Over the years, the Chinese e-commerce market has changed a lot, revolutionizing the traditional system for both consumers and sellers. The Chinese internet giants have made a real run to become the best e-commerce platform in China through the development of cutting-edge technologies.

Thanks to their efforts, the opportunities to increase sales for companies and the entertainment for consumers have developed significantly.

The engine of growth in consumption is the new generation of Chinese consumers which is characterized by the fact of:

  • to let go at more free expenses,
  • to be sophisticated consumers,
  • to use the internet daily to do any type of business from chatting to buying items.

Over the past 10 years, many platforms have developed, improved to adapt to the demanding and ever-changing needs of Chinese consumers.
In 2020 we can group the main e-commerce platforms in China into these below:

  1. Tmall,
  2. Pinduoduo,
  3. JD.com,
  4. Kaola,
  5. Little red book (Xiaohongshu),
  6. VIP,
  7. Taobao,
  8. Suning.

Some are specific to some industries, others are better for smaller or larger companies. Therefore, how can a company choose the most suitable platform for its sector and its possibilities?

Let’s take a look into some of the most popular Chinese eCommerce platforms and understand their specificities.

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China eCommerce Overview in 2020

E-commerce sales in China are on way to surpass expectations as they already reached $1.53 trillion in 2018. Back in 2017, e-commerce sales outpaced estimates by $44.41 billion, driven largely by sales from leader Alibaba’s Taobao and Tmall. Those two will still have a total of 58.2% this year, but Alibaba’s share is shrinking as the market diversifies with the emergence of retailers and newcomer Pinduoduo’s recent success.

In 2020, according to statistica “the revenue is expected to show an annual growth rate (CAGR 2020-2024) of 6.9%, resulting in a market volume of US$1,309,535m by 2024.”

From 2015 to 2018, Alibaba’s share of e-commerce sales in China fell from 77.6% to 53.5%. Alibaba’s e-commerce sales are now growing slower than the overall e-commerce growth rate 34.3% with Alibaba’s sales forecast to increase just 22.8%.

In addition, the rapid expansion of cross-border e-commerce has offered opportunities for small and medium-sized enterprises to participate in world trade.

Consumption among upper-middle-class is still growing so fast, over 17% per year and, by 2020, will account for $1.5 trillion in urban China. That compares with a 5% growth rate among emerging-middle-class and middle-class consumers.

However, the emerging middle class and the middle class will remain the largest consumers in many categories, in particular rapidly evolving consumer goods such as personal care products and detergents.

Five key trends driving China’s E-Commerce market

E-commerce shopping festivals

E-retailers are creating more shopping festivals and themes to increase consumer’ engagement. For example, over 79% of consumers said they planned to participate in Double 11.
  • Alibaba got 168 billion RMB in sales and 39% growth on Singles’ Day,
  • JD.com, achieved RMB 127 billion during this same period, with over 50% growth.
Double 11 and some shopping festivals are a key opportunity for local and international brands to leverage the enthusiasm for shopping among Chinese consumers.
Chinese consumers are looking to experience, try new things and buy products that may be new to them. These shopping festivals are a perfect opportunity for new brands entering the Chinese market.

Consumption upgrade

With the Rise of disposable income, consumers are more confident in spending their money on a number of categories such as food, cosmetics, and clothing. The demand for fashion is growing much faster than other consumer demands. The middle- to upper-class consumers are now increasing their demand for goods that are not available domestically.
For this reason, the number of Chinese online platforms and cross-border shopping sites where high-end and niche international brands are growing in popularity and are also driving the consumption updating movement.
The proportion of consumers who had recently made a cross-border e-commerce purchase reached 67% in 2017, compared with only 34% in 2015. Imported goods are liked by Chinese consumers for their good quality, health and safety, and even package design.
Thanks to various online platforms, such as Kaola.com, Tmall Global and JD Global, Chinese consumers now can have broad access to products from overseas.

A new form of retail: online and offline integration

Since the term “new retail” was used by Jack Ma in 2016, it has been an important topic for manufacturers and retailers alike. This concept involved the integration of online and offline retail elements, including products, services, logistics, big data, marketing, management and so on.
Currently, in China, online players are taking the initiative to drive this integration. For example, the largest e-commerce platform in China, Alibaba recently invested $2.9 billion in China’s biggest offline retail group, Sun Art.
Online to Offline (O2O) business model is transforming the retail industry. Both Alibaba and JD.com are also focusing on the millions of other grocery stores in China, as they believe these shops are places where consumers can be targeted to drive further penetration of payment platforms and e-commerce.

Digital payments are the main payment method for Chinese consumers

Alipay and Wechat pay is the most popular online payments in China, and they are already an integral part of e-commerce platforms such as Alibaba and JD.com.
Online financial companies like Alibaba’s Ant Financial and JD.com’s Baitiao are becoming very famous among Chinese consumers, especially millennials, due to low fees and convenient user experience. The disposable income and consumer confidence rise, is encouraging them to spend even more online.
Online wallets are the top payment method, nearly 33% of Chinese shoppers use it to complete transactions. Roughly half of all China’s eCommerce sales are made on mobile devices. There are dozens of mobile eCommerce platforms, but in 2017 Taobao had the most monthly active users at 253.2 million. 

Other platforms like Meituan, JingDong, WeiPin, Tmall, eLeme, Baidu NuoMi, and DianPing all play an active role in the market, but none are nearly as popular as Taobao in terms of active monthly users.

2019 data announced by Alibaba “Annual active consumers on our China retail marketplaces reached 601 million, an increase of 25 million from the 12-month period ended June 30, 2018”

If none compare to Alibaba and Taobao yet, a  platform has been growing in the shadow of third and fourth tiers cities and slowly eating some of Taobao’s market share.

This platform is Pinduoduo. An app that work with rival giant Tencent and that is promoting social eCommerce. We will talk about it later in the post, don’t miss out.

The boom of Social media and e-commerce integration in China 

Social media is the main platform where people come to interact with one another, what’s making it an ideal place to share and comment on products. As the number of mobile users rises, the importance of social media has increased.
The high concentration of mobile e-commerce has accelerated the transition of the advertising ecosystem. Thus social media has become a crucial tool for marketing, especially when they are communicating and engaging with potential consumers.
We have observed a trend from social media apps to turn toward eCommerce in the last few years.  The three biggest social media players used to WeChat, microblog Weibo, and social network QQ Zone. They are still big but a serious competitor has emerged: Short Videos App (Douyin/TikTok or Kuaishou for instance).

Wechat and its vision of eCommerce

WeChat allows retailers to feature online stores and has a convenient third-party payment function (Wechat pay). 

It also features push messages to introduce new product lines or deliver promotions. U.S. companies interested in exploring social media avenues and working with these sorts of social media players should seek to work with a local marketing partner to develop a strategy and support execution.

China e-commerce world: what opportunities does it offer to brands?

Why is localization so important in China?

With the development of new technologies, building a beautiful and dynamic website is not a big deal. The important thing that really matters is building a website that is relevant to your target customers.

China is a challenging market for foreigns brands and Chinese netizens are difficult to please. They have a unique language, different symbolic colors, and philosophy, they face a different ecosystem and online regulations. This market is just too enormous to be ignored, so it’s important to adopt the best practices to set up your e-commerce design for China that will mean taking a big step for your brand’s success.

GMA helps the brand’s products join China’s most popular e-commerce platform. We provide comprehensive and diversified professional managed e-commerce services like:

  • the registration and opening online shops,
  • store decoration design,
  • upload product,
  • daily customer communication operation, and maintenance,
  • optimization of promotional activities inside and outside the platform.

What are the most used e-commerce platforms in China?

The most used e-commerce platforms in China in 2020 are:

  • Taobao
  • Tmall and Tmall B2D
  • JD.com
  • Little Red Book (Xiaohongshu)
  • Suning
  • Kaola
  • Pinduoduo

But let’s get to know them in detail. What is the most suitable e-commerce platform for your brand?

Taobao

Alibaba-owned Taobao is no unknown to the e-commerce industry. The C2C giant sells almost everything,  from pets to vehicles.  Taobao owes its success as the market leader in this industry by offering free registration for its users.

Taobao.com, the most popular online shopping site in China, is a platform for small businesses and individual entrepreneurs to open online retail stores. It features a variety of items and cheap prices. In fact:

  • the products are usually offered by small business owners,
  • buyers are very careful buying things, they check several aspects including the shop credit, costumer’s satisfaction rate, and comments before making their final decision.

The app has recently launched it’s affiliate program: Taoxiaopu. Taobao has rebranded itself has a platform that encouraged entrepreneurship and young designer to find their fame online instead of being the online version of a fake market.

In the effort of rebranding themselves, Taobao launched last summer a live streaming program in collaboration with Weibo. Live streaming is becoming incredibly popular and hard to avoid this days. Live streaming has proved itself to increase ROI and Conversion rate.

If you want to know more about how to enter and manage this platform, contact GMA. We help brands:

  • contact and confirm with the platform for product entry
  • e-commerce consultancy
  • page design on Taobao
  • Marketing and advertising
  • live streaming / video footage.

 

Tmall

Another e-commerce platform owned by Alibaba is Tmall focused on B2C services. It is a virtual shopping center that hosts many international brands, such as Gucci, Calvin Klein, Burberry and many others.

It is more high end than taobao and the requirement to enter as a seller are high. The idea is simple, only quality sellers are allowed, when one is ordering on Tmall, one does not have to worry about what he/she will receive. For more details about our Tmall services click here

Tmall also offers a crossborder service for foreign entities that do not have a presence in China and whishes  to try out the market. The requirements are still quite high. In summer 2019 however, the platform has released TOF (Tmall Oversea Fulfillment) to encourages smaller brands and give them a chance on the Chinese market.

Tmall B2D

Tmall B2D has implemented a new B2D strategy (Business to developers) to resolve the problem of distribution in China. This solution is considered as the new revolution of distribution in China because major companies like Alibaba have started to find ways to arrange this market.

Tmall B2D manages to connect distributors with the brand directly to avoid any intermediate connections, by gathering all distributors and helping them to connect with the brand.

This platform allows significant gains for all participants (the final customer, as well as the intermediary distributors) and therefore the success of the product and its brand in China.

We are an E-Commerce Company specialized on Tmall . We help Brands to sell their products on Tmall through:
  • Consulting & Strategy
  • Tmall Store design
  • Marketing and Promotion for Tmall
  • Tmall Management

JD.com

Founded in 1998, JD.com is the largest B2C online retailer in China and one of the biggest competitor to Alibaba. It provides about 400,000 new products including cell phones, home appliances, apparel, wedding events, electronics, books and more. It also has an English version website en.jd.com.

It features fast delivering service and guaranteed product quality. The main problem is it does not support instant online customer service and its customer-service phone is hard to get through.

JD Mall offers direct sales of electronics products, general merchandise, books, home appliances, digital communications, apparel, food, and other goods.

JD Mall’s cross-border service, JD Worldwide, allows international merchants to sell directly to Chinese consumers without a physical presence in China. The company has the largest fulfillment JD Logistics which provide business partners with supply chain solutions, including warehousing, delivery, and after-sales service.

Learn more about our JD.COM services just clicking here.

GMA offers services like:

  • JD.COM store Setup
  • JD.COM Design
  • JD products Update
  • JD store Management
  • Commison
  • JD Promotion  

Little red book (Xiaohongshu)

Little Red Book, founded in 2013, has 70 million mostly young users. Its app combines social media and e-commerce.

Little Red Book grew very fast into a forum where users post-shopping tips, including must-have products and stores frequented by local residents.
The Little Red Book app displays product photos and videos posted by users as soon as it starts up. Cosmetics, clothes, and bags come with reviews, ratings and user back stories on purchases. People can research products and buy them through the platform.
 
GMA can help you offering you services like:
  • RED Store Setup
  • Influencers Campaign
  • Ecommerce Management

VIP.com

VIPShop focuses on discounts and flash sales. The online retailer partners with over 1,000 brands to bring certain amounts of items at a lower price for consumers. The site mainly covers clothing and electronics. It was one of very few Chinese tech stocks to list in the US this year.

Suning

Suning.com is one of the largest non-government retailers in China, headquartered in Nanjing, Jiangsu Province. Suning e-commerce platform categories include physical merchandise, such as home appliances, 3C products, books, general merchandise, household commodities, cosmetics and baby care products, content products and service merchandise.

Suning Commerce Group Co., Ltd. principally operates franchised retail shops of electronics appliances in China. The Company mainly offers colour televisions (TVs), audio and video (AV) players, disc players, refrigerators, washing machines, digital and information technology (IT) products, small household electronics, air conditioners, telecommunications products and other products. The company also provides installation and repair services for electronic appliances.

Kaola

Kaola.com has grown by establishing a reputation for featuring reliable, genuine products on its site. It maintains quality by setting up purchasing teams in foreign cities such as Tokyo and tries to keep prices down by negotiating directly with manufacturers.
In a reliability survey of cross-border e-commerce companies in the first half of 2017 conducted by China’s iiMedia Research, Kaola.com topped the ranking, followed by Amazon.com and Xiaohongshu.
It continues to expand aggressively. Last fall, Kaola.com announced plans to spend 500 billion yen ($4.65 billion) over the next three years to buy Japanese products.

Last but not least: Pinduoduo, the king of Chinese social eCommerce

In the summer 2019 many thing happened in the Chinese eCommerce world, including Pinduoduo beating JD.com has second largest e-commerce platform behind Tmall. For years, Pinduoduo has been focusing on smaller Chinese cities by offering the best deal and the possibility to users to work and in hand to get items at bulk price.

2019 was the time for Pinduoduo to walk on Taobao’s footsteps and show what it was capable of. Not only the app work directly with suppliers reducing cost of sold items but it has focused on affiliation working hand in hand with Wechat.

Pinduoduo buyers can get discounts, gifts and even free items by promoting, sharing link and pushing peoples to register on Pinduoduo. This affiliation program worked so well that Taobao’s later launched it’s own affiliation program know as taoxiaopu.

The app offers many benefits to sellers such as:

  • No registration requirements
  • No sales fees
  • Cheap advertising
  • The possibility of showing the total of sales outside the platforms (great to increase conversion).

To sum up:

We love the current dynamic in the Chinese eCommerce world. Because the platforms are racing the be the most attractive to customers and brands, we see the development of new marketing tools that to us are full of opportunities. This race not only means more tools for seller and buyer but also relaxed requirements to register on these plateforms. Believe me it used to be a challenged.

With the development of new technology, one seems to overshadow the rest: Video. Live streaming by KOLs has of course a huge impact on sales conversion but short video ads are also part of the game with unicorn app such as Douyin.

 

Gentlemen Marketing Agency

We Build your Store, We Promote your Business and You Make it Thrive. There are many ways to sell online in China. Contact us now to discover which solution fits your business best! We Setup Stores and run smart Digital Marketing Campaigns in China.

Gentlemen Marketing Agency is an innovative marketing & E-Commerce Agency in China. Our solutions are designed to help you achieve your business goals in China. We have 7+ years’ experience in providing an invaluable online strategy to companies looking to penetrate or develop their activity in the Chinese market. We seek to form long-term partnerships with serious projects.