China's Online Shoppers will Spend $2 Trillion this Year
A year ago, over 500 million online shoppers in China spent $1 trillion in purchasing. Thanks to the growth of mobile apps and improving logistics networks, which have helped e-commerce companies reach new customers in smaller cities, the country is on its way to hit the $2 trillion milestone this year.
According to the latest worldwide retail and ecommerce forecast by market research company eMarketer, China is poised to become the world’s top retail market by the end of this year, displacing the US. China’s retail sales this year will surpass that of the US by more than $100 billion, says the report, which was based on an analysis of quantitative and qualitative data from research firms, government agencies, media firms and public companies, plus interviews with executives at publishers, ad buyers and agencies.
Last year, a report by Forrester, another market research firm, one-fourth of all retail sales in the Asia-Pacific region will occur online by 2022, led by China and South Korea.
The power of spending
The total retail sales in China will grow 7.5 per cent to reach $5.636 trillion, while in the US retail sales will grow 3.3 per cent to hit $5.529 trillion. Growth rates are slowing for both countries, adds the report, but China’s growth rate will exceed that of the US through 2022.
“In recent years, consumers in China have experienced rising incomes, catapulting millions into the new middle class,” says Monica Peart, senior forecasting director at eMarketer, in the press release. “The result has been marked rise in purchasing power and average spending per person,” she adds.
The growing retail economy
Ecommerce is one of the major drivers of China’s retail economy, with sales growing beyond 30 per cent this year to reach $1.989 trillion. This implies that 35.3 per cent of retail sales in China open on the Internet, which is the highest rate in the world till now. The US lags far behind, with ecommerce on track to represent 10.9 per cent of its retail sales. China surpassed the US in ecommerce sales in 2013.
The report mentions that towards the end of this year China will have 55.8 per cent of all online retail sales globally, with that figure expected to exceed 63 per cent by 2022. The US’ share of the global ecommerce market, meanwhile, is expected to drop to 15 per cent by 2022.
With a share of more than 53 per cent, Alibaba will lead ecommerce sales in China, the report says. Peart, however, notes that the Jack Ma-founded giant’s share has been steadily declining over the past several years because of the rise of smaller players. Social commerce platform Pinduoduo, for instance, has seen a triple-digit growth since 2016, although its share remains small.
“Relative newcomers and multichannel retailers continue to take share from giants Alibaba and JD.com,” Peart says. “The mature players set their sights on further international expansion. Smaller local players are finding their niche in the Chinese ecommerce market by integrating WeChat and using online-to-offline data to better target consumers,” she adds.