What is cross-border e-commerce?
The Internet allows consumers to shop online globally, purchasing products and services that may be unavailable or prohibitively expensive in their home countries from websites in other countries and from marketplaces such as Alibaba Group’s Tmall.com that host multinational merchants. This phenomenon, known as cross-border e-commerce or international e-commerce, is growing as advancing technologies help reduce problems associated with international payments, long shipping times and language barriers – making it possible to shop online anywhere and everywhere by laptop and smartphone.
China is a key market for cross-border e-commerce as it transitions to a consumption economy fueled by a growing middle class and unlocked spending among rural populations:
• China’s middle class is expected to reach 630 million by 2022.
• Concerns about product safety feeds demand for imported goods with perceived better quality control. Chinese consumers are looking for products “Made in America.”
• Chinese consumers are discovering they can go online to buy goods directly from foreign companies. These cross-border purchases by China’s online shoppers grew ten-fold between 2010 and 2014, from less than $2 billion to more than $20 billion.
• China’s rural Internet users numbered 178 million as of June 2014.
Consumption habits are being shaped by the Internet and smartphones:
• China is comparatively understored, with just over two shopping malls per million people – about one-tenth the rate in America. Inconvenience and inefficiency of offline retail pushes consumers to online shopping for better price, quality and selection.
• E-commerce is expected to make up 24.2% of total Chinese consumption by 2020, up from estimated 9.9% in 2014.
• China has the world’s largest mobile Internet population with 527 million users.
• Nearly half of China’s total online shopping GMV (gross merchandise volume) was generated by consumers using mobile devices in the first quarter of 2015.
Alibaba Group’s Cross-Border Growth Strategy:
• Provide businesses in U.S., Europe and elsewhere around the world access to China’s 331 million-plus online shoppers.
• Enable small businesses and manufacturers in China to serve both developed and emerging economies around the world.