Wine & Internet in China

Nov 09, 2011 1 Comment by

Wine and Online Shopping

What does the future hold in China?

In an article on July 12th, wine-info.com, stated that according to their sources, the number of operational B2C (online wine sellers) has increased to over one hundred sites. I wasn’t able to locate the source of this date but it definitely indicates that people believe there is a future for buying wine online. But, will this belief become a reality?

Recently there was an interesting webinar, presented by Digital River Payments where they had compiled the latest Chinese online shopping estimates in conjunction with Alipay. They estimated that this year the number of people online in China is expected to grow to over 500 million users, with an estimated 35% of them shopping online and expect that over $90 (RMB575) billion will be spent online. (In 2010, $63 (RMB403) billion was spent online). These are extraordinary numbers and they are set to continue to grow. From 2009 – 2015 the cumulative annual growth rate is expected to be at a rate of 52%.

These figures solidly establish the potential for the online market here in China, so how about the potential for wine consumption? The OIV (International Organization of Vine and Wine) estimates that overall global wine consumption fell 3.6% from 2008 – 2010, but China’s wine consumption defied everybody else in the market and grew by 50%. It also showed there was over 80% increase in the volume of imported wines entering China. All the data indicates that both wine and online shopping are two growth markets but does it automatically translate that people will actually buy wine online? Economists always like to try to use comparables to predict future growth, however in this case it is very difficult to find a suitable comparative as the size, growth rate and movement of goods is extremely unique. You might expect that the US market might be a possible indicator, however there is one stark difference that has curbed the growth of buying wine online in the US – the state alcohol laws restrict shipping alcohol across certain state lines. This is a key barrier to growth that exists in the US market but does not exist here. These regulations are thought to be one of the reasons why Amazon.com decided to put their online wine store on hold in 2009.

A key characteristic of the Chinese online shopping market is trust. This has been one of the key success factors at Taobao.com. The consumers put a very large emphasis on the rating of each merchant on Taobao; it is very important that a merchant has a proven track record. A consumer’s key concern is that they do not want to be tricked. This was a key point that was raised by my Chinese friends when we were launching crushedgrapes.cn.

So, what does all this mean for the hundred or so online wine shops that have opened recently, how can they build that individual trust in their website? Is the market big enough so that one can just build an online wine store and they will come, or is the online Chinese consumer more sophisticated than that? Then again, as the e-commerce marketplace becomes more sophisticated, will trust remain such an important factor? These are questions that will only be answered over time, but I for one am intrigued about how this will develop.

By Niamh Given for Zhongguo Wine

Sources:
-OIV Report:

http://news.reseau-concept.net/images/oiv_uk/Client/DIAPORAMA_STATISTIQUES__AG_Porto_2011_EN.pdf

-Digital River Payments Webinar:

http://www.digitalriverpayments.com/form/thank-you/china-epayments-webinar

-Wines-info.com Article:

http://www.wines-info.com/En/html/2011/7/228-38823.html

-OIV Report:http://news.reseau-concept.net/images/oiv_uk/Client/DIAPORAMA_STATISTIQUES__AG_Porto_2011_EN.pdf


Niamh Given founder and managing director of CrushedGrapes.cn.
With a passion for Wine, China & Online Shopping; Niamh and her husband Daniel have set up an online wine destination based in Shenzhen, China.


Chinese Wine Industry, News, Wine & Chinese Internet

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One Response to “Wine & Internet in China”

  1. Michiel says:

    Very interesting article, thanks for the insights.
    Somehow the OIV reports cannot be accessed. If I copy-past the URL the page says ‘page not found’. Do you know another way to access them ?

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