China'S Online Retail Sales Will Increase By 2 Times &Nbsp Next Year, And Warehousing Will Become A Bottleneck.

China's largest online retailers predict that sales will increase by 2 times next year, and the increase in warehouse demand will lead to higher warehouse rentals.

CEO Ji Wen Hong, a luxury sales website, said in an interview that anyone wants more warehouses.

Any warehouse larger than 20 thousand square meters will be rented immediately after entering the market.

A comprehensive online shopping center, WAL-MART 1, is also looking for more storage space.

Jingdong, the second e-commerce company in China, plans to invest 6 billion yuan (US $943 million) in the next three years to build seven distribution centers.

Jingdong's total sales in 2011 are expected to increase to three times in 2010, reaching 30 billion yuan (about 4 billion 721 million US dollars).

Shop No. 1 sells a wide range of products, ranging from NOKIA phones, Pampers diapers to Chuci salad dressing.

The total revenue of No. 1 store is 2 billion 500 million yuan (US $393 million) this year. The company expects total revenue in 2012 to increase to three times this year, reaching 7 billion 500 million yuan (US $1 billion 180 million).

Yu Gang, chairman of shop No. 1, said in an interview that the company had committed a mistake in the past that the shortage of warehouses resulted in poor supply and could not repeat the same mistakes in 2012.

Yu Gang said that due to shortages of warehouses and manpower, sales of the company had been greatly affected in the first four months of this year, with losses of about 10% to 20% of sales.

The more, the better

Yu Gang said that shop No. 1 has increased the warehouse area from 40 thousand square meters to 220 thousand square meters since the beginning of this year, but this scale can only meet the needs of the beginning of next year.

After the Chinese Lunar New Year, the company still needs more warehouses.

Yu Gang also said that Beijing and Guangzhou, as well as Ji'nan, Xiamen, Xi'an and Shenyang's warehousing and logistics centers, will double by next year, with a total area of 400 thousand square meters.

Michael Cole, general manager of China industrial real estate information provider RightSite.asia, said that this is an important pformation of Chinese stores. "Michael Cole"

He believes that the demand for warehouses will continue to grow in the next few years.

Cole said that the search volume on the RightSite.asia website is far more than that of production sites and office sites.

Rent increase

Increased demand has led to a rise in rents.

According to Yu Gang, chairman of shop No. 1, the rental of warehouse has increased by 5% this year.

Data from Colliers International, a real estate brokerage firm, showed that warehouse rentals rose 7.7% in 2010 and 20% in the same year.

Colliers International Nigel Ingham, director of industrial facilities in East China, said that the vacancy rate of logistics warehouses with good conditions is very low at present, which is only about 7%.

In the first half of 2011, the rent rose by about 7% as demand increased by two figures.

Influx of foreign capital

The rise of online shopping has also contributed to the influx of capital.

According to Zero2IPO, a market research firm, investment in e-commerce in China has increased to $2 billion 200 million by the end of September.

In 2010, the figure was $950 million.

In April, Jingdong raised $1 billion 500 million from Russia's venture capital DST and Tiger Fund.

According to sources, Jingdong will seek to be listed in the United States next year.

In August, the company received the injection of $100 million from private equity fund Warburg Pincus and venture capital KPCB China.

The money will be used to establish logistics centers in Shenzhen, Beijing and Guangzhou. The storage area is expected to reach 80 thousand square meters by the end of this year.

CEO, Ji Wen Hong, estimates that the total sales volume of the network will reach 1 billion 200 million yuan (US $189 million) in 2011.

Vicious spiral

Richard Ding, Royal China Group CEO, a retail and real estate investment consultancy based in Shanghai, believes that Internet retailers are unable to meet the needs of consumers due to insufficient storage, which may lead to a decline in their market share.

If orders can not be processed in time, it may frustrate consumers' online shopping habits.

This may lead to a vicious circle.

The growth of sales largely depends on the supply of products.

Therefore, warehousing plays an extremely important role.

The per capita disposable income of urban residents in China increased by 7.8% in the first three quarters of 2011.

This also directly promotes the business growth of online sellers and traditional distributors.

As the Chinese government advocated the pformation of the export oriented economic growth mode to stimulate domestic demand, the average monthly growth rate of China's retail industry in the first nine months of this year was 17%.

According to a August HSBC Holdings Plc report, China will become the world's largest luxury market in 2012.

According to Cushman&Wakefield, a commercial real estate agent, the demand for warehousing increased 42% of commercial real estate investment last year.

Ji Wenhong, CEO, said consumer satisfaction is the company's top priority.

Logistics is the last step and the most direct impression of consumers.