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E-commerce growth in China slows to 9.1%
E-commerce & mobile retailGreater China
Research from Insider Intelligence has forecast China’s 2022 e-commerce sales to grow at their slowest pace since 2008, in a sign of broader economic troubles in the largest e-commerce market on the planet.
Why it matters
It’s important to remember that the competitive set is difficult to match – for a long time, China’s economy was used to retail sales growing by an average of 12% per month, according to the Wall Street Journal.
In an online shopping economy worth $6.1 trillion – one that would presumably grow at an accelerated pace given the ongoing zero Covid policy in the country which has continued to lock down regularly – it’s surprising to see such trepidation.
What it suggests is not that the fundamental utility of e-commerce no longer makes sense to people, but rather that it’s a sign of economic attitudes as people hold back on discretionary purchases at a time of broader economic woes: the property market has dipped, inflation begins to take hold and wages can’t keep up.
It appears that more aggressive competitors are selling more (even if that may not be a long-term recipe for profitability). Pinduoduo’s value offering has spurred sales growth of 36%.
Where e-commerce excels appears to be in grocery which has continued its fast growth (albeit a little slower). Generally, consumption patterns reflect ongoing lockdown situations: food, household, personal care, fitness, pet, home improvement, and even camping categories have all done well, while fashion has struggled.
Giants struggle to maintain stellar performance
E-commerce giants have felt the pinch, with Alibaba’s June results showing a 1% dip in China sales, while rival JD.com saw growth slow to just 5.4%. It’s worth pointing out that both these firms dwarf Pinduoduo’s sales. Alibaba remains the biggest and likely the strongest brand in the space.