While the offline retail market is expected to suffer in the short and mid-term, China’s online retail sector will grow rapidly in the next few years, with online shoppers to exceed 40 per cent of the total population in 2018 and online retail sales to double by then from current level, according to analysts.
China’s online retail market is a bright spot in the sluggish retail sector, said analysts from Jefferies Group in a recent research note.
“This era is witnessing speedy application of new technology and vigorous cross sector M&A to facilitate e-commerce penetration,” said Jessie Guo, who was lead author of the report by the US investment bank.
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She expects the number of China’s online shoppers to increase to 587 million in 2018, up from 413 million in 2015. By then, 42.4 per cent of the total population would have some experience in online shopping.
In the meantime, the gross merchandise volume (GMV) of online retail is forecast to reach 7.5 trillion yuan in 2018, double the 3.9 trillion yuan in 2015, equal to a compound annual growth rate (CAGR) of 24.6 per cent over the three year period.
China’s online retail sales have been expanding at a faster pace in recent years compared with other developed economies. In 2015, online retail sales jumped 39 per cent year on year to 3.9 trillion yuan, accounting for 13 per cent of total retail sales compared with 10.6 per cent in 2014 and 8.1 per cent in 2013, according to data from the National Bureau of Statistics.
By comparison, global online retail sales in the US reached US$342 billion in 2015, up 14.6 per cent from 2014. That accounted for 7.3 per cent of the total retail sales in the US.