Chinese e-commerce players look to lower-tier cities to sustain growth

minutes 2019/03/15 03:23:25
China's News, China's Financial News, e-commerce

Mar 15, 2019 (China Knowledge) - China’s e-commerce players are shifting their focus towards consumers in the country’s smaller cities to help boost consumption in a slowing economy and uncertain global outlook.

China’s third-largest e-commerce platform Pinduoduo which announced just released its earnings announcement on Wednesday said that a majority of its users are coming from China’s lower-tier cities and demand from these consumers are now being matched and fulfilled on the company’s platform, in reference to the unique group buying mechanism on Pinduoduo.

The increase in demand and consumption from the country’s lower-tier cities is a boost for many e-commerce players in China helping to offset a slowdown in consumption from China’s first and second-tier cities.

Moving forward, lower-tier cities are expected to fuel two-thirds of the increase in national consumption from 2019 to 2030 and e-commerce platforms are stepping up their efforts to expand online retail initiatives in China’s lower-tier cities.

Individuals living in China’s lower-tier cities may even be more willing to spend compared to those in China’s first and second-tier cities as the lower cost of living in these cities allow them to live very comfortably and have more disposable income.

Apart from Pinduoduo, other e-commerce players such as Alibaba, Vipshop and have also acknowledged that a large proportion of their user growth is currently coming from lower-tier cities.

Consumers in China’s lower tier cities have long been deprived of access to products readily available to those in higher tier cities or a limited selection of inconsistent quality. E-commerce players can now help to bridge this gap and unlock the potential of these consumers.

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