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Alibaba data boosts a projection of China e-commerce to nearly $450 billion in 2014
    July 31,2014



 

Sizing the Chinese e-commerce market has required a lot of guesswork, because the dominant player was a private company and did not reveal its sales. But now that Alibaba Group Holding Ltd. is filing to go public on the New York Stock Exchange there is a lot more hard data for analysts to work with. And that’s led an influential Beijing-based research firm to revise upwards its estimate for the market.

 

The firm, iResearch, now projects online retail sales in China in 2014 will grow 45.8% to 2.76 trillion yuan ($446.6 billion) from an earlier forecast of 2.45 trillion yuan ($396.4 billion) and a growth rate of 32.4%.

 

The firm also revised its estimates for the last two years based on data in the Alibaba prospectus, released in May. IResearch now estimates Chinese e-retail sales grew 59.4% in 2013 to 1.89 trillion Yuan ($305.8 billion). Its previous 2013 estimate was 1.85 trillion yuan ($299.4 billion). The company also lowered its estimate of 2012 online retail sales from 1.30 trillion Yuan ($210.4 billion) to 1.19 trillion yuan ($192.6 billion).

 

 “Based on the financial documents from Alibaba’s coming IPO, we made an adjustment for our historical data and modified the market size accordingly.” iResearch e-commerce analyst Jodie Ting tells Internet Retailer. Alibaba disclosed in its prospectus that its two big online marketplaces, Taobao and Tmall, handled $248 billion in sales in 2013. That suggests Alibaba accounts for 81% of consumer online purchases in China last year.

 

The estimates from iResearch are influential and have been cited in financial documents submitted this year by both Alibaba and its leading competitor, JD.com, in advance of their IPOs. JD.com, which is No. 1 in the Internet Retailer China 500, went public in May, raising $1.78 billion in an IPO on Nasdaq. Alibaba is not ranked in the China 500 because, like eBay Inc., it only provides a platform for other merchants and does not sell merchandise it owns itself. Alibaba is expected to go public in the next couple of months.

 

China’s Ministry of Commerce also appears to rely on iResearch estimates in its own reports. For 2012 and 2013, the ministry provided the same estimates as iResearch’s previous projections for online retail sales in China, 1.30 trillion in 2012 and 1.85 trillion yuan in 2013.

 

The projection of nearly 60% growth in e-commerce in 2013 and 50% growth in 2014 is in line with data about the growth in package delivery in China.

 

The total number of packages delivered in China increased 60% in 2013 compared to the prior year, and are up 53.7% in the first half of 2014 compared to same period in 2013, according to the State Post Bureau of China.

 

That indicates online sales are going up at similar rates. “In China, about 70% to 80% of parcel deliveries stem from online orders,” says Wang Fang, a consultant for Shanghai-based logistics consulting firm China Express Consulting.

 

Chinese consumers’ online spending grew 47.1% to 628.76 billion yuan ($101.74 billion) in the second quarter of 2014 and accounted for 10.1% of total retail sales in China, according to the latest quarterly report from iResearch.

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