Evolving Dynamics in the Chinese E-commerce Market: Supply and Demand Trends, Strategic Shifts, and Rule Optimization
The Chinese e-commerce market is transitioning from rapid growth to a bottleneck phase, driven by stratified and segmented consumer demand that emphasizes value-for-money and quality-of-life improvements. Platforms are shifting from a one-size-fits-all low-price strategy (prominent in 2023) to a “dual-track” approach in 2024, combining price competitiveness with differentiated value propositions tailored to platform-specific strengths.
On the demand side, economic challenges reinforce value-oriented consumption, but diverse consumer needs support differentiated growth strategies. On the supply side, the market faces growth pressures but has opportunities in quality-of-life categories.
Key platform rules play a pivotal role in strategy execution:
Future Trends: Platforms will deepen strategic differentiation and explore niche opportunities. Merchants must align their product strategies with platform goals, while consumers should choose platforms wisely to meet their evolving needs efficiently.
1.1 CHANGES IN THE DEMAND SIDE
Consumer demand in the e-commerce market is increasingly showing a clear trend of stratification and segmentation.
During the current economic downturn, Chinese consumers’ income expectations are generally cautious, leading to more rational consumption. Value-for-money demand now dominates the consumer market. However, the complexity and diversity of consumer demand in the Chinese market provide strong support for the diversified and varied development of China’s e-commerce market.
Main Features of the Stratification and Segmentation of Consumer Demand in China’s E-commerce Market
The demand for an improved quality of life in China is driving the growth of specific product categories, particularly in the outdoor sports economy and the silver economy.
The outdoor sports economy is booming, with activities such as trekking, cycling, diving, surfing, camping, fishing, and skiing gaining popularity. Corresponding product categories include outdoor footwear and clothing, functional products (e.g., sun protection, waterproof, quick-drying gear), food supplies, protective gear, scenario equipment, outdoor tools, and accessories. The market size for outdoor products was 197.1 billion yuan in 2022 and is projected to expand to 2400 billion yuan by 2025, reflecting a significant growth trajectory.
The silver economy, catering to the elderly, is also witnessing rapid expansion. Products that enhance the quality of life for seniors include comfortable and functional clothing, health monitoring and protective gear, rehabilitation equipment, exercise tools, nutritional supplements, wellness products, and entertainment items such as books and music. The silver economy market size was 7 trillion yuan in 2023 and is expected to soar to 30 trillion yuan by 2025, underscoring its immense potential.
On the supply side, the Chinese e-commerce market has reached a bottleneck, with increasing pressure to identify new growth areas. Traditional e-commerce platforms face slowing growth, and conventional promotional strategies are losing effectiveness. Meanwhile, live-streaming e-commerce, though still growing, is experiencing a deceleration in growth rates.
An analysis of the 618 sales growth rates highlights this trend. In 2022, overall online sales grew by 20.3%, but this slowed to 14.8% in 2023, with a sharp decline to -7.0% projected for 2024. Similarly, comprehensive e-commerce sales growth fell from 17.5% in 2022 to 5.4% in 2023 and is expected to contract by -6.9% in 2024. Live-streaming e-commerce, which saw explosive growth of 124.0% in 2022, slowed to 27.6% in 2023, with further moderation to 12.1% growth anticipated in 2024.
These trends underscore the growing importance of differentiated strategies and niche market opportunities to overcome the challenges facing China’s e-commerce market.
From the perspective of meeting the demand for improved quality of life, the Chinese e-commerce market still holds rich structural development opportunities.
The demand growth for categories driven by the improvement of quality of life is strong
2.Strategic Changes in Chinese E-commerce Platforms
2.1 STRATEGIC CHANGES IN THE E-COMMERCE PLATFORM
In 2023, major e-commerce platforms focused on low-price strategies to stay competitive, responding to high demand for cost-effective products and fierce competition during the economic downturn. Platforms prioritized price competitiveness, aiming to help consumers save money, time, and effort. However, the success of these strategies varied due to differences in their strategic goals and core strengths. Cost-performance became a key driver for attracting consumers in challenging economic times.
Taobao:
Effect: The low-price strategy had little impact. In Q2 2024, Taobao’s retail revenue dropped by 2% year-on-year, and Alibaba’s net profit fell by 27%.
Reasons:
1. Taobao’s wide range of non-standardized categories, like clothing, complicates price comparison and increases price sensitivity.
2. Taobao’s customers prioritize product diversity and high-quality services over low prices, leading to fewer orders despite discounts.
JD.com:
Effect: The low-price strategy worked well. In Q2 2024, JD’s retail revenue grew by 1.5% year-on-year, and net profit surged by 69%, exceeding expectations.
Reasons:
1. JD’s standardized categories, like home appliances and 3C electronics, make price comparisons easy and enhance price sensitivity.
2. JD’s strong supply chain boosts its low-price competitiveness.
TikTok (Douyin):
Effect: The low-price strategy showed limited success. GMV growth slowed to below 40% in March 2024 and under 30% in Q2, missing expectations.
Reasons:
1. Brand owners control pricing tightly, making it hard for TikTok to compete on price.
In 2024, the core characteristics of strategic adjustments for e-commerce platforms can be summarized as the “dual approach”:
1) Combining platform characteristics, focusing on creating low-price competitive advantages that match their strategic positioning.
2) Focusing on creating differentiated competitive advantages beyond low-price competition.
Implementing the ‘dual approach strategy’ and actively creating differentiated competitive advantages has become the mainstream development model for e-commerce platforms
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