The latest market research report by Technavio on the business-to-consumer (B2C) e-commerce market in China predicts a CAGR of around 28.78% during the period 2017-2021.

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Technavio has released a new market research report on the Business-to-Consumer E-commerce Market in China (Graphic: Business Wire)

The increase in Internet and smartphone penetration, free shipping and unproblematic return policies, easy payment options, and growing seasonal sales are the top factors expected to drive the business-to-consumer e-commerce market in China during the forecast period.

The rise in the number of smartphone users has significantly contributed to the online retail market's growth. As of 2016, nearly 51%-53% of the mobile phone holders in China used smartphones. The rapid rate of smartphone penetration results in significant growth opportunities for online retailers in China. As customers are accustomed to shopping that offers comfort, the growth of online shopping is expected to be on the rise.

Tamal Saha, a lead analyst from Technavio, specializing in research on the retail goods and services sector, says, “As per the World Bank Group, in 2016, the percentage-to-population of internet users in China was 53.20%. 733.45 million people in China have access to the internet; the number is the largest globally. Smartphone users in China spend more time online than users in other APAC countries apart from Japan and South Korea.

In China, a customer spends nearly 16 hours a week on an average on the internet for shopping, online payments, ticket bookings, and other online transactions. The growth of wireless and fixed connections has increased the degree of broadband penetration in China.”

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The top three emerging trends driving the B2C e-commerce market in China according to Technavio’s research analysts are:

  • Growing m-commerce platform
  • Omni-channel retailing
  • Increasing social media marketing

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Growing m-commerce platform

A high degree of internet penetration and an increase in the number of smartphone users worldwide have led to the evolution of the shopping habits and shopping patterns of the global customer. This applies to e-commerce customers in China as well. The growing demand for e-commerce is coupled with an equally increasing popularity of m-commerce.

“Mobile versions of many a web-portal have been launched to meet the growing demand for m-commerce and smartphone shopping. Alibaba Group Holding, a key vendor in the online space, has launched mobile applications that are compatible with iOS, Windows, Android, and other operating systems. The use of mobile wallets is expected to peak in the forecast period with the advent of e-cash,” according to Tamal.

Omni-channel retailing

Omni-channel retailing is a key trend that has recently been incorporated by domestic and international physical retailers across different product categories. Omnichannel retailing is an evolving concept in the B2C e-commerce market in China. Multiple retailers are investing in omnichannel retailing through their own web shopping portals.

Vendors in beauty and personal care (BPC) market such as Procter & Gamble (P&G), Shiseido, Unilever, others sell their products through web portals and e-commerce retailers. Likewise, physical retailers catering to product categories such as apparel, footwear, toys, baby products, and others are venturing into the online shopping space.

Increasing social media marketing

Social networks occupy a significant space in the B2C e-commerce market in China. On a daily basis, users spend about 1.95-2.15 hours on social media in China. The major social networking websites in China include douban, Renren, WEIBO, and Tencent's Qzone. As of 2016, China registered around 689 million social media users; the country is expected to incline by a CAGR close to 4.60% by 2021.

Retailers in the B2C e-commerce market in China use social networking websites to gain marketing and sales leverage. The optimum utilization of social media for marketing plays a significant role in creating new products and consumer experiences, understanding changes in fashion trends and interests, tracking brand and product reviews, and launching several social media marketing campaigns.

The key vendors are as follows:

  • Alibaba Group Holding
  • Dangdang
  • JD.com
  • Suning Holdings Group
  • Vipshop Holdings

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Technavio ResearchJesse MaidaMedia & Marketing ExecutiveUS: +1 844 364 1100UK: +44 203 893 3200www.technavio.com