What Happened: The Chinese e-commerce market is forecasted to reach $3 trillion (19.6 trillion RMB) by 2024, up from $2.1 trillion (13.8 trillion RMB) in 2021, with a CAGR of 12.4 percent over the next four years, according to estimations by GlobalData.
WWD highlights that in 2021, e-commerce sales in China are expected to register 17.2-percent growth, as the COVID-19 pandemic has changed consumer behavior. Although overall consumer spending took a hit in 2020, decreasing 3.9 percent, online sales in China increased by 14.8 percent during the same period.
The Jing Take: The rapid economic rebound will likely further boost the growth rate of consumer spending in the luxury industry. Various policies are already underway to boost consumption, although only the affluent class is “revenge spending.”
Shortly, e-commerce sales will increase as new players enter the digital space. Moreover, e-commerce titans are constantly trying to improve their conversion rates through the use of cutting-edge technologies.
Using virtual reality (VR) or augmented reality (AR) features and livestreaming has already improved user experiences and interactions. Furthermore, gamification elements like those used by Alibaba and Tencent engage consumers longer and boost buyer motivation and brand loyalty.
As e-commerce sales continue to expand, we foresee more brands engaging with platforms like Taobao Streaming and collaborating with apps like Kuaishou to boost their online engagement.
This positive growth trend will continue because online shopping offers convenience. In a mobile-first country like China, which boasts 1.6 billion mobile phone subscriptions, shopping via mobile can give consumers more comfort and accessibility. The growth of Pinduoduo in remote rural areas and smaller towns is a testament to the success of online shopping. In fact, Pinduoduo has leveraged the power of the forgotten consumer, building the third-largest e-commerce player in China in the process.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.