China's E-Tailing Blossom: A Case Study

Introduction

E-tailing, or online retailing, has experienced rapid growth globally during the past ten years. Global e-tailing sales are expected to reach $1.92 trillion by 2016 (as cited in Statista, 2014). E-tailing is also playing a growing role in global GDP growth. It is estimated that e-tailing will account for 1.61 percent of global GDP by 2018 (as cited in Statista, 2014).

Chinese e-tailing growth is the driving force for global e-tailing growth. China’s e-tailing market has been growing at a significant rate since 2009. In 2013, china surpassed the United States as the largest e-tailing market. The major force of China’s e-tailing boom is e-tailing on Singles Day (11/11) in which products on retail sites such as Tmall.com are sold at deep discounts. Singles Day was launched by Alibaba in 2009. Since 2012 this day has become the largest shopping day in the world, exceeding the sales volumes on Cyber Monday in the U.S. In 2012, Alibaba’s sales volume on Singles Day achieved $3.1 billion, more than doubling Cyber Monday’s sales for 2012. In 2013, Alibaba reached sales of $ 5.7 billion on this day, nearly tripling Cyber Monday’s sales for 2013. In 2014, Alibaba recorded sales of $9.3 billion on Singles Day, an increase of 60% from 2013 sales and five times larger than Cyber Monday’s sales.

In this case study, we will explore the stories behind the boom of China’s e-tailing market by answering the following three, major questions:

• 1.

  Why has China’s e-tailing market been growing at an astonishing rate during the past five years and is it sustainable over the next five or ten years?

• 2.

  What are the cultural and social factors that differentiate China’s e-tailing success from other global players?

• 3.

  What are the effective China market entry strategies for international retailers?