According to the Zhitong Finance APP, Shenwan Hongyuan released a research report stating that after more than 20 years of rapid development, China's e-commerce market is transitioning from a focus on incremental growth to a mature stage that balances both incremental and stock growth. In 2024, the online retail sales of physical goods are expected to reach 13.1 trillion yuan, with a growth rate slowing to 6.5%; the number of online shopping users will reach 974 million, with a penetration rate of 87.9%. The three key indicators of live-streaming e-commerce (transaction scale, user scale, and consumption growth rate) are all declining year by year, and intensified industry competition is forcing companies to return to offline layouts. Against the backdrop of increasing emphasis on offline channels, leading domestic brands have already begun to implement differentiated offline strategies.
<h2>Shenwan Hongyuan's main viewpoints are as follows:</h2>
Overall growth rate of the e-commerce industry is slowing, and the high-speed growth phase may be coming to an end
In 2024, China's online retail sales of physical goods are expected to reach 13.1 trillion yuan, achieving a growth rate of 6.5%. In recent years, the growth rate of online retail sales of physical goods has been continuously slowing. By the end of 2024, the number of internet users in China is expected to reach 1.108 billion, with an internet penetration rate of 78.6%; the number of online shopping users will reach 974 million, accounting for 87.9% of the total internet users. After more than 20 years of rapid development, China's e-commerce market is experiencing a transition from a focus on incremental growth to a mature stage that balances both incremental and stock growth, with an overall slowdown in industry growth. At the same time, new traffic channels/platforms are continuously growing, further intensifying competition among giants. The three key data indicators of live-streaming e-commerce—market transaction scale, user scale, and consumption growth rate—are all declining year by year, indicating that the high-growth dividend period of the online e-commerce industry may be coming to an end, and companies relying on online channels are returning to offline to reshape their differentiated competitiveness.
Multiple policies support offline formats, expanding brand influence through customer reach dimensions
In terms of policy, various consumption promotion policies have been continuously introduced in recent years. The &#34;Special Action Plan to Boost Consumption&#34; issued in March 2025 points out the need to comprehensively expand domestic demand; in terms of customer base, diverse and innovative offline formats can provide consumers with freshness, increase brand influence, enhance consumer loyalty, and promote sales, bringing new growth points for brands.
Benchmarking the offline beauty market in the US and Japan, China's diverse offline new formats have potential
In the US, offline purchasing habits are deeply rooted, and high logistics costs for online shopping hinder online development. Japanese consumers are rational and cautious, preferring to try before buying to ensure that products meet their needs and expectations. Brands with offline layouts can provide a sense of familiarity and trust, making the intuitive experience and service assurance offered by physical stores particularly important. Convenience and experiential aspects, as strengths of offline channels, will continue to support the vigorous development of the offline beauty industry. The structure of China's offline beauty market has room for upgrading. Sales channels for beauty products in China include supermarkets, beauty specialty stores, department stores, health and personal care stores, and pharmacies. The market share of department stores has decreased from 38.2% in 2018 to 27.2% in 2023, but they remain a core retail channel. The market shares of beauty specialty stores and health and personal care stores are stable at around 7%, showing a slight downward trend. Although there is some presence of beauty products in supermarkets, the development of this channel is relatively slow, with an overall market share of only about 3%, and it is still declining
Against the backdrop of increasing emphasis on offline channels, leading domestic brands have already implemented differentiated offline layouts.
Recommendations: 1) Shumei Co., Ltd. with a balanced multi-brand matrix development, accurately grasping beauty traffic trends, and expanding offline channels in collaboration with quality collection stores; 2) Shanghai Jahwa, which has multiple popular national brands and extensive layout in department store and supermarket channels; 3) Proya, which has launched an offline exclusive energy series to strengthen offline channels; 4) BTN, which relies on endorsements from pharmacy and hospital institutions to shape a professional pharmaceutical image; 5) Mao Ge Ping, a domestic brand of high-end oriental beauty with unique offline counter layout; 6) Runben Co., Ltd., a leading brand for mother and baby mosquito repellent, partnering with non-platform distributors to expand the offline market. Attention: Shuiyang Co., Ltd. with high-end brand layout in offline self-operated channels, boasting multiple offline channels.
Risk Warning: Offline channel recovery may fall short of expectations, intensified industry competition, inventory turnover risks, offline channel expansion may not meet expectations, and consumer recovery may be slower than anticipated

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Shenwan Hongyuan released a research report stating that after more than 20 years of rapid development, China's e-commerce market is entering a mature stage, with overall growth slowing down. The online retail sales of physical goods are expected to reach 13.1 trillion yuan in 2024, with the growth rate dropping to 6.5%. The market transaction scale, user scale, and consumption growth rate of live-streaming e-commerce are declining year by year. The high-growth dividend period of online e-commerce may have ended, and companies are beginning to return to offline channels to reshape their competitiveness. Policy support for offline formats promotes brand influence and sales growth

Zhitong

Shanghai Jahwa

Proya

SWHY

Midea Group

Shenwan Hongyuan: The rapid growth dividend of online e-commerce may be coming to an end, and the value of offline channels is being reassessed