via Seeking Alpha: China’s online retail market, already the world’s largest at approximately $1.1 trillion according to an estimate by eMarketer, is also the fastest growing. Wow, just think about that fact, the biggest and fastest growing e-commerce market is in China.
For the past three years, its compound annual growth rate has been 38.1 percent, almost three times the US growth rate of 13.6 percent, according to a study conducted by McKinsey & Company. According to the study, in 2017, China’s e-commerce market is expected to surpass Europe and the United States combined. Another Wow, but not too surprising when considering the population of Europe (pop. = 738m) and the United States (pop. = 324m) and their combined population (pop. = 1.06b) versus China’s population (pop. = 1.38b) according to the World Population Review.
eMarketer also estimates that ecommerce sales in China accounted for over 23% of sales during 2017, but this percentage will rise to over 40% by 2021.
And Chinese consumers aren’t just buying Chinese products from Chinese websites. Also, cross-border e-commerce is experiencing explosive growth, powered by Chinese consumers’ desire for lower prices and higher-quality products. Cross-border e-commerce is projected to account for 9.2 percent of the country’s total online retail market by 2018, according to McKinsey.
Additionally, more than two-thirds of Chinese consumers shop Online-to-offline and back again, according to the McKinsey study which also found that more than half of Chinese consumers switch between online and offline three to four times before making a purchase.
The Chinese Consumer is Trading Up!
Chinese consumers aspire to a better life and want to trade up their purchases, they are becoming more discerning and gradually more individualistic.
This is leading to a shift toward healthier choices, more user-friendly products, with products and brands that better fit their personality. This could be a big opportunity for niche brands—and a threat to the mass-market brands that had won big in previous years and ubiquitous availability, supported by the trust gained by heavy advertising.
McKinsey reports that in 2015, the online share of consumer electronic purchases, has reached a whopping 39 percent in 2015, and it now looks possible that by 2020 it will be about 50 percent of overall sales. But as the great Yogi Bera says: Making predictions may be difficult, especially about the future.