Trends that Shaped China’s E-commerce Scene in H1 2024

Published on: July 8, 2024

Jacob Cooke

Co-founder & CEO

It can be difficult to parse through reporting on China’s consumer and e-commerce landscape, which has changed dramatically across the last six months. Ultimately, the Chinese consumer market presents significant opportunities for merchants across various channels and product categories. In particular, the rise of content-driven commerce and the evolving preferences of Chinese consumers all point to a dynamic market with significant growth potential for merchants. The challenge is to cut through the noise and identify those opportunities.

Encouraging Consumption Data

In H1 of 2024, we’ve started to see exciting consumption data across goods and services sectors.

We’ve just wrapped up 6.18, China’s second-largest shopping festival, which showcased encouraging trends despite mixed reports. WPIC’s assessment is that overall gross merchandise value (GMV), a barometer for sales, was up from last year and set a record high, contrary to some reports suggesting a decline.

While there may have been less buzz around the shopping festival, that indicates a maturing market with consumers spreading their spending more evenly throughout the year, influenced by the rise of livestreaming (where popular hosts routinely offer discounts) and secondary shopping festivals. The big festivals are less remarkable with discounts available year-round, so consumers don’t mark their calendars to stock up on goods and make big purchases at a discount. But despite this sense of a lack of buzz, consumers still spent a record high on this year’s 6.18—because they are spending more, period.

A strong 6.18 built on a strong first half of 2024. China’s e-commerce logistics index, which tracks e-commerce shipping volume, gained for the fourth straight month in June, indicating healthy growth in domestic demand.

Travel numbers also offer a positive indicator for consumer confidence. Data from June’s Dragon Boat Festival showed a significant increase in travel: 17 million rail rides, up from 16.2 million the previous year, and a 20% increase in local bookings with a 50% rise in outbound hotel bookings, according to Trip.com. Qunar reported that outbound flight bookings for the summer surged by 1.6 times compared to last year, with ticket prices decreasing by about 20%.

Popular international destinations include Malaysia, Japan, Thailand, the US, South Korea, Singapore, Australia, the UK, Indonesia, and Canada. This trend builds on momentum from May Day, where international flight bookings hit record highs, and domestic travel bookings doubled those of 2019.

Chinese travelers are increasingly favoring small group and solo trips, particularly road trips, seeking authentic experiences and adventures over traditional tourist sites. Overall, Chinese outbound travel has risen by 392% in 2024, indicating renewed consumer confidence and a strong willingness to spend, which is beneficial for brand partners.

As Alibaba chairman Joe Tsai noted during the firm’s last earnings call, Chinese consumers currently hold record-high household cash savings, approximately $19 trillion, indicating a strong capacity to spend. The property market’s impact makes consumers cautious, yet several indicators point to growing consumer confidence.

The growth in the services sector during recent holidays, a strong 6.18, increased spending on discretionary items like apparel and electronics, and strong performances in personal care, pet, and nutraceuticals segments support this view. Additionally, travel bookings set records, reflecting robust consumer confidence for the rest of 2024.

Top Categories

The 6.18 Shopping Festival provides insights into the evolving preferences of Chinese consumers. On Tmall, several categories experienced over 50% year-over-year growth, including:

home appliances like washing machine and dryer sets
outdoor activity-related goods such as hiking boots and road bikes
interest-based equipment like mirrorless interchangeable-lens cameras and e-sport equipment
sun-protection apparel
and more.

The growth in outdoor activity-related goods and sun-protection apparel highlights a shift towards health, wellness, and work-life balance. Young Chinese consumers are increasingly participating in sports and fitness activities and are highly knowledgeable about skincare, investing in functional apparel and sun-protective products to maintain their health as they spend more leisure time outdoors. Nutraceuticals continue to shine as consumers have a clear preference for consumable, health-promoting products.

How Customers Are Shopping: The Competitive Landscape

Content-driven commerce has surged in 2024, with platforms like Douyin and Xiaohongshu seeing significant growth. Xiaohongshu reported an 8.2-fold increase in livestreaming orders compared to last year, with GMV up six times and purchasing users increasing by 7.4 times. Douyin also posted triple-digit growth in several categories. McKinsey forecasts the social commerce market to expand to $145 billion by 2027, up from $67 billion today, while livestreaming commerce in China already generates roughly $700 billion in annual sales.

Despite this trend pivoting towards more social commerce over traditional e-commerce, Alibaba had a strong March quarter and a successful 618. Alibaba’s investments in improving the user experience on Taobao and Tmall, including enhancing the content ecosystem, merchandise assortment, and price competitiveness, have begun to yield solid results. In the March quarter, GMV and order volume achieved double-digit growth, driven by increases in buyers and purchase frequency. The high-value membership program, 88VIP, also grew by double digits. With Tmall growing on 618, that points to a strong growth trend on Tmall.

For merchants, it’s key to have a strategy that reaches consumers across Douyin and Tmall.

End of Walled Gardens

One of the other notable trends coming out of 6.18 is that Tmall partnered with Douyin on traffic sharing. This partnership allowed merchants to post advertisements on Douyin and seamlessly track user journeys from discovery to purchase on Taobao and Tmall. By integrating marketing efforts on Douyin with transaction capabilities on Taobao and Tmall, merchants can harness the power of “zhong cao”—or “planting grass”—working with key opinion leaders (KOLs) to build brand desirability. This collaboration helps merchants boost conversion rates and optimize ad spend by identifying which KOLs drive store traffic and conversions.

This partnership reflects the evolving nature of e-commerce in China, where content and commerce are increasingly intertwined. It also signals the decline of the “walled gardens” era in China’s internet ecosystem, with Alibaba working not only with Douyin but also with Tencent, Zhihu, and Bilibili. These cross-platform integrations enrich the consumer experience and expand market reach, benefiting all parties involved. As the 618 sales continue, it will be interesting to observe how these strategic partnerships influence consumer engagement and merchant success.

Conclusion

In summary, the Chinese consumer and e-commerce landscape in 2024 has been marked by dynamic shifts and robust opportunities. The 618 Shopping Festival has demonstrated that overall spending is on the rise, with platforms like Tmall and JD.com seeing record high GMV. The landscape is evolving with consumers spreading their spending more evenly throughout the year, influenced by the rise of livestreaming and secondary shopping festivals, which may be reducing a sense of “excitement” around the major festival but not reducing spending.

Travel data from recent holidays indicates a resurgence in consumer confidence and a strong willingness to spend, further bolstered by record-high household cash savings. This renewed confidence is reflected in various sectors, including home appliances, outdoor activity-related goods, and sun-protection apparel, all of which saw significant growth during the 618 festival.

The competitive landscape is being reshaped by the surge in content-driven commerce. Platforms like Douyin and Xiaohongshu are experiencing explosive growth, emphasizing the importance of a multi-channel strategy for merchants. Alibaba’s strategic investments in improving the user experience on Taobao and Tmall are yielding positive results, demonstrating the resilience and adaptability of traditional e-commerce giants.

The partnership between Alibaba’s Taobao and Tmall platforms with Douyin signals the end of the “walled gardens” era, highlighting a more integrated and collaborative approach to e-commerce. These cross-platform collaborations enrich the consumer experience and expand market reach, setting the stage for continued growth and innovation in the Chinese e-commerce sector.

As we move through the rest of 2024, merchants and brands should focus on leveraging these trends and partnerships to maximize their reach and capitalize on the growing consumer confidence in China. The landscape is ripe with opportunities for those who can adapt and innovate in this dynamic market.

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Trends that Shaped China’s E-commerce Scene in H1 2024

Jacob Cooke

Encouraging Consumption Data

Top Categories

How Customers Are Shopping: The Competitive Landscape

End of Walled Gardens

Conclusion

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