E-commerce is Big in China. Really Big.

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China e-commerce

China is the world leader in online sales. And that’s with only half of the population online. This year, the country will account for 50 percent of the world’s e-commerce sales.

A new report from e-commerce intelligence company yStats reveals who these consumers are and where the future online sales opportunities exist.

Online sales in china have been growing at high double-digit rates, a pace that’s expected to plateau because two-thirds of those who use the Internet in urban areas of the country already shop online, and in the bigger cities, that percentage is even higher.

That’s not to say growth will stall. On the contrary, one very important group is adopting e-commerce at a rapid pace: rural dwellers. Between 2015 and 2016, the number of online sales in rural areas more than doubled, according to yStats. In 2015, shoppers in those areas racked up $353 billion in online sales. In 2016, that number hit $895 billion. (For comparison, total e-commerce sales in 2016 were $391 billion in the U.S, according to the U.S. Department of Commerce.) And there’s plenty more where that came from. More than a billion people live in these rural areas but sales from these regions only account for a quarter of the overall total.

(Read more about Chinese shoppers’ online sales habits: Overseas E-commerce Sales Lead China’s Retail Boom)

Chinese consumers have embraced e-commerce in part because the retail landscape there was underdeveloped.

Speaking at the ShopTalk convention in March, Lee McCabe, vice president of North America for Alibaba Group, highlighted the differences in the U.S. and China.

“The retail landscape was weak and inefficient. In U.S., there are 12 shopping malls per million people. In China there are 2. It was ripe for innovation. It was ripe for e-commerce,” he said. “China developed differently. Here, we went from brick-and-mortar to desktop to laptop to smartphone. China just jumped straight to smartphone. And for the majority of people in China, the smartphone is the Internet.”

With only half the country online, McCabe said, the number of Internet users in China is already twice that of the U.S. population at 700 million.

Currently the biggest players, by far, in the Chinese market are Alibaba’s Tmall, which boasts a 50 percent market share, and JD.com. More than two thirds of all B2C online sales in China are transacted on these two platforms.

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