Chinese e-commerce companies are growing by leaps and bounds, but there's still one problem (BABA, JD)

Alibaba posts strong revenue, mobile growth in first quarter

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China's e-commerce market is already the largest in the world and is rapidly expanding, but there's one problem.

Companies such as Alibaba and JD.com, the two biggest retailers in the nation, are running into a wall when trying to reach more shoppers, as many of China's 1.3 billion people live in rural areas that commercial trucks cannot easily access.

But to their credit, retailers based in China have significantly improved their delivery logistics in 2015, according to a new CBN Data report cited by Internet Retailer. The total volume of e-commerce packages climbed 40% year-over-year in 2015, as more than 20 billion parcels were delivered in China. And 80% of those parcels were ordered online.

Speed and efficiency of delivery also increased by 14% to an average of 2.6 days to fulfill orders.

Astoundingly, Chinese customers received free shipping on 87% of e-commerce packages, though it is unclear if retailers or delivery companies paid for the cost of shipping.

Finally, cross-border shipments into China improved in 2015, as the average wait time for overseas goods fell by 30% YoY.

Alibaba and JD.com are spending considerable time and resources to reach more Chinese consumers as they jockey for position in the market. Both companies have been testing drone delivery systems, as well as constructing warehouses and fulfillment centers throughout China.

E-commerce companies based in China sold almost $590 billion in goods in 2015, an impressive 33% YoY increase, according to data from China's National Bureau of Statistics. For comparison, the e-commerce market in the U.S. climbed 14% YoY to slightly more than $341 billion, according to the U.S. Department of Commerce.

Given that growth, it's no surprise that Chinese e-commerce companies are doing all they can to increase the speed of their deliveries. Consumers around the world are becoming less accepting of multi-day shipping periods as more companies begin offering same-day fulfillment.

Cooper Smith, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on same-day delivery that takes an exhaustive look at this market and sizes the percentage of people who will purchase goods to be delivered the same day.

The report uncovers the demographics of same-day delivery customers, the markets where these services have the best chance of taking off, and assesses how each of the many new same-day delivery entrants compares to the others. It also looks at the technology that really could make getting a package delivered to your door hours after you order it a common phenomenon.

Here are some of the key points from the report:

• USE: BI Intelligence estimates that 2% of shoppers living in cities where same-day delivery is offered have used such services. In dollar terms, we estimate that roughly $100 million worth of merchandise will be delivered via same-day fulfillment this year in 20 US cities.
• CONSUMER EXPECTATIONS: Consumer interest in same-day delivery is already fairly high. Four in 10 US shoppers said they would use same-day delivery if they didn't have time to go to the store, and one in four shoppers said they would considering abandoning an online shopping cart if same-day delivery was not an option.
• DEMOGRAPHICS: The most common same-day delivery shopper fits a very specific profile — millennial, highly likely to be male, urban-dwelling, and young. The products people want delivered same-day are also fairly niche.
• BARRIERS: Despite all the competition in the same-day delivery market, it still won't be easy to get people to pay for these services. 92% of consumers say they are willing to wait four days or longer for their e-commerce packages to arrive.

In full, the report:

• Estimates the market for same-day delivery from 2013-2018, including the percentage of people who will use these services and the total sales volume
• Looks at the most likely same-day delivery customers and the cities where these individuals are concentrated
• Unpacks the kinds of goods people are likeliest to order for same-day delivery
• Lays out how the different same-day delivery services stack up against each other in terms of prices, location, and selection
• Considers the barriers that could keep same-day delivery from ever becoming a mainstream preference among consumers
• Identifies the technology that could make same-day delivery cost-effective and commonplace

To get your copy of this invaluable guide, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the shift toward same-day delivery.