China’s $1.94 trillion e-commerce is the largest in the world, and more than three times that of the number two U.S. market, according to a newly released eMarketer report. And the rise of New Retail there, which blends the best of online and offline commerce to drive higher levels of engagement between brands and consumers, is inspiring innovations in retail across the globe, eMarketer noted.

The report described a booming global e-commerce market, is expected to grow 20.7% this year to $3.5 trillion in sales. China’s $1.94 trillion in sales will have contributed 54.7% of that figure, according to eMarketer. Here are the areas in e-commerce where China is leading, according to the report:

• Mobile commerce: Four out of five e-commerce dollars are being generated from mobile devices in the country in 2019 – or 80% – versus the 64.4% global average, the report said.
• Mobile payments: Chinese consumers rely on apps, such as Ant Financial’s Alipay, for both online shopping and payments at physical stores. About 81% of smartphone users in China will use mobile payments this year, compared to just 27% in the U.S.
• Cross-border e-commerce: This was a channel to watch, eMarketer said, as global infrastructure improves and small businesses are able to better access to global markets. In China, demand for high-quality household products and luxury goods and high-fashion apparel will drive the trend.

“Despite its reputation for parroting the U.S.’s digital success stories, there is a growing sentiment that China has become the nexus of e-commerce innovation,” the report said.

To explain the impact of digital commerce on brick-and-mortar retail, eMarketer contrasted New Retail, a term used largely in China, with “omnichannel,” which is commonly used in the West. New Retail is built on China’s digital-first approach to commerce, because it largely leapfrogged the brick-and-mortar buildout seen in the West and went quickly to online. Omnichannel, however, is the West’s attempt to tack digital services onto its longstanding brick-and-mortar infrastructure to deliver to consumers the shopping efficiencies that have gotten used to online. But as omnichannel operations grow in sophistication and the customer experience becomes more seamless, “the vision of New Retail is closer to becoming a reality” in the West, the report said.

The report also spotlighted Alibaba’s New Retail-powered grocery chain Freshippo as an example of this consumer-centric approach, where “customers can shop in person, dine in and have orders delivered.” Aside from China, eMarketer said that the U.S. and the U.K. are advanced in some New Retail operations that are more suitable for the local consumers, such as “click-and-collect,” which allows consumers to order online and pick up their items at a store.

Perhaps it is no surprise then that the leading e-commerce player in China, Alibaba Group, also tops the list of global e-commerce leaders. Alibaba’s Taobao and Tmall marketplaces ranked first and second globally in terms of gross merchandise volume, with Amazon at number three, according to Internet Retailer data cited by the report.

The report also made a clear distinction that Alibaba’s revenues are “almost exclusively driven by third-party marketplace sales,” whereas Amazon’s are primarily derived from first-party sales.