Analysis | Retailers favouring US e-commerce market over China's following economic slowdown

The allure of China's e-commerce to retailers has faded due to a slower growth rate in recent months, according to a new study.

The slowing growth of the mainland’s broader economy, and also concerns about infrastructure investment, logistics support, and buying power in smaller cities all contributed to China's e-commerce market losing the top spot to the US in management consulting firm AT Kearney's rankings.

The American e-commerce market – worth US$238 billion - has retaken the top spot this year after being overtaken by China in 2014 thanks to sustained growth, an improving economy, and higher consumer confidence, the firm said in the study.

Its Global Retail E-Commerce Index is released every year and is aimed at helping retailers identify market investment opportunities. The UK, Japan and Germany follow China in this year’s ranking.

“While China’s e-commerce market continues to expand, its rate of growth has slowed down. Also, a large part of its future growth will be driven by tier 3 and tier 4 cities. There are questions over infrastructure investment, logistics support - a key to retail e-commerce growth and consumer spending in those cities,” the report said.

It also notes that in China, shipping and distribution conditions are often vastly different depending on the destination, especially when it comes to the last mile. Retailers have also been slow to meet consumers’ expectations for refunds and returns, despite recent improvements in the fashion market.