China’s $1.94 trillion ecommerce is the largest in the world, and more than three times that of the number two US market, according to a newly released eMarketer report.
The rise of New Retail in China, which blends the best of online and offline commerce to drive higher levels of engagement between brands and consumers, is inspiring innovations in retail across the globe, eMarketer noted.
The report described a booming global ecommerce market, which is expected to grow 20.7% this year to $3.5 trillion in sales.
China’s $1.94 trillion in sales will have contributed 54.7% of that figure, according to eMarketer.
Here are the areas in ecommerce where China is leading, according to the report:
- Mobile commerce: Four out of five ecommerce dollars are being generated from mobile devices in the country in 2019 – or 80% – versus the 64.4% global average, the report said.
- Mobile payments: Chinese consumers rely on apps, such as Ant Financial’s Alipay, for both online shopping and payments at physical stores. About 81% of smartphone users in China will use mobile payments this year, compared to just 27% in the US.
- Cross-border ecommerce: This was a channel to watch, eMarketer said, as global infrastructure improves and small businesses can better access to global markets. In China, demand for high-quality household products and luxury goods and high-fashion apparel will drive the trend.
“Despite its reputation for parroting the US’s digital success stories, there is a growing sentiment that China has become the nexus of ecommerce innovation,” the report said.
New Retail vs. Omnichannel – what is the difference?
To explain the impact of digital commerce on brick-and-mortar retail, eMarketer contrasted New Retail, a term used mainly in China, with “omnichannel,” which is the term typically used in the West.
New Retail is built on China’s digital-first approach to commerce because it largely leapfrogged the brick-and-mortar buildout seen in the West and went quickly to online.
Omnichannel, however, is the West’s attempt to tack digital services onto its longstanding brick-and-mortar infrastructure to deliver to consumers the shopping efficiencies they are familiar with online.
But as omnichannel operations grow in sophistication and the customer experience becomes more seamless, “the vision of New Retail is closer to becoming a reality” in the West, the report said.
The report also spotlighted Alibaba’s New Retail-powered grocery chain Freshippo as an example of this consumer-centric approach, where “customers can shop in person, dine-in and have orders delivered.”
Aside from China, eMarketer said the US and the UK are advanced in some New Retail operations that are more suitable for local consumers, such as “click-and-collect,” which allows consumers to order online and pick up their items at a store.
Alibaba Group tops the list of global ecommerce leaders
The leading ecommerce player in China, Alibaba Group, also tops the list of global ecommerce leaders.
Alibaba’s Taobao and Tmall marketplaces ranked first and second globally in terms of gross merchandise volume, with Amazon at number three, according to Internet Retailer data cited by the report.
The report also made the distinction that Alibaba’s revenues are “almost exclusively driven by third-party marketplace sales.” In contrast, Amazon’s revenues are mostly derived from first-party sales.