Mobile e-commerce in China

www.chandlernguyen.com Feb 2016

1. China retail m-commerce sales was 3.7X that of the US in 2015 and is growing rapidly at 40%+ annually

Ret

ail m

-com

mer

ce s

ales

(in

Billio

ns)

$0

$300

$600

$900

$1200

2014 2015 2016 2017 2018

$178$151$123$89$57

$1,040

$737

$506

$334

$180

China US UK KR

Source: eMarketer Oct 2015 report

Note: No available data for JP, Germany and Australia from eMarketer Retail m-commerce includes products or services ordered using the internet via mobile devices (including sales on tablets), regardless of the method of payment or fulfilment; excludes travel and event tickets; excludes Hong Kong; converted at the exchange rate of US$1=RMB6.1457

2. China has about 335M mobile internet buyers (2.7X the US number), and the annual growth rate is around 10%

Note: Research from November 2015 Visa report titled "eCommerce Consumer Monitor 2015" conducted by ORC International (Opinion Research Corporation), indicated that the percentage of mobile buyers is about 70%-80% of desktop/laptop buyers in China. https://goo.gl/JOsnDR

Internet user and digital buyer data are from eMarketer 2015 reports. Mobile internet buyer numbers are estimated numbers, using 80% of the number of digital buyers. This is a very conservative approach since the number of mobile internet users in China in 2015 was 590M users. Raw data is at the appendix

Mob

ile in

tern

et b

uyer

gro

wth

0.0%

3.3%

6.5%

9.8%

13.0%

Mob

ile in

tern

et b

uyer

s (in

milli

ons)

0

115

230

345

460

2014 2015 2016 2017 2018

Mobile internet buyers* Mobile internet buyer growth

8.2%

9.9%

11.8%12.3%

445412

374

335298

12.3%11.8%

9.9%

8.2%

3. Mobile buyers in China spend about $1000/year in 2015 (37% higher than the US) and the spend growth rate is about 30% annually

Annu

al s

pend

per

mob

ile in

tern

et b

uyer

$0

$600

$1200

$1800

$2400

2014 2015 2016 2017 2018

$1,146$1,026

$903

$727

$541

$2,335

$1,791

$1,350

$997

$605

China USNote: Retail m-commerce sales taken from eMarketer Oct 2015 report. The number of mobile internet buyer was deduced using the approach on slide 3 above. Retail m-commerce includes products or services ordered using the internet via mobile devices (including sales on tablets), regardless of the method of payment or fulfilment; excludes travel and event tickets; excludes Hong Kong for China; converted at the exchange rate of US$1=RMB6.1457 Raw data in the appendix

Source: eMarketer Oct 2015 report

4. Digital buyers in China are male skew (55%), the majority (55%) between 18-34 year old with household income between $650-$1000 (56%)

5. 70% of digital buyers in China use WeChat

6. Alipay has a commanding lead in mobile payment transaction value in China with more than 75% of the volume

Note: Data is from an October 2015 Analysys International Enfodesk study as cited in press release. Data is based on interviews with industry stakeholders, Analysys International Enfodesk's proprietary monitor data and estimates based on its own forecast model.

7. 70% of digital buyers in China would make purchases/payments online for digital content, travel, bill payments and movie tickets

8. 65%-68% of digital buyers in China are impulse shoppers, significantly higher than those in the US or JP

Note: Impulse shopper: Those who frequently browse product categories they do not originally think of purchasing. Data is from the December 2015 Hakuhodo and Communication University of China report titled "2015 Consumer Observations" as cited in press release. 3,520 consumers ages 20-59 living across tier 1-3 cities in China were surveyed during November 16-19, 2015. Among the respondents in China, 960 had a monthly household income of 7,000+ Chinese yuan renminbi and were from tier-1 cities (Beijing, Guangzhou, Shanghai), 1,280 had a monthly household income of 5,000+ Chinese yuan renminbi and were from tier-2 cities (Fuzhou, Shenyang, Wuhan, Xian) and 1,280 had a monthly household income of 4,000+ Chinese yuan renminbi and were from tier-3 cities (Shantou, Xiangyang, Xuzhou, Zhangjiakou).

Appendix

eMarketer Aug 2015 data on China mobile phone internet users and digital buyers

2014 2015 2016 2017 2018Internet users 647,709,053 674,342,620 700,096,096 736,241,694 778,154,316

Mobile phone internet users 561,803,928 589,134,266 618,719,993 653,155,580 691,532,125

Digital buyers 372,813,062 418,669,068 468,072,019 514,411,148 556,592,863

Mobile internet buyers (estimated at 80% of digital buyers) 298,250,449 334,935,255 374,457,615 411,528,919 445,274,290

Digital buyers (% of internet users) 60.10% 64.80% 69.80% 73.00% 74.70%

eMarketer 2015 data on Chinese & US mobile buyers

2014 2015 2016 2017 2018China Average Annual Spend per Mobile buyer $605 $997 $1350 $1791 $2335

US Average Annual spend per Mobile buyer $541 $727 $903 $1026 $1146

China Mobile e-commerce sales (in Billions)

$180.41 $333.99 $505.74 $737.07 $1,039.84

CN Mobile buyers (in Millions) 298.3 334.9 374.5 411.5 445.3

US Retail m-commerce sales (in Billions) $56.67 $88.53 $123.13 $151.11 $178.27

US Mobile buyers (in Millions) 104.8 121.8 136.3 147.3 155.5

Note: Mobile buyer: ages 14+; mobile device users who have used their mobile device to make at least one purchase via web browser or mobile app during the calendar yearRetail m-commerce sales: includes products or services ordered using the internet via mobile devices, regardless of the method of payment or fulfilment; includes sales on tablets; excludes travel and event ticket sales

3. Mobile buyers in China spend about $1000/year in 2015 and the spend growth rate is about 30% annually

Annu

al s

pend

per

mob

ile in

tern

et b

uyer

$0

$600

$1200

$1800

$2400

2014 2015 2016 2017 2018

$2,335

$1,791

$1,351

$997

$605

Annual spend per mobile internet buyer

Source: eMarketer Oct 2015 report

Note: Retail m-commerce sales taken from eMarketer Oct 2015 report. The number of mobile internet buyer was deduced using the approach on slide 3 above. Retail m-commerce includes products or services ordered using the internet via mobile devices (including sales on tablets), regardless of the method of payment or fulfilment; excludes travel and event tickets; excludes Hong Kong; converted at the exchange rate of US$1=RMB6.1457

Top 3 Payment Methods that Digital Buyers in China Will Use for Purchases Made During 11/11 Digital Shopping Festival*, Nov 2015