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The Chinese e-commerce market is set to register a strong compound annual growth rate (CAGR) of 12.4% from CNY13.8trn (US$2.1trn) in 2021 to CNY19.6trn (US$3trn) in 2024, new figures show.

According to data and analytics company GlobalData’s E-Commerce Analytics, e-commerce sales in China are expected to register a robust growth of 17.2% in 2021, as consumers increasingly shift from offline to online due to the Covid-19 pandemic.

“Chinese e-commerce evolved rapidly over the last five years, supported by high Internet and smartphone penetration, increasing consumer confidence in online shopping, emergence of e-commerce platforms, and the availability of alternative payment solutions such as Alipay and WeChat Pay,” says Nikhil Reddy, banking and payments analyst at GlobalData. “The Covid-19 pandemic has further accelerated this trend as consumers are increasingly using online channel for their purchases.”

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Although the pandemic has led to a slump in overall consumer spending, it has resulted in the growth of e-commerce purchases, thereby further widening the gap between online and offline shopping.

According to the National Bureau of Statistics of China, while the total retail sales of consumer goods in the country declined by 3.9% in 2020, online retail sales of physical goods increased by 14.8% during the same period.

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While sectors such as travel and accommodation, and restaurant services were affected due to the lockdown and travel restrictions, strong growth is seen in online purchases of goods.

Alternative payment solutions such as Alipay and WeChat Pay are the most popular payment methods for online transactions in China, and both of them collectively account for over half of total e-commerce sales in the country.

While Alipay benefits as a primary payment tool on all the e-commerce platforms owned by the Alibaba group, WeChat Pay, which is offered by WeChat messaging app, leverages its 1.2bn social media user base to push online payments. As Chinese consumers continue to embrace e-commerce, these payment solutions will be greatly benefited.

New payment models such as ‘buy now pay later’ are being launched to gain share of the largest e-commerce payment market. In March 2020, Tencent introduced Fen Fu, a credit feature in its WeChat app, allowing users to shop and pay later in installments. Alipay offers a similar ‘buy now pay later’ service called Huabei.

“Chinese e-commerce market has been on the rise during the last five years. The uptrend is likely to continue over the next few years driven by the growing consumer preference, and the emergence of new online payment methods,” says Reddy.