COMING FROM COMPUTER: Click the mouse and what you need will come out. Online shopping is rapidly increasing in popularity in China(YSC/CFP)

As couples followed the tradition of buying flowers, candies and other gifts for their special someone for Chinese "Valentine's Day," which fell on August 26 this year, many young Valentines took a non-traditional approach to making purchases on the holiday: online shopping. Roses sold by online shops increased 10 fold from last year, as most young people chose to make their purchases from online flower shops, information on the iResearch Consulting Group website stated.

iResearch, a professional consulting organization, specializes in in-depth studies on customer behavior in Internet media, e-commerce, online games, wireless value-added services and other new economy fields. The group additionally provides data products and consulting services to customers in both the Internet industry and traditional industries.

The jointly released China Online Shopping Research Report for the first half of 2009, compiled by iResearch and taobao.com, the largest online retailer in Asia, indicates that in the first six months of this year taobao.com realized a transaction value of 80.9 billion yuan ($11.84 billion), approaching the transaction value of 99.96 billion yuan ($14.64 billion) throughout 2008.

Cutting down costs of sales channels and storage, online shopping has obvious advantages in prices, while saving time and other costs. It has become the first preference of netizens as a way of making purchases. Statistics show that in the first half of this year, about 10,000 new shops were opened every day on taobao.com, doubling the figure in the second half of last year. The number of registered members of the online retailer reached 140 million, accounting for over 40 percent of China's more than 300 million netizens.

The rapid growth of online shopping, despite the financial crisis, has attracted the attention of economists. A report released by the Institute of World Economics and Politics of the Chinese Academy of Social Sciences indicated that in the first half of 2009, taobao.com contributed 15 percentage points to the growth of the domestic demand market. "Statistics show that online shopping has become a major channel to drive up the domestic demand," the report stated.

Unprecedented growth

Online shopping experienced exceptional growth in the second quarter of this year. According to iResearch figures, China's online shopping market size was 56.36 billion yuan ($8.25 billion), up 91.9 percent over the same period last year, and up 20.7 percent compared to the previous quarter.

iResearch studies show that the proportional amount of online shopping per person by Chinese consumers has increased rapidly in recent years. In 2003 the figure was marginal, lingering at 127.6 yuan ($18.68), but by 2007 it had surpassed 1,000 yuan ($146.41). Consumer shopping took another great leap in 2008, with per-person online shopping amount rising to 1,602.3 yuan ($234.6).

Compared with the total retail sales of consumer goods, the Chinese online shopping market only takes up a small proportion, the iResearch report stated. Online shopping contributed only 0.6 percent of the revenue of the retail industry, allowing considerable room for further development. In the United States, the transaction value of online shopping stood at $100 billion, accounting for 6 percent of the total retail value. In South Korea, the sales volume of the online shopping market reached $20 billion, accounting for 12 percent of the total retail volume.

The prosperity of the Chinese online shopping market has stimulated the nerves of overseas shopping websites as an increasing number of overseas shopping websites begin to explore the Chinese mainland market via various channels. Already there have been more than 300 overseas online shops entering China via AliPay, an independent third-party payment tool through which shoppers can pay online.

Although many overseas e-commerce companies have come to China, this pattern of "international trade" still faces some bottlenecks, such as the high logistics costs, according to iResearch analysis. For example, it takes 280 yuan ($41) and seven days to mail a 3-kg box from Japan to China, which will test the limits of after-sale services.

Online migration

The booming online shopping market has attracted the eyes of substantive shops, many of which have expanded their business to the Web.

Gome and Suning, leading home appliance retailers in China, both have outlets in various cities around the country. The two appliance giants entered the online sales field this year, each establishing their own online shopping platforms. From the beginning of July to August 2, Suning began opening online shopping services in 32 cities, including Nanjing, Shanghai, Beijing, Shenzhen and Guangzhou, where consumers could log into the retailer's online shop to buy home appliances. Paying via online banking service allows shoppers to receive a 20-yuan ($2.93) voucher besides more favorable prices.

Participation of companies brings pressure to the competition of payment options for online shopping. Among current online payment tools, AliPay is now the biggest third-party payment platform in China, with 200 million users as of July 6, 2009.

Bank of Shanghai has also launched operations to enter the online payment competition. In early July, Bank of Shanghai launched its "business to consumer online payment" option, opening its first third-party payment platform—International Payment Solutions (IPS). With individual online banking service, customers can, after opening online payment account, make payments to online shops that cooperate with IPS, such as 360buy.com, newegg.com and DHC.net.cn.

Compared with alibaba.com, which established AliPay, Bank of Shanghai has a better reputation as a monetary provider. When opening online shops, more companies will look to use the IPS platform by Bank of Shanghai due to the bank's reliability.