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Mintel forecasts online spending in China is reaching a peak

Nov 09. 2017
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By The Nation

China is experiencing a fundamental shift in the way their consumers shop, and in how the shopping experience fits into the wider environment of customer service delivered both online and in-store.

New research from global market-research provider Mintel reveals that China’s online retail market has reached a critical mass. Business-to-consumer (B2C) online retail is expected to reach above 60 per cent of total e-commerce sales in 2017, with mobile online retail expected to make up over 80 per cent of the B2C retail category.

Mintel estimates that by the end of this year, per capita online retail spending will grow to 45.7 percent of the total per capita retail money spent. However, per capita online retail spend is predicted to hold steady between 2017 and 2019.

Total B2C and consumer-to-consumer (C2C) online retail sales in China are expected to reach 6.4 trillion Chinese yuan (Bt31.9 billion) by year-end 2017, having grown at a CAGR compound annual growth rate of 37.9 per cent since 2012. That is a fivefold growth in value in just five years.

Matthew Crabbe, Research Director, APAC, at Mintel said:

“Mintel research reveals that online per capita spend in China is close to reaching a peak and there are a few reasons why this is happening,” said Matthew Crabbe, a research director at Mintel. “One issue is that consumers are increasingly buying experiences and services online, rather than products. The other issue is that consumers are already adapting to ‘new retail’; they are embracing greater integration between online and in-store shopping. This will mean much tougher competition between retailers. It will also likely mean more pressure for further consolidation in the market, resulting in more mergers, acquisitions and strategic partnerships.”

China’s ‘new retail’ experience has consumers purchasing different products from different channels. Mintel research shows that 72 per cent of in-home food shoppers prefer to shop in-store, compared with 60 per cent of consumers who prefer to shop online for toys, games, clothing, and accessories. Apart from alcoholic drinks (61 per cent shop in-store) and pharmaceuticals and healthcare products (57 per cent shop in-store), the combined total of those who shop online via a mobile device or lap/desktop is greater than the proportion who shop in-store.

While in-store grocery shopping still dominates, 66 per cent of consumers buy in-home food and drinks in-store, the average number of consumers who shop online (mobile or desk/laptop) for in-home food and drinks grew 3 per cent since 2016, with nearly half (49 per cent) buying in-home food online using a mobile device. Compared with 2016, mobile online shopping grew significantly across all sectors, according to Mintel’s research.

“The growth in mobile online shopping across all sectors this year illustrates how mobile is driving the convergence of online and offline shopping into 'new retail',” said Matthew. “Meanwhile, online shopping penetration is high across most sectors. There may be room to expand fresh and luxury food product sales online, thus increasing the number of high-income consumers who shop online, but the room for expansion of share of pocket among China’s consumers is running out.”

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