China has more Internet users than the United States and Japan combined, and it already has 145 million online shoppers (second only to 170 million in the U.S.), with exponential growth expected that could bring the number to 329 million by 2015 and make the e-commerce market in China the world’s most valuable.

Despite this vast window of opportunity, many companies are leaving significant growth potential on the table; they’re allowing merchants that sell on Chinese shopping marketplace giant Taobao.com, as well as other e-commerce companies, to shape consumer perception and the market overall.

These are insights from "The World’s Next E-Commerce Superpower: Navigating China’s Unique Online-Shopping Ecosystem," a new report from The Boston Consulting Group (BCG).

“Consumerism is already big in China—people simply love to shop. But China is unusual in that Internet access has far outpaced the reach of the top physical retailers, which means that e-commerce development probably will not mirror the pattern in other countries,” said Waldemar Jap, a Hong Kong-based partner at BCG and coauthor of the report.

“Companies that want to compete will not only have to understand how Taobao and others may already be shaping their online presence but they will also have to engage consumers via multiple online—and offline—channels.”

Growth of E-Commerce in China

The study notes that e-commerce in China will go from representing 3.3 percent of the country’s total retail value today to 7.4 percent in 2015. It took the United States ten years to achieve that growth, notes the study.

Within five years, most of today’s online shoppers in China will be spending RMB 6,220 (or about $980) per year, twice what they are today. That’s close to the U.S. average of $1,000.

The BCG reports says the low cost of shipping in China gives e-commerce an ongoing boost. It costs $1 on average to ship a 1-kilogram parcel, versus $6 in the U.S.

Until not long ago, a key barrier to e-commerce adoption in China was the lack of a satisfactory payment method; credit cards aren’t prevalent. Taobao solved this through its Alipay escrow-accounts innovation.

Payments from consumers are held in escrow until the consumer receives the order. (Paypal, in contrast, transfers money to the merchant when the order is placed, and merchants don’t send orders until the money is received.) More than 60 percent of consumers on Taobao use Alipay. Cash on delivery is a popular alternative, as well.