Click and buy! Here PRC based top 5 leading e-commerce platforms. Alibaba wins the gold medal, while Pinduoduo and JD are striking for second place
According to data, the penetration of ecommerce in China has reached 71.1% of the total Chinese population. With the population of China, it this means there are over a billion people on China’s shopping apps. In terms of spending, Emarketer estimates that spending on China’s shopping apps reached USD 1.53 trillion!
With PRC based e-commerce apps experiencing such amazing growth, competition is becoming more and more fierce. This environment is too heterogeneous if compared with the Western one. In China, shopping apps have become the most popular way for users to access online shopping. According to research from China Internet Watch, over 80% of Chinese online sales were generated from mobile apps, and this trend is expected to continue in the future.
New players are growing, while “old glories” are going down or being stable at the podium. That’s why foreign brands players entering the market should take their time in choosing which marketplace to work with. In this blog we’ll cover the prime selling points, focuses, and specializations of the largest China shopping apps. The whole sector is growing, by the way, challenges lay ahead, as new laws put into effect in early 2019 have increased the administrative burden many of these platforms face.
1. Alibaba : The Leader in The Chinese Ecommerce
Hangzhou based e-commerce giant is actually the real number one in China. One example of Alibaba’s dominance was the creation of the Double 11 shopping holiday in 2009. The creation of this shopping holiday has been called by many as an “Ecommerce Miracle, but the event became now the most important shopping event in the world. Moreover, with $38 billion total revenue, “Double 11” 2019 edition has broken every conceivable record.
Due to the popularity of this shopping holiday, brands and competing for Chinese online shopping sites have had to follow the trend and offer promotions on the same day in the hopes of capturing a piece of the pie. Even foreign brands are now offering promotions on this day.
Alibaba is everywhere. Taobao, Tmall and Tmall Global are leading both Chinese e-commerce and cross-border e-commerce fields. Moreover, after NetEase’s Koala acquisition, Alibaba enlarge signfically its portfolio and offer, while in August 2018, Tmall officially launched a new platform entirely dedicated to luxury, called Luxury Pavilion. Designed for high-end users, this platform was created to offer a tailor-made service to maximize user experience and brands’ relationships with consumers.
Plus, noticing the recent rise of “social commerce” apps like XiaoHongShu, Alibaba has also recently started implementing some social media aspects into its e-commerce experience on both Taobao and T-Mall. What about livestreaming? Alibaba is investing in this new e-commerce trend. Speaking in numbers, Taobao Live, the live-streaming unit of e-commerce giant Alibaba, recorded sales of RMB 20 billion ($2.85 billion) during the Singles Day shopping event held on Nov. 11, accounting for around 7.5% of the group’s overall RMB 268.4 billion in sales.
2. Pinduoduo: How It Became the 2nd Online Shopping App in China
Thanks to its ability to take hold in smaller cities, the Shanghai-based e-commerce platform Pinduoduo has boomed in China. It went from being a startup for group-buying deals to become the Dragon’s online shopping phenomenon so much so that today, we cannot talk of an app for price-sensitive consumers anymore. What makes Pinduoduo different is that its primary features revolve around group-buying. This means that the more people buy a product the cheaper the products get. The Shanghai based app passed JD as users, but is still at 3rd place concerning annual revenue.
Pinduoduo was founded in September 2015 by a former Google engineer and his company, the Shanghai Dream Information Technology Co. The Shanghai-based startup managed to become a Unicorn in just 21 months reaching $1.5 billion gross market value much faster than its older peers. In August 2019, four years after the launch, Pinduoduo’s monthly active users reached the figure of 366 million people, meaning about one in four Chinese people use Pinduoduo every month.
Today, 443.2 million active buyers use this platform for their online purchases and 65% of them live in the Dragon’s third-tier cities or below. The app, in fact, initially found popularity through its group-buying business model, therefore, offering discounts to users who buy items together. At first, this approach has taken hold in lower-tier cities where the population has a lower income compared with first and second-tier cities. However, its users have nearly doubled their annual average spending to $208 in the 12-month period ended on June 30. Pinduoduo integrates its paying method with the largest standalone social media app in China, WeChat, moreover, the Shanghai app now bets on the logistics sector to rival the e-commerce giant’s Cainiao.
3. JD: Tech and Luxury Goods with Top-Notch Logistics
JD, better known as JingDong, is the “eternal number two” in Chinese e-commerce and today Tmall and JD together account for over 80% of B2B China e-commerce transactions. Started with a focus on the direct sale of electronic products in the 90s, JD only really started to grow when it took its business online.
It slowly added more and more categories until it developed into the all-around China e-marketplace. Jingdong has grown sales at a robust pace over the years. On a constant currency basis, its sales have risen 55.9% in 2015, 43.5% in 2016, 39.2% in 2017, and 27.5% in 2018. Analysts now expect JD.com’s sales to rise by 17.5% to $80.55 billion in 2019 and 16.7% to $93.98 billion in 2020. Though decelerating, revenue growth remains impressive for the Beijing-based firm.
What users love is that just pushing a button, customers can get direct access to many global brands. Moreover, netizen recognized JD as a secure provider of not only domestic products but also goods from around the world. As Alibaba, JD offers both same-day and next-day delivery thanks to its nationwide logistics network. Following Hangzhou based archrival, JD even launched its own shopping holiday in the same as Alibaba Double 11. JD’s shopping holiday is called 6.18, and is celebrated during the first 18 days of June. Actually, this holiday has become the second-largest China ecommerce holiday behind double 11 over the last few years.
JD.com is a leader in terms of luxury sales too. More and more foreign luxury brands including Swiss independent luxury watch brands ORIS, Tissot and TITONI, Italian fashion house MOSCHINO, etc, have also confirmed strategic partnerships with JD. For luxury buyers looking for security in their purchasing and exposure to overseas brands, JD.com is the ideal China shopping app.
4. XiaoHongShu: The Revolution of Social Commerce
XiaoHongShu (小红书), literally Little Red Book, founded by Charlwin Mao in 2013, is a social ecommerce app with over 250 million registered users as of 2019, and it bases its success on the influence and trust of information shared by the users themselves. At the moment, Little Red Book ranks as one of main cross-border shopping apps (Little Red Book launched its cross-border ecommerce platform, the “RED store” ,in 2014).
XiaoHongShu has formed strategic partnerships with many overseas brands including Lancôme, Swisse, and Innisfree (Brands can open a brand account/digital store on XiaoHongShu). As of 2017, the platform has reached 6.5 billion yuan sales.
With a focus on beauty and fashion, it acts as a platform for people to post and share shopping tips, product reviews, and lifestyle stories. How does Little Red Book new mini program work? You will need to invite at least 50 friends to be your fans before you become a “Shop Owner (红人)”. As a “Shop Owner”, you will get cash rebate when your fans place orders. The cash rebate can be up to 40% of the sales. Currently there are only 10 products listed in the shop. All of the products are already very popular on RED.
5. Vip.com: The New Frontier of Luxury E-Commerce
VIP.com or Vipshop was founded by Eric Ya Shen and Arthur Xiaobo Hong in 2008. It is specialized in online discount sales and, currently, it is the third largest e-commerce platform in China, right after JD.com and Tmall, with a market share of 15.7%. In 2014, VIP International was launched as the cross-border e-commerce sub-platform of VIP.com but with a different goal. Not only it seeks to further its overseas expansion but the platform now also aims to add more luxury products to its portfolio in order to gain new customers, while also encouraging existing customers to spend more.
The popular flash sales platform now focuses on selling international fashion to Chinese consumers at a discount. VIP.com has been working a lot to upgrade its cross-border platform by adding more high-end overseas products to its catalog and by improving authenticity, selection, price of products, and after-sales service.
Like other cross-border platforms, authenticity is paramount for VIP International, which insists on purchasing products directly from the place of origin. They employ professional buyer groups in 11 countries and regions to guarantee product authenticity from the supply chain.
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