Online shopping in China grows 26.2% in 2016

Online retail sales in China reached 5.16 trillion yuan ($752 billion) in 2016, representing 26.2% growth from 2015—more than double the growth rate of overall retail sales, according to China’s National Bureau of Statistics, the agency charged with tracking economic data. Total retail sales amounted to $33.23 trillion yuan ($4.98 trillion) in 2016, up 10.4% year over year.

While consumers made 15.5% of their total retail purchases online, the percentage was a bit lower for physical goods, at 12.6%. Overall sales of tangible goods amounted to 4.19 trillion yuan ($610 billion). The remaining nearly $145 billion in retail purchases was of digital goods, such as music and videos.

The report guarantees China will further extend its lead over the United States as the world’s largest online retail market. U.S. e-retail sales totaled $341.7 billion in 2015, according to the U.S. Commerce Department, and is on track to grow at around 15% in 2016 to around $393 billion. The U.S. Commerce Department will report fourth quarter 2016 and full-year U.S. online retail sales on Feb. 17.

Helping fuel China’s growth in online retail sales was the rapid integration of stores with online channels, the National Bureau of Statistics says.

“We expect New Retail, a new form of [online-to-offline sales] promoted by Alibaba and supported by Chinese authorities, will shape the retail landscape for China going forward. Earlier in 2017, Alibaba announced the privatization of Intime Retail Group, which we believe would be a test case for its New Retail strategy. Also, other partnerships between physical stores are Alibaba and Sanjiang, JD.com Inc. and Yonghui Supermarket,” Esme Pau, an analyst at research company Fung Global Retail & Technology, tells Internet Retailer.

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Sales in stores grew 7.8% in 2016, a sizable jump from 5.5% growth in 2015. Specialty stores selling specific brands grew 4 percentage points faster than in 2015, but supermarkets and department stores lost market share, growing about 1.5 percentage points more slowly than in 2015.

The government agency reported that Chinese consumers bought more premium products in 2016, including sporting goods, sport utility vehicles and electric automobiles. For example, sales of mobile devices grew nearly 12% in 2016. Online sales of food in China went up 28.5% in 2016 over the prior year, clothing sales increased 18.1% and sales of other goods rose 28.8%, the National Bureau of Statistics reported.

The growth in online and offline retail reflects a still-healthy Chinese consumer economy, despite a slowdown in recent years. China’s gross domestic product grew by 6.7% in 2016, overtaking India, which registered a 6.6% increase in GDP, as the world’s fastest-growing major economy, according to the data released recently by The International Monetary Fund.

Chinese consumers are fulfilling some of their demand for premium products by buying imported goods online. The number of Chinese consumers who purchased overseas products on Tmall Global, an online marketplace for imported goods, more than doubled in 2016, according to Tmall Global operator Alibaba Group Holding Ltd. Amazon.com Inc., one Alibaba’s main rivals in China, reported earlier that as of the end of August 2016 Chinese consumers had placed more than 10 million orders on the cross-border e-commerce shopping area of Amazon.cn, which launched in 2014.

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