BEIJING: Tmall and JD.com account for over 80% of China’s e-commerce market, but it’s not necessarily either/or for brands concerned that the rivalry between the two platforms may have an impact on their own strategies.
“Working closely with internet companies has become strategic, [and] sometimes comes with exclusivity, which means you can only work with one,” according to Tom Birtwhistle, PwC Hong Kong digital consulting director.
“There is no answer to that,” he said during a presentation reported by Campaign Asia-Pacific.
But he also observed that China was far from being unique. “In most digital markets around the world, there are typically two or three players,” he noted.
“That being said, within the 25% that is fragmented, particularly in a market like China, niches can be a billion-dollar industry,” Birtwhistle pointed out. “There is a massive proliferation of vertical-specific platforms.”
And he cited the example of Kaola.com, owned by internet portal NetEase and operating a cross-border platform selling non-Chinese brands. Earlier this year NetEase announced a $4.7bn investment in bringing more Japanese brands to China as part of its battle against the two local e-commerce giants.
Another example was Pinduoduo, a social commerce app that has found particular success with lower income consumers in lower tier towns and cities. Sometimes likened to Groupon, Pinduoduo offers low prices and group discounts that users can take advantage of by gathering up a certain number of friends on social media (Pinduoduo integrates seamlessly with WeChat).
Despite the readiness of many Chinese consumers to adopt new technology, Birtwhistle stressed that they were more interested in the overall shopping experience than in the latest novelty.
“Alibaba has all the money and technology in the world, yet they focus on getting the consumer experience right and having the tech to enable it,” he said.
Sourced from Campaign Asia-Pacific, Nikkei Asian Review, Econsultancy; additional content by WARC staff