China’s service retail sector, which includes everything from food delivery and online travel to local lifestyle services like beauty and home repairs, is poised for significant online growth.

Wang Puzhong, CEO of Meituan’s core local commerce business, projects that the sector’s online penetration rate is projected to reach 25% by 2030, up from just 9% in 2024.

Wang highlighted the immense potential for expansion, noting that the service retail industry’s scale reached 7 trillion yuan (US$964 billion) in 2024. Despite China already being a global leader in convenient and diverse service consumption, the relatively low online penetration indicates a vast untapped market. This forecast suggests an accelerating shift towards digital platforms for consuming experiences, convenience, and expertise over the next five years.

The Meituan executive also predicted that the surge in online activity will foster the emergence of 300 “thousand-store brands” by 2030. These “thousand-store brands” refer to companies that have successfully expanded their physical footprint to operate at least 1,000 retail outlets across China, signifying strong market penetration and brand recognition. This indicates a significant scaling of service businesses across various categories, as these brands are expected to leverage the increasing digitalization of the service retail space to expand their physical presences and reach a broader consumer base.

🔗 Source: 36Kr

🧠 Food for thought

1️⃣ China’s online service retail penetration targets reflect significant market maturation

Meituan’s projection of 25% online penetration by 2030 represents nearly triple the current 9% rate, indicating a massive growth opportunity in a country already leading global eCommerce.

China’s eCommerce market currently generates over $3 trillion annually, representing more than half of global online sales, despite having lower overall penetration rates in some sectors 1.

This growth pattern follows China’s established trajectory in other retail categories, where the overall eCommerce sector already accounts for 27.8% of total retail revenue, making it the global leader in online sales penetration 2.

The historical context supports this ambitious forecast. China’s e-commerce penetration had already reached 20% by 2017 in general retail, showing the country’s capacity for rapid digital adoption 3.

Express delivery packets in China surged from 9.19 billion in 2013 to over 108 billion in 2021, demonstrating the logistics infrastructure growth that will be needed to support service retail expansion 4.

2️⃣ Service retail’s digital transformation represents a quantifiable business opportunity

The projected growth in service retail is backed by data showing companies that undergo digital transformations see an average sales increase of 7%, according to Boston Consulting Group research 5.

Digital transformation initiatives typically improve customer satisfaction by an average of 10% and operational efficiency by 12%, metrics that directly impact the bottom line for service retailers 5.

This transition is supported by China’s robust digital consumer base. Out of 980 million internet users, over 840 million are already digital buyers, nearly double the 420 million reported in 2016 4.

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