Blog / Ecommerce in China

Ecommerce in China

Online retail sales in China reached 5.16 trillion yuan ($752 billion) in 2016, representing 26.2% growth from 2015. Online retail sales to consumers in the U.S. reached nearly $400 billion in 2016 by the U.S. Commerce Department’s measure–a 15.6% jump compared with 2015. Online retail sales in the UK topped £133 billion in 2016, beating expectations with a 16% jump from 2015, according to the e-Retail Sales Index from Capgemini and IMRG. It should also be noted that mobile now accounts for half of all ecommerce sales in China.

The scale of e-commerce in China makes this a very attractive market for foreign companies, one prominent example being Wal-Mart who have taken a 12.1% stake in JD.com and teamed up with them for single's day, the big Chinese shopping event. While the Chinese market is the biggest and fastest growing ecommerce market in the world, it can be difficult to enter and negotiate. Many western businesses wanting to sell online into China will set up on one of the famous Chinese e-commerce platforms like Tmall or Taobao. Using one of these platforms can minimise some of administrative processes due to their simple trade rules and lower tax rates for importing products. The Alibaba Group, owns the largest share of the Chinese e-commerce market with Taobao and Tmall. They control 80% of the total e-commerce market in China and have over 100,000,000 transactions a day.

Here is a brief overview of the main players in the Chinese e-commerce market:

Alibaba is the dominant e-commerce company in China by far, what remains to be seen is how successfully it can compete on the international stage across its most important businesses. Just like Amazon, its growth has been led by its e-commerce business, complemented by cloud services and to a lesser degree, digital entertainment and media.

TAOBAO (C2C - customer to customer)
Taobao is China’s largest online shopping destination. A huge online marketplace on which anyone can sell their products including customers and businesses. However, this platform is more cost-driven. Indeed, if you choose Taobao, you would have to compete with thousands of small local businessmen who propose different prices than yours. It will remain hard to differentiate yourself from the competition.  

TMALL (B2C - business to consumer)
China’s largest third-party platform for brands and retailers - In contrast to Taobao, Tmall is exclusively devoted to professionals. Moreover, you have to hold a license-holders permit which allows you to sell your products. Besides, you need to have your own local company or work with a third-company partner with a local presence. You have to show your legitimity to sell your products and the rights you have to sell in China.  Tmall is brand-driven. It represents a huge opportunity for foreign e-commerce companies to launch their business in China.

ALI-EXPRESS - (B2C) - B2C e-commerce platform with users from over 220 countries
60 million active buyers during the past 12 months. Its daily visitors are over 20 million.
JD.COM Jindong is the challenger in China, they are the second largest platform with a 25% market share and is more associated with Electronic products and Home Appliances.

Because of its historically complex logistical situation, China is ahead in what is called O2O ("online-to-offline"), or 'last mile delivery,' with big online merchants tying up with bricks and mortar chains. The purpose is to enable customers to shop online but pick up the merchandise in a convenient location and for the bricks and mortar chains it gives them an online presence.

Cainiao is the tech-driven logistics affiliate of Chinese e-commerce giant Alibaba Group. Cainiao isn’t a delivery company. It’s an Alibaba-led consortium of logistics companies that partners with warehouse managers and last-mile couriers to enable speedy delivery of online orders, including fast-moving consumer goods (FMCG), to increasingly large swaths of the country. Cainiao has built a data platform that enables speedier and more efficient service by letting couriers bundle deliveries in the same area.