In 2022, roughly 1 billion consumers shopped on e-commerce channels across China, generating 45.3% of all retail sales online. As one of the world’s largest e-commerce markets in terms of sales, retailers and brands should look to China to keep on top of key trends, innovations, and consumption behaviours.
China is often cited as being at the forefront of innovations within the retail sector and this is largely being driven by its Gen Z consumers. Quick to adopt new innovative digital experiences – such as virtual influencers and the metaverse – they are also driving growth of previously niche categories, including collectible toys and non-alcoholic beverages.
Looking to 2023, here are the top five emerging e-commerce trends that are likely to gain traction.
The rise of virtual influencers
In 2022, AI-powered digital creations strutted down catwalks, participated in dance competitions and hosted livestream sessions. International brands in China used virtual influencers to engage the country’s digitally native consumers, with different profiles and characteristics designed to appeal to different target audiences.
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AI-idols are set to become more commonplace in the year ahead. Market research firm Forrester predicts a fifth of B2C brands in China will use digital idols to improve consumers’ shopping experiences in 2023.
Tech advances have increased engagement by allowing virtual influencers to appear in livestreams alongside real people. Alibaba has launched two virtual idols, who are taking up positions as brand ambassadors to help retailers build brand profiles and garner following among China’s digitally native consumers. For example, Alibaba’s virtual idol Noah appeared in a brand livestream by American fashion house Tommy Hilfiger in September 2022, nearly quadrupling the brand’s daily gross merchandise value (GMV) compared with an average day.
Metaverse in 2023 – a whole new world
Game-like experiences, virtual try-on services and digital collectibles have proved to be an important tool for brands to engage directly with consumers and build a following both in the metaverse and in real life.
Since late 2021, nearly two dozen luxury brands have released 37 digital collections on Alibaba’s Tmall Luxury Pavilion, and thousands of consumers have purchased them. Burberry, for example, created a private digital salon for coat shopping on Tmall Luxury Pavilion, Alibaba’s luxury marketplace.
We predict more and more retailers will start to leverage the metaverse to gain customer loyalty and develop products – by 2026, it’s expected that a quarter of consumers will spend at least one hour a day in the metaverse for work, shopping, education, social or entertainment.
Winning over Gen Z shoppers
Making up just 15% of China’s population, Gen Z already has a significant influence on consumption trends as one of the fastest-growing consumer groups in China. Gen Z accounted for two-thirds of consumers on Alibaba’s cross-border marketplace, Tmall Global, in 2022, and over 17% on Tmall Luxury Pavilion. Last year, the total number of luxury gifts purchased by consumers born after 1995 surpassed those born before 1985 for the first time on Tmall Luxury Pavilion.
Gen Z’s values differ from other consumers – they prioritise individuality and their demand for previously niche categories such as skateboarding and non-alcoholic drinks is driving these categories into the mainstream. With their spending power on the rise, brands should look at how to engage this cohort of consumers.
Furry friends are more meaningful than ever
For the younger generation of Chinese consumers, pets are treated more like children… sparking a revolution in innovative products designed to spoil them. “Pet parents” are increasingly investing in digital gadgets such as intelligent pet bowls that track pets’ eating habits, and companion robots that keep their furry companions company when their owners are away.
During Alibaba’s 11.11 Global Shopping Festival in November 2022, pet brands recorded a three-digit growth in gross merchandise volume (GMV), reflecting the importance attached to these furry family members.
Looking to 2023, we expect more brands to feed pet owners’ hunger for products and services to support their pets’ 360 well-being.
Brands in the ‘Great Outdoors’ will climb new heights
From skiing and flying discs to camping, the boom in outdoor gear has signalled a shift from a category regarded only for competitive professionals, to one promising accessible fun.
Travel restrictions and the Winter Olympics in Beijing fuelled the outdoor craze, with sales of winter sports equipment increasing by 300% on Alibaba’s marketplace Tmall early last year. Outdoor gear and camping sales also doubled in March 2022 compared to the previous year.
This new wave of outdoor enthusiasts is set to take their hobbies with them into 2023. As a result, we expect brands to double down on the China market and digitise their offerings to deepen consumer engagement.
