PChome Store leads the industry with 51.6 % market share

HONG KONG, CHINA - Media OutReach - 7^th June, 2018 -  Taiwan's ongoing economic recovery is helping stimulate growth in household expenditure across the country and, when coupled with very high Internet penetration and smartphone usage, is fueling a revolution in consumer to consumer (C2C) mobile e-commerce, according to a new report by China Insights Consultancy (CIC).^[1]

While decline in domestic demand and economic slowdown in mainland China during 2015 has noticeably impacted Taiwan's economy, the country continues to recover as nominal GDP grew from NTD16.8 trillion (USD0.5 trillion) in 2015 to NTD17.6 trillion (USD0.6 trillion) in 2017 for a real GDP growth rate of 2.8%. This economic recovery has also translated into steady growth in expenditures per household with a compound annual growth rate (CAGR) of 1.8% from 2015 to 2017.

During this period, the e-commerce market also grew from NTD727.4 billion (USD22.8 billion) in 2015 to NTD1,108.6 billion (USD36.4 billion) in 2017 with the CIC report expecting growth forecasts to reach NTD2,159.8 billion (USD64.0 billion) in 2022. Charlie Jiang, Founding Partner of CIC stated: "The key factors propelling this growth are the continuing growth of internet penetration in Taiwan (73.3% in 2017), growth in the user base of e-shoppers and number of online orders, an increase in average spending for each e-shopper, and changes in consumer behavior."

The key factor of Taiwan's internet penetration rate at 73.3% is a much higher proportion when compared to other emerging economies in Asia such as PRC (56.1% in 2017) and Thailand (55.7% in 2017) which has the highest internet penetration rate amongst emerging economies. These figures rank Taiwan as first-tier in terms of proportion of internet users but shows great potential for growth due to a mature electronics industry and the availability of affordable smartphones, especially when compared to other advanced economies in Asia such as Japan (95.3% in 2017).

The number of e-shoppers in Taiwan increased at a compound annual growth rate (CAGR) of 3.5 percent from 2015 to 2017 to reach 15 million people, or around 87 percent of the number of internet users. In the same period, the number of e-commerce orders grew from 634.9 million in 2015 to 927.4 million in 2017.

Not only are more people shopping online, they are also spending more, with average expenditures per shopper increasing from NTD24.7 thousand (USD0.8 thousand) per year in 2015 to NTD29.4 thousand (USD1.0 thousand) last year. That number is expected to hit NTD49.9 thousand (USD1.5 thousand) by 2022, according to the CIC report. The average value of each order is likewise increasing with an expected CAGR of 3.0% from 2017 to 2022 and eventually achieve an average value of NTD1,387 (USD41.1).

Meanwhile, the growth in mobile transactions is outstripping that of more traditional PC-based purchases. In 2017 mobile based e-commerce accounted for 48 percent (NTD536.6 billion or USD17.6 billion) of all online transactions, compared to just 34 percent (NTD247.3 billion or USD7.7 billion) in 2015, and is expected to reach 61 percent (NTD1,311.2 or USD38.9 billion) by 2022.

Several mobile shopping APPs and mobile platforms released from 2013 onwards have gained popularity among the young people in Taiwan with the shift from social media commerce to true C2C e-commerce platforms. And, given a relatively high smartphone penetration rate and faster mobile internet speeds supported by the introduction of 4G technologies, a higher mobile shopping penetration rate is expected in the years to come, gradually absorbing a greater portion of online shopping traditionally taking place on PCs.

With those kinds of numbers on the block, it's no wonder that the few major players in the sector, such as industry leading PChome Store, are bullish on future business prospects and investing heavily in new technologies in the form of new APPs and mobile platforms to enter the market before the fast-changing industry takes hold.Of that, top-ranked PChome Store held almost 51.6 percent during the first quarter of 2018 with GMV of NTD12,700 million (USD425 million). Making up the rest of the top four were Shopee with 40.1 percent market share, Carousell (3.0 percent) and Rakuma (0.2 percent).

Even though PChome Store is the youngest player among the top four, its APP released in April 2017 has vaulted the company to the lead in all key performance indicators of the industry, including mobile C2C GMV, mobile C2C orders, C2C Daily Active Users (DAU), active product listings, and mobile C2C Convenience Store (CVS) collections.

With 210 million active product listings, mainly in the beauty, fashion, food and lifestyle categories aimed at 15-35-year-old female e-shoppers, PChome Store, with 400 thousand C2C daily active users, is far ahead of the rest of the pack. Second ranked Shopee shares similar categories but lags behind with only 297.6 thousand C2C daily active users and the CIC report predicting that the company may transfer its focus to B2C and B2B2C business in the future. Carousell and Rakuma offer some used products and handicrafts with only a small number of buyers.

According to the report, however, for a company to compete effectively in the burgeoning mobile C2C e-commerce market is no easy task as they will need to excel in a number of key success factors.

These include a strong sales and marketing strategy, brand awareness and user loyalty, low operation costs for sellers, effective and user-friendly support systems, seamless and secure payment systems, well-developed logistics networks, diversified product listings, as well as recognized user experience and well-structured membership systems.

About CIC

China Insights Consultancy is a consulting firm founded in Hong Kong and provides professional industry consulting services across multiple industries. China Insights Consultancy's services include industry consulting, commercial due diligence, strategic consulting, expert network, etc. Its consulting team has been tracking the latest market trends in internet and high technology, healthcare, financial service and fintech, culture, entertainment & education, consumer goods, automotive, transportation & logistics, energy & power systems, environment & building technologies, chemicals, materials & food, industrial, manufacturing & automation, agriculture, minerals & mining, etc., and has the most relevant and insightful market intelligence in the above industries.

References

1. ^{^} Media OutReach (www.media-outreach.com)