E-commerce to dominate retail sales in China in 2021

The rise of social commerce contributed to this global historic first.

China’s e-commerce sector is projected to take up 52.1% of the country’s retail sales by 2021, up from 44.8% a year prior, the first time across the globe where a majority of retail sales for an entire country will transact online, according to a report from eMarketer.

The country with the next highest rate of e-commerce as a share of total retail sales is South Korea, which is projected to transact 28.9% of its sales online this year. In the US, that figure will be at 15%, and the average amongst Western European countries will be 12.8%.

China has led the world in aggregate e-commerce sales figures and e-commerce’s share of total retail, but that share was only 29.2%, relatively close to the e-commerce’s share projected for South Korea and the UK in 2021.

“Whilst the pandemic did not create this trend, it certainly buttressed it, and China’s most recent ecommerce boom did not decelerate even after the country got a handle on the virus and the economy fully reopened,” eMarketer’s forecasting writer Ethan Cramer-Flood said.

In 2020, brick-and-mortar sales declined by 18.6% in China, and is projected to decline by another 9.8% this year. By comparison, e-commerce grew by 27.5% in 2020 and will grow by another 21% in 2021.

Contributing to this growth is the rise of social commerce, which surged 44.1% in China in 2020 and is expected to grow 35.5% this year to reach $363.26b. By comparison, social commerce in the US could reach $36.09b.

WeChat’s interface also began to facilitate third-party ecommerce: Mini Programs allowed all manner of businesses to leverage WeChat’s user base and showed to be extremely popular amongst merchants and consumers, the report stated.

“As soon as WeChat implemented its Mini Programs option, China’s social commerce boom truly began. According to various media reports, well over $200b in ecommerce transacted via these programs last year, all of which counts as social commerce,” Cramer-Flood said.

Further, the group-buying-meets-social-networking phenomenon has shot up from a 0.5% share of China’s e-commerce market in 2016 to claim a projected 13.2% this year.

In particular, Pinduoduo unlocked China’s rural e-commerce participation more effectively than any other platform in terms of both buying and selling, and became the world’s fourth-largest e-commerce company almost overnight, according to the report.

Livestreaming also became a hot trend, but in first instance the traditionally nonsocial Alibaba led the way on livestreaming commerce. Other businesses later jumped on the bandwagon.

The pandemic also caused consumer behavior to alter in 2020. Online grocery shopping surged, and this preference is expected to be sticky over the long term. Households remained skittish for many months after the virus ceased to be a widespread danger, and this hesitancy toward social activities helped sustain the ecommerce boost, the report stated.