China Economic Review
Charting China’s changing economic terrain · Since 1990
Logistics hinder e-commerce development
September 28, 2009
Note most carefully we are only talking e-commerce here. That is, stuff sold over the internet. It is here that transportation and distribution problems are holding back the growth of e-commerce businesses.According to a survey conducted by McKinsey & Company, more than 27% of people in poorer cities say they would buy items online than those in wealthier cities, even though internet penetration in the former is lower.
However, the logistics industry that supports online sales still lags behind demand.
Cao Fei, an analyst from Analysys International, a leading internet-based provider of business information. said e-commerce consists of three major parts – information, capital flows, and logistics. The former two can be managed via the internet, but delivery requires proper logistics.
He added, "Currently, the logistics firms still have problems such as delivery time and quality of service, although they have improved over the past two years."
A seller from Taobao, the nation’s biggest online auction site with about 145 million registered members, or around 43% of the country’s total internet users, said most of her customers come from major cities.
Li Chun, a garment seller on Taobao, told the Global Times, "So far, I have no buyers from villages. If the buyers are from small counties, I have to first check with the logistics company to see if they can be reached."
Alibaba.com said a report from iResearch shows in the first half year, developed regions contributed to most of online shopping, with the top three – Guangdong, Zhejiang and Jiangsu, all wealthier coastal provinces – accounting for 12.2%, 11.8% and 9.2%, respectively.