The formation of a strong domestic market and the construction of a new development pattern cannot be separated from a developed consumer market. Various forms of online retail are new forms of sales-supply in the era of digital economy. Whether and how it affects the consumption of urban and rural residents relates to the effect of promoting consumption on the supply side. Based on the theoretical discussion of the internal mechanism of online retail affecting residents' consumption, this paper tests the consumption effect of online retail. According to research findings, online retail has significantly promoted the rise of the consumption level of both urban and rural residents. Although there is a certain degree of crowding-out of offline consumption, the demand creation effect of online retail is greater than the demand transfer effect of offline consumption in general. The mechanisms of online retail to promote consumption include expanding market, reducing transaction costs and promoting competition within industry. The conclusion above is still stable after treating the endogeneity. Besides, heterogeneity test shows that the effect of online retail on the consumption of rural residents is more obvious than that of urban residents, and the promotion effect on the whole residents' consumption in the eastern region is higher than that in the central and western regions. Also, the positive impact of online retail on the survival consumption of all residents is lower than that of enjoyment and development consumptions. Urban residents are more dependent on online retail in terms of survival and development consumption, while rural residents are more dependent on online retail for enjoyment consumption.