Despite some forecasts projecting a slowdown in ecommerce in China, a new report from Goldman Sachs sees the world’s largest online market continuing to boom over the next four years.
The report pegged Chinese ecommerce sales at $750 billion in 2016 sales, coming from 460 million online shoppers, and projects a CAGR of 23% through 2020 – nearly triple the rate of offline sales.
Goldman Sachs increased its previous forecast for Chinese ecommerce sales in 2020 by 15% to $1.7 trillion, and upped its projection of online penetration that year from 22% to 25%, from 16% currently.
Drivers include the expansion of online retail categories like fast-moving consumer goods, facilitated by upgraded logistics infrastructure over the past two years and the increase in omnichannel; sustained online growth in categories like apparel and electronics into lower-tier cities and rural areas, supported by technology; and the addition of 200 million online shoppers between now and 2020.
In particular Alibaba Group and JD.com, China’s first- and second-largest ecommerce companies, have been building out their networks of Chinese fulfillment centers, which are transforming supply chains and slashing delivery times by storing goods closer to a greater number of population centers, Goldman Sachs noted.
Nearly 25% of all ecommerce sales in China are apparel, footwear and accessories, with Alibaba as the biggest seller. Another 20% is electronics and appliances where JD.com and Alibaba’s Tmall each have a 40% share.