E-Commerce Growth in China

China’s online retail growth in April falls to a new low of 17.8%

China’s online retail sales increased 17.8% year on year in the first four months of 2019, a significant deceleration compared with the 32.4% year-on-year jump in the same period last year, according to data from China’s National Bureau of Statistics.

China’s online retail sales totaled RMB 3.04 trillion (around $422 billion) in the first four months of this year, RMB 2.93 trillion of which were physical goods, which increased 22.2% year on year, the report said.

Online sales for top product categories pointed to significant slowing compared with the same period a year ago: growth in food sales fell to 26.7% compared with 44.9% in 2018, apparel weakened to 23.7% from 28.0% in 2018, and daily product sales rose 21.2% year on year compared with 31.1% year on year in 2018.

Slowing growth for online sales comes against the backdrop of a sluggish retail market. Growth in China’s overall retail sales, which include spending by the government, businesses, and households, slumped to the lowest seen since May 2003: 7.2% year on year in April from 9% the same period a year ago. Meanwhile, China posted an economic growth reading of 6.6% for 2018 earlier this year, the slowest growth in nearly 30 years.

The sluggish economy and slowing retail sales growth, coupled with the intensifying trade war, are sapping momentum from Chinese e-commerce companies as middle-class consumers tighten their purse strings. Purchase of big-ticket items such as home appliances and autos, as well as consumer electronics have fallen. Drop in smartphone sales is particularly visible, and the slowing economy is one of the major reasons.

On the bright side, more and more Chinese consumers are shifting online to make their purchases. The report shows that online retail sales for physical goods account for 18.6% of total retail consumer goods sales in the four months ended April 30, up from 16.4% during the same period last year.

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