China's E-Commerce in 2025: When Discounts Stop Working and AI Takes the Lead
China’s e-commerce engine is still roaring on the surface. From January to July 2025, online retail sales hit RMB 8.68 trillion, up 9.2% year-on-year, according to the National Bureau of Statistics. Service-related online retail also grew 5.2%. Live commerce, instant delivery, and endless shopping festivals continue to dominate digital life.
But behind the numbers, a deeper shift is underway. Price wars have lost their punch, traffic growth has plateaued, and the next phase of e-commerce is being shaped not by discounts, but by data, technology, and changing consumer values.
The End of the Mega-Promotion Era
For years, shopping festivals like Singles’ Day and 618 were the lifeblood of China’s e-commerce boom. But fatigue has set in.
According to StarMap’s 618 report, total GMV for the 2025 festival reached RMB 855.6 billion, up 15.2% year-on-year. Yet much of that growth came from extended timelines and calendar shifts, not genuine demand. Consumers are simply tired.
After years of deep discounts, promotion fatigue is real. Shoppers are no longer thrilled by “buy more, save more” deals. Return rates are climbing, and with them, operational costs.
With confidence still fragile and consumers prioritizing practicality over indulgence, platforms have begun simplifying campaigns and shifting focus toward better experiences. The new playbook? Fewer gimmicks, more authenticity.
From Platform-Led to Consumer-Defined
Power is moving from the platform to the people. Chinese consumers are not just shopping. They’re shaping markets.
Brands that listen are winning. On Xiaohongshu, Maison Margiela’s visibility jumped five ranks, while return on ad spend rose 70%, with 80% of new traffic coming from first-time users. Bulgari’s Serpenti campaign tripled its conversion rate by engaging users through private messages rather than generic ads.
The lesson: the next wave of growth comes from direct, personalized interaction.
According to JD.com, content-led discovery now drives 62% of Gen Z purchase decisions, while live commerce converts 3.2 times better than traditional online listings.
Three Growth Engines Powering the Next Wave
1. AI Commerce Goes Mainstream
AI isn’t just hype. It’s the new salesforce. Platforms like Tmall Luxury Pavilion are using “AI livestream hosts” through programs like Tmall Luxury Picks. These digital presenters cost just 5% of a human host and deliver 24/7 interactions that feel 70% as realistic.
For brands, the benefits are massive: lower costs, higher ROI, and data-driven personalization. AI hosts are evolving into digital concierges that know your product, your customer, and the conversation that converts them.
2. Instant Retail Redefines the Last Mile
The “next hour economy” has arrived. Instant retail - delivery within minutes - is moving from niche to necessity.
According to the 2025 China New E-Commerce Development Report, instant retail GMV in 2024 grew 19.5%, outpacing overall e-commerce by 12 points. Consumers now expect speed, convenience, and certainty, whether they’re ordering groceries or luxury lipstick.
The message is clear: logistics has become the new brand loyalty program.
3. The Gifting Boom
Gifting has quietly become one of the most dynamic corners of the market. Once limited to holidays, it now reflects deeper emotional and cultural connections.
The sector has grown from RMB 800 billion in 2020 to RMB 1.23 trillion in 2024, and is projected to reach RMB 1.45 trillion this year. Social commerce already accounts for 15% of all gifting transactions, growing faster than offline channels.
From customized products to collaborations with cultural IPs, gifting has become a tool for self-expression - one that merges commerce, community, and emotion.
Redefining the Rules of Retail
The old equation of “traffic + discount = growth” no longer works. The future belongs to brands that integrate technology, logistics, and culture into a seamless experience.
E-commerce in China is no longer about selling. It’s about relationship building. AI drives personalization, instant retail brings proximity, and gifting fuels emotional engagement.
For brand leaders, the challenge is no longer how to sell more during shopping festivals, but how to stay relevant in a world where retail is everywhere, all the time.
Because in 2025, there’s no such thing as “pure e-commerce” anymore… only a fluid, hybrid ecosystem where innovation, collaboration, and consumer trust are the true currency of growth.
