Online retail sales in lower-tier cities and rural areas of mainland China, the world’s largest e-commerce market, started to overtake those in its largest cities for the first time last year, according to a new report from McKinsey.
The global management consulting company estimates the country’s online retail market last year recorded a gross merchandise volume (GMV) – the total value of goods sold on e-commerce platforms – of US$630 billion, 50.1 per cent of which were transactions made in the country’s vast lower-tier cities and rural areas.
Alan Lau, a senior partner at McKinsey in Hong Kong and one of the three authors of the report, told the South China Morning Post on Monday that findings from its latest “iConsumer China” survey represent a “huge revelation for foreign brands, which need to rethink their strategy in that segment of the market”.
“The lower-tier cities and rural areas are now home to 257 million online shoppers, compared with 183 million in the higher-tier cities,” Lau said.
The McKinsey survey, which was conducted in January with respondents across five Chinese mainland geographic categories, showed e-commerce penetration in the tier-3 and tier-4 cities, as well as villages, reached 62 per cent of people aged 13 and older last year.