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Online stores provide many jobs but little gain

By Nie Peng (chinadaily.com.cn)
Updated: 2008-10-07 17:23

Running an online store can be a good part-time or temporary job for people in need, but only a few "super traders" can count on it for making big money, a survey released on Monday indicated.

China's C2C (customer to customer) sites had created 420,000 jobs as of September, but nearly three-fourths of the online store owners or employees earned less than 2,000 yuan ($292) a month, according to the country's first-ever survey on online traders' income.

"In recent years, many low-income people began to try self-employment through opening online stores, which eased the employment pressure on authorities," Qin Chuan, an Internet analyst, told Beijing Business Today.

B2C (business to customer) and C2C are the two patterns in online shopping. While enterprises sell goods and information to customers in the B2C pattern, C2C transactions are conducted online between different customers.

C2C businesses emerged in China a decade ago, but not until recently did many Chinese accept online stores as an option for normal employment.

The number of online store owners on China's three major C2C sites, taobao.com, paipai.com and eachnet.com, hit 1.17 million, with taobao.com attracting a majority of 1.05 million, the survey conducted by China InteliConsulting Corporation in September has found.

The number of "active shops" on the C2C sites was also about 1.05 million, 850,000 of which were hosted by taobao.com.

However, the survey has shown that both sales revenues and profits of most online stores were very low.

Zhou Hongmei, senior analyst with China InteliConsulting, said the total online shopping revenue reached 60 billion yuan in 2007, with 48 billion yuan going to C2C businesses.

The recent survey estimated that as much as 40 percent of online trading revenue went to the "super traders" that accounted for only 2 percent of the total online store owners. On the other hand, small traders, taking up nearly 90 percent, shared just 30 percent of the revenue.

Although the average monthly income of those employed or self-employed through online stores was 2,080 yuan, higher than many Chinese cities' minimum wage levels, 73.2 percent of them earned less than 2,000 yuan and 42.7 percent fell in the 800-1,500 yuan group. Only 1.3 percent made more than 6,000 yuan a month.

The survey defined an employment opportunity in terms of monthly income: 1,000 yuan or above for online store owners or employees in Beijing, Shanghai, Guangzhou and Shenzhen, and 800 yuan or above for those in the country's other areas.

It also found university students, new graduates, laid-off workers and unemployed people accounted for one-fourth of online traders.

In July, Beijing ordered all corporate entities and individuals who do businesses online to register with authorities and pay taxes on their earnings from August 1, a move which will cut the competitive edge that online traders have enjoyed over supermarkets and retail outlets in the past.

But according to a report on fawan.com on Tuesday, 90 percent of the more than 230 online store owners questioned have not applied for a business license yet.

"I moved my businesses online because of the poor performance of my traditional store," said "pp" (Internet name), owner of an online clothing store.

Now that online stores were required to pay taxes, she began to worry about her store's ability to survive, if she has to put up her prices.

"Sudden price hikes will harm my online store's operations and reputation," she said.