With the rapid expansion of the consumer market and the development of digital technologies, China’s ecommerce industry continues to grow all the rage across the country. The Chinese market ranks at number one worldwide for its retail e commerce sales. In 2021, e commerce in china contributed more than half of the country’s retail sales.
With such a huge opportunity size, China is one of the most lucrative countries for foreign brands to start selling online.
The Growth Of E-Commerce Market in China
1. In 2021, China became the largest market for eCommerce with a revenue of US$1,543 billion, placing it ahead of the United States. (1)
2. The Chinese eCommerce market grew by 15% in 2021, and contributed immensely to the worldwide growth rate of 29%. (1)
3. The E-commerce value of the China market is expected to grow at a strong CAGR of 11.6% between 2021 and 2025 to reach CNY21.4 trillion (US$3.3 trillion) in 2025. (2)
4. The overall e-commerce sales in China grew at a CAGR of 17.7% between 2017 and 2021. (2)
5. The revenue in the eCommerce market in China is projected to reach US$1,412.00bn in 2022 and surpass 3.6 trillion U.S. dollars by 2025.(3)
6. E-commerce platform users penetration will be 71.9% in 2022 and estimated to hit 83.9% by 2025. The projected number of users is expected to amount to 1,230.4m users by 2025. (3)
7. China’s B2B cross-border e-commerce market is forecasted to grow by 160% between 2021 and 2025. (4)
8. China has 1.6 billion mobile users and 75% of them transact with eCommerce platforms using these devices. (4)
9. Experts estimate live-streaming to be worth $60 billion annually and continue to grow more in the coming years. The ecommerce sales from live streaming in China are expected to skyrocket to 624 billion yuan by 2023. (5)
5 Top Growth Drivers Of Chinese E-Commerce Market
- The COVID-19 pandemic drove e-commerce activities in the country. Concerned consumers started increasingly using online channels for their purchases to avoid getting exposed to the virus. The trend continues even beyond the pandemic.
- The availability of various alternative payment solutions such as Alipay and WeChat Pay also drove growth. Collectively, Alipay and WeChat Pay (including TenPay) drove accounted for 57.6% of total e-commerce value in 2021.
- The emergence of new e-commerce platforms, increasing consumer confidence in online shopping and growing penetration of Internet and smartphone led to the rapid growth in the Chinese E-commerce market in the last five years.
- China’s millions of migrant laborers enabled companies like Alibaba and JD.com to provide same-day delivery anywhere in the country, offering a nearly limitless supply of low-cost delivery services. This offering was very attractive for first time buyers. Even though labor costs have increased, this factor helped in early adoption.
- M-Commerce is huge in China and 83.1% of ecommerce in China is expected to become Mcommerce in 2022. Most shoppers in China skipped the desktop era and joined the internet age directly via mobile devices.
Forecasts & Trends For Chinese E-Commerce Market
1. The largest share of revenue will come from Electronics, closely followed by fashion and food.
2. The share of revenue of Cross-Border E-Commerce is estimated to be 3% of the total market share from 2021 to 2025.
3. About 60 percent of all transactions will continue to happen through E-wallets.
4. Online sales will contribute 32.5% of all sales in 2022. The percentage will increase to 33.2 percent by 2025. The physical stores will continue to be important even as every brand moves towards setting up its online store.
5. Majority of E-commerce platform users (about 32 percent) lie between the ages 25 to 34 years, followed by those between 35 to 44 years of age (about 25 percent).
6. Alibaba and JD.com were the largest B2C E-Commerce market players in China in 2021, with a current joint market share of more than 60%. When it comes to online marketplaces in China, Taobao and Pinduoduo are the most popular.
7. In 2021, Gen Z and Millennial consumers were e-commerce trendsetters. They fuelled a surge in innovation, from subculture fashions to gender-neutral perfumes.
How To Enter The Chinese E-Commerce Market
With careful planning, your business can enter China and start selling. The following step-by-step guide will help you plan your China market entry.
1. Assess Your Product
Not sure if China is the right market for your products? Then, start by doing some customer research. You can read China market reports and look at how competitive businesses are performing with your target audience.
However, one of the best ways to test your success in the China market is to attempt and sell your products. You can take support of platforms like AdChina.io to set-up a basic presence to start selling and advertising your products.
2. Choose The Right E-Commerce Platform
If you’ve already done your research and made up your mind to enter the China market, the next step would be to establish your presence and start selling on a suitable E-Commerce platform. Alibaba, JD.com, and NetEase Kaola are the top three platforms to consider when planning to sell in China.
Alibaba has 3 offerings – Alibaba.com, Taobao and Tmall. Alibaba.com is the biggest B2B eCommerce platform globally. Taobao is like eBay but with fewer auctions and more set prices. Tmall (Taobao Mall) is a platform for selling branded goods to the growing middle class.
JD.com is China’s second-largest eCommerce company and was the first brand to offer same-day delivery to its users. The platform buys its inventory from branded suppliers and then operates its logistics in-house.
Kaola has built its reputation as the platform to buy affordable genuine imported products. It also provides valuable information on fashion, lifestyle, fitness, and other related topics.
WeChat also offers businesses with registered official accounts the option to sell through WeChat Stores. These stores function as mini-websites within the platform and help convert leads seamlessly into paying customers.
If none of these options are a good fit for your business, you can also launch your own Ecommerce website and start selling in China. Having your own website has certain benefits for branding and re-purchases. However, you need a Internet Content Provider (ICP) registration, have website hosting, adopt a mobile-first strategy, and ensure that you can accept online payment methods that are preferred by Chinese consumers.
Platforms like AdChina.io can help you set up your website as well your social media accounts to run advertisements to bring you sales.
3. Build Your E-Commerce Marketing Plan
Presence on Chinese Social Media platforms is a must to build brand awareness and bring visitors to your E-commerce store. WeChat, Weibo, Douyin and Xiaohongshu (Little Red Book) are the top platforms to consider for promoting your products. It’s also very important to adopt a mobile first strategy from day one.
These platforms offer opportunities to create content to promote your brand, run advertisements, collaborate with KOLs (Chinese influencers also known as Key Opinion Leaders), run competitions or challenges and also sell your products through live streaming.
Through AdChina.io, you can run advertising campaigns across multiple social media channels at once and track your metrics on a single dashboard. The tool also lets you run very precise and targeted ads so that you make the best of your marketing spend. You can also take assistance from our team to partner with KOLs and set-up your campaigns.
4. Understand Chinese ECommerce Laws
It’s important to stay educated about any E Commerce laws and regulations that come up in China. For instance, in 2019, a law was passed by Chinese lawmakers to protect consumers through stricter merchant regulations. There’s also an increase in the tax-exempt spending on overseas purchases in order to discourage consumers from purchasing counterfeit products.
Likewise, each social media platform as well as Ecommerce platform has their own rules and regulations that must be followed to grow your business in China.
5. Establish Logistics and Customer Support
For E-commerce business, it’s crucial to have well established logistics and customer support. Establish a way for customers to place return requests. You can consider working with a third party to pick up goods which they can return to you or sell in China at a reduced cost.
It’s also important to set-up processes that minimize return requests and only allow returns in a limited time frame. Providing good images, descriptions and even a set of FAQs to help customers make the right purchases can help reduce return rate.