black Friday and Cyber Monday are so successful. They are based not only on aggressive pricing and discounts, but also on celebrating a real event by building a whole new experience around it that enriches the customer’s journey.
E-commerce in the USA
The USA is another power in terms of online sales. E-commerce accounted for 14.3% of total online retail sales in the United States in 2018. By comparison, e-commerce accounted for 18% of all retail sales in the UK and 18.4% in China.
In 2017, 34.5% of e-commerce sales in the United States were made from a smartphone. And according to estimates by the research company “eMarketer Inc”, online sales from mobile devices will increase to 50% of total online purchases in the United States by 2020.
Amazon accounted for 40% of online retail sales in the United States in 2018. Which leads us to define it as the most popular online store in the United States for that year. American mobile shoppers are looking for quality and uniqueness, more than just value for money.
Amazon vs Alibaba
It is no coincidence that the two most important players in the sector, Amazon and Alibaba, come from these two countries. In addition to the established markets – North America and Europe for Amazon, China for Alibaba – the challenge is all played out in the Asia-Pacific area, where both players have increased strategic investments not only in online but also in physical retail, with a particular interest in the food and fashion sectors. Over the past two years, Alibaba has invested around $8 billion in offline retail. Amazon, on the other hand, after the acquisition of the organic supermarket chain Whole Foods for $13.7 billion in 2017 is looking for another partner, this time international, in the food sector to invest in. In addition, it has focused on the opening of physical stores in the United States and is also planning to open in Germany.
But speaking of numbers, e-commerce in China will increase by 17.4%, compared to 8.5% in the US, and will dominate the global online fashion market with a turnover of over 285 billion dollars in 2021.
Amazon ranks first in Europe and the United States with sales of $136 billion in 2016. Despite ranking first in the U.S. and Europe, Amazon has not yet conquered the Chinese market.
The difference in profit margins is also evident. It is 70.5% for Alibaba, compared with a measly 1.74% for Amazon.