Online retail spending in China will exceed $1 trillion by 2019, according to a new forecast from Forrester Research, Inc., up from $307 billion in 2013.
The China Online Retail Forecast 2014 – 2019 also estimates that spending via mobile will grow at 44.2% compound annual growth rate (CAGR), twice as fast as online sales, which are estimated to grow at 19.9% CAGR. Mobile sales and online retailers’ expansion into new product categories will be the twin drivers for ecommerce growth in China over the next five years.
“To capture the opportunities in the increasingly competitive retail market, organizations must realize the importance of digital capabilities,” says Vanessa Zeng, Senior Analyst, Forrester Research. “Successful organizations must drive innovation to deliver compelling shopping experience and focus on enhanced customer segmentation, offering seamless customer experience across touchpoints, and leverage mobile to drive overall online retail business.”
According to the report, Chinese consumers are shifting to mobile for online shopping. The frequency with which online consumers in metropolitan China shop via their mobiles is increasing rapidly, while those in lower-tier cities use smartphones as their primary means of network access and for online shopping.
Major web players, Tmall and JD.com, will continue to dominate China’s ecommerce market, with respective market shares of 57% and 21%. Tmall and JD.com will try to seize control of the mobile commerce market by enhancing their mobile investments and improving customer experience.
More categories of products traditionally sold offline, such as pharmaceuticals and furniture, are now made available online. The growing number of middle-class and affluent Chinese consumers adds to online demand for a wide variety of high-end products, such as fresh food, imported goods, and automobiles. The convenience, variety, and fast delivery associated with online purchase will boost eCommerce in these new categories.