The e-commerce market in China is booming, with sales projected to reach $3 trillion by 2024. This growth is partly due to the emergence of new platforms and apps, such as WeChat and JD.com, that make it easier for Chinese consumers to shop online. In this post, we take a quick look at the key players in the Chinese e-commerce market and some of the trends shaping its future.
E-commerce Market in China
In 2016, China surpassed the US as the world’s largest online retail market with a total of 2.8 trillion yuan ($440 billion) in sales generated from e-commerce transactions. In addition to increased spending power and rising internet penetration, the continued popularity of e-commerce is partly due to the widespread use of mobile shopping apps.
Most online retail transactions are made on China’s two most popular mobile platforms, WeChat and Mobile Taobao. Mobile payments account for about 85 percent of all transactions on WeChat, while sales on Taobao increased nearly 18 percent over the 2016 Lunar New Year holiday, totaling around $14.3 billion in two days.
E-commerce Players in China
E-commerce platform Taobao, owned by Alibaba Group, is the dominant player in China’s e-commerce market, with about 83 percent of all online transactions. The growth of China’s middle class is fueling demand for luxury goods through new e-commerce sites like Mei.com. State-owned Anhui Xinhua Media boasts the third-largest market share in China’s e-commerce industry after Alibaba and JD.com through its shopping website Juhuasuan, which drives traffic with discounted group buying deals.
Key E-commerce Trends in China
The shift towards mobile engagement is challenging China’s traditional marketplaces. According to research from McKinsey & Company, most and more people are moving towards online shopping. Intensifying competition has led to increased mergers and acquisitions among Chinese e-commerce companies.
E-commerce Future in China
E-commerce companies use big data analytics to personalize shopping experiences by targeting consumers based on their gender, age, and location. Product recommendations are becoming more accurate than ever, while customized services like Tmall’s virtual fitting rooms are changing the game for online shopping.
China’s e-commerce market has become increasingly competitive, but regional differences still exist. For example, luxury goods and apparel are more prevalent in coastal cities, while home appliances and food sell better in the nation’s interior.
Taobao
Taobao is China’s most popular e-commerce website. It was launched in 2003 by Alibaba, which was founded in 1999 by former schoolteacher Jack Ma. Taobao offers a marketplace for Chinese consumers to buy and sell products from individuals and other businesses. By offering free listings, touting zero transaction fees, and allowing users to post reviews and track shipments, the site quickly became a major e-commerce player. Today it’s one of the largest shopping sites in the world, with 575 million monthly active users as of March 2017
Tmall
In 2010, Taobao created an offshoot called Tmall that was more upscale than Taobao’s offerings. Brands that sell on Tmall tend to be higher-end and do more promotions, garner them many repeat customers. To boost its selection of brands and products, Alibaba purchased Intime Retail Group in 2015 and partnered with luxury conglomerate LVMH. As a result, Tmall now offers over 100,000 luxury brands.
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