Brand E-Commerce Service Market Is Expected to Rise in The Future With a Decelerating Growth

Source:iResearch June 26,20199:10 AM
In 2018, the GMV of Chinese brand e-commerce service market reached 161.34 billion Yuan in China with a growth rate as high as 45.7%. After a fast growth, e-commerce market slowed down its growth in a general steady development stage. The GMV of brand e-commerce service market is expected to increase as well in the future with a decelerating growth. 
The continuous increase of personal dispensable income and the deepening tax reduction policies in China stimulate domestic consumption market greatly, which will lift the rooftop of the industry’s development, attract more foreign brands into the industry and enrich the types operated in the industry. Meanwhile, domestic consumption will be upgraded. People will have larger demand for higher life quality, which provides middle-end and high-end brands from Europe, America and Japan with great room for steady growth. This will further accelerate the speed foreign middle-end and high-end brands enter Chinese market and promote the development of the whole industry.

The profitability of brand e-commerce has been stable since 2016, and the gross profit margin settled between 25% and 35%. Meanwhile, the revenue growth of the industry was relatively stable as well while the general growth slowed down its pace. The GMV growth in 2018 was still higher than 40%, indicating a relatively good development ability of the industry.
iResearch holds the opinion that the integration ability of data resource system will determine the digitalization level of one industry and therefore decides the ability of cost reduction, efficiency improvement and consumer experience upgrading. The gross profit margin decline was mainly resulted from the faster operational cost growth than GMV growth. In 2015, the industry gradually upgraded to refinement operation, which required companies to invest more in technology and data resources. Therefore, the operational cost increased fast. Meanwhile, the deceleration of GMV growth can be attributed to the decline of existing customer growth of service providers that led to a smaller contribution of the existing customers to the GMV growth.
To keep the high growth rate of the revenue, service providers need to broaden their sales channels with multi-dimensional innovative methods. They are expected to create new competition room for existing companies and accelerate the expansion of their new brands so as to bring new growth points and improve their development ability. Thanks to the service quality and experience improvement of the general service providers, brand expansion will be obviously faster in the future.

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