The rising cost of acquiring new customers in online B2C

After 20 years of wild growth of the online B2C sector in China, experts from PWC said its golden age might be over for new entrants. What we are now facing is the rising cost of acquiring new customers and a few giants in full control of the traffic gateway, with no end in the near sight.

PWC highlighted some statistics that the cost of customer acquisition online is 5-10 times higher than what it was a few years ago, for instance in 2016:

  • Cost of customer acquisition for lifestyle services had reached over RMB 100
  • Acquisition for travel services was about RMB 1,000
  • Cost of consumer acquisition for Internet financial services companies was RMB 1,000-3,000
  • Cost for pharmaceutical E-Commerce services increased from 20-30 RMB in 2014 to RMB 200-300 in 2016

The C-side is a crowded space.

So the silver lining is the B side of enterprises technology service.

PWC said China and U.S. combined have 30 million companies that require technology services. While the market value of U.S. SaaS companies has exceeded USD 170 billion, the valuation of China’s SaaS companies is only around USD 45 billion. This means it is in the developmental phase with huge future potential.