Visualising how fast is online retail in China *really* growing?

I've been doing some onsite engagements with a client in China in the last few months. Last time I visited, I managed to forget the power cable for my laptop. So my client very kindly ordered me a replacement online from JD.com, which arrived within 3 hours of the order being placed... OK Shanghai probably isn't representative of China as a whole (although JD says this service is available in 30 cities, total population > 300 million people!), but the impression you get of ecommerce while you're out there is fairly staggering. Certainly I've never seen so many people browsing their mobiles in one place as on the Shanghai metro, and every other advertising hoarding seemed to be for a retail website of some kind.

I've seen lots of graphs showing ecommerce growth in China, and separate graphs showing ecommerce growth in western countries, but I haven't really seen anything that puts the two in some sort of context. As I'm doing some research for the next edition of The Multichannel Retail Handbook at the moment, I happen to have been able to take the opportunity to set UK and Chinese official statistics side by side.

And here's the picture:

Roughly summarised:

1. Chinese retail as a whole is growing roughly as quickly as online retail in the UK. (CAGR of ~15%)

2. Chinese online retail is growing 4x faster than UK online retail (CAGR of ~60%)

Impressive stuff, a nice to see the on-the-ground impression confirmed in a side-by-side comparison. You can draw your own conclusions about whether China, despite its apparent recent economic wobble, is an interesting place to target online for retailers.

Data sources: UK Office of National Statistics, National Bureau of Statistics of China

Incidentally since the graph is inevitably a bit squeezed out for the slower growing lines, here's the same data with a logarithmic scale:

Why bother with multichannel? - answer #1: follow the money

A challenge I am often posed when I work in less developed internet-retail markets (Romania or Ukraine being recent examples) is "why should we bother with multichannel? It is organisationally challenging and expensive, and we are doing fine right now."

The simple answer is, that's where your customers' money is going, and if your country follows the trends in others, going quickly. This is 2011 data published by Ofcom for various European countries.

Much more telling is a look at the trend in retail spending in the UK. (Data sourced from the Office of National Statistics).

One observation is obvious: the growth in eCommerce sales has been spectacular. The second observation is probably more important: eCommerce does NOT represent "new money." Overall retail sales are either down (non-food) or merely on-trend (food). What we can see is a switch in spending, not additional spending.

This is the channel customers are choosing to spend their money. If you're not on it, your competitors will be, and your customers will go there.

eCommerce now represents over 10% of all retail sales in the UK, so it is genuinely meaningful to draw such charts. The interesting question for the next few years is whether it will soon become relevant to draw similar graphs charting the growth of Mobile. Countries with well developed landline broadband such as the UK or US may be less interesting studies than those such as India where over 50% of the population has access to a mobile phone, but less than 3% of households have landlines or broadband.