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Disposable income and consumer spending in China continue to grow at a slow but steady pace. Rising incomes are helping boost the fortunes of the country’s ecommerce sector, which has been a clear beneficiary of consumers’ growing largesse.
According to an April 2017 forecast by iResearch Consulting Group, average annual ecommerce spending in China continues to rise. iResearch projects the average digital buyer in China will spend RMB12,198 ($1,836) online in 2017, an increase of 7.0% over 2016.
The question for ecommerce companies, marketers and observers of China’s economy is where to place the “ceiling” on ecommerce spending growth. The iResearch data suggests ecommerce spending is slowing, estimating the average annual growth rate per digital buyer will dip below 5% starting next year.
Other data supports the idea that ecommerce sales are no longer growing at the sky-high rates that once characterized China’s online economy. Based on January 2017 forecast data from Fung Global Retail and Technology, the share of sales captured by retail and consumer-to-consumer (C2C) ecommerce in China will start to plateau after this year. While that share is expected to reach 21% in 2017, it will increase by only 4 percentage points over the following three years, hitting 25% in 2020.
Most market signals seem to suggest slower but steady ecommerce spending growth will be the norm in China, at least for the next few years. The challenge for ecommerce companies operating in China will be deciding whether this slower spending growth is a temporary blip on the radar, or a preview of a more permanent shift as the consumer market in China reaches maturity.
As programmatic advertising matures, buyers and sellers no longer see it merely as a means of automating processes, but rather as an advanced method of controlling ad campaigns—and better targeting the audiences that come with them.
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