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Online Shopping on the Rise in Smaller Chinese Cities

E-tailing has the potential to unlock pent-up demand in regions where there remains little access to brick-and-mortar stores, according to a Taobao.com study.

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CHINESE SPENDING: Chinese living in smaller cities are beginning to spend more online than those in the country’s wealthier urban areas, indicating the potential that e-tailing has to unlock pent-up demand in regions where there remains little access to brick-and-mortar stores, according to a study released by Taobao.com.

Shoppers from third- and fourth-tier cities spent an average of 5,628 yuan ($918) a person last year on Taobao.com, owned by Chinese e-commerce giant Alibaba. That figure beat the 4,700 yuan ($766) spent by consumers in higher-tier cities, the survey said. The study said that 30 million shoppers from more than 2,000 county-level cities spent 179 billion yuan ($29.2 billion) on Taobao in 2012, up 87 percent compared with the year before. Consumers in small towns are spending a higher percentage of their disposable incomes online compared with those in bigger cities, the study said. Additionally, consumers in smaller cities shopped on Taobao 54 times a year, compared with urban consumers, who made an average of 39 purchases annually.

Yiwu, a city located a couple of hours outside of Shanghai by train in Zhejiang Province, ranked number one in online spend with transactions reaching 3.4 billion yuan ($554 million) in 2012. Shoppers in Qingliu County, located in the southern Fujian Province, spent on average 20,000 yuan ($3,262) a shopper, representing a high proportion of per capita income in the county, Taobao.com said.

Additionally, consumers in third- and fourth-tier cities are keen to buy international brands online. For example, shoppers in more rural areas spent an average of 765 yuan ($124) on Estée Lauder products on Tmall.com, a business-to-consumer site also owned by Alibaba, versus 652 yuan ($106) spent by residents in larger cities.

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