Consumer-to-consumer (C2C) transactions, such as transactions between two consumers via an auction site, reached
in 2007, up by 90% from the previous year, according to DCCI. The momentum continued into 2008, with second-quarter sales climbing 25% over the first quarter to reach
.7bnâdriven largely by sales of books, audio and video products, cosmetics, household products and womenâs clothing.
Taobao.com, the online auction subsidiary of local B2B/B2C player
Alibaba.com
in which
Yahoo! Inc
of the US has a 40% stake, has seen market share grow to the point where it held more than 85% of the national market as of
, according to Analysys. Transactions via Taobao in full-year 2007 totalled
.3bnâroughly equivalent to the 2006 revenues of the Lianhua chain, a member of Shanghaiâs
Bailian Group
. Coming a distant second is world leader
eBay Inc
of the US, which entered
China
by acquiring
Shanghai
-based
Eachnet
for
in 2004.
Yet e-commerce continues to present a number of obstacles. Chinaâs post-sales service is poor or non-existent, consumers have little legal protection and there is virtually no credible consumer movement. E-commerce businesses must also face the following problems:
Lack of payment options. The Chinese credit-card market continues to grow, complemented by a government programme to build a nationwide interbank electronic payment network. But most online buyers still do not have access to electronic payment options and must pay either on delivery or at their local post office. However, increasingly reliable online-payment schemes such as
PayPal
and Alipay are now helping to ease consumersâ security concerns.
Distribution problems. Fulfillment is a major obstacle to doing any kind of business in
China
. In the B2C sector, this is gradually changing as more domestic companies specialise in delivering goods ordered online. Foreign participation will also facilitate distribution as market-opening measures are implemented. For now though, the distribution channels are still far from reliable.
Shady operators. According to CNNIC, around one in eight online buyers have ordered and paid for online goods that never arrived. This has created a culture of mistrust, which major players are doing their best trying to dispel.
