First, let me give you a good news! I am still bound to writing this e-mail (applause! ??). The bad news, though, is that I am still in the "three-week slump" window which makes more probable that this will be my last newsletter this year. But who knows? Only time will tell!
In this edition we'll have a look over China's e-commerce sector and its global impact. It's a long one so I hope you will find it interesting enough to get at the end of it where I have some cool videos to recommend.
China's e-commerce sector has experienced remarkable growth over the past two decades, evolving into the world's largest digital marketplace. As of June 2024, China had approximately 905 million online shoppers, representing 82.3% of its internet users. This marks a 2.4% increase from the 884.1 million online shoppers reported in June 2023.
China’s e-commerce journey began with humble origins in the late 1990s, as the internet started gaining traction in the country.
- In 1999, Alibaba was founded by Jack Ma, sparking the dawn of e-commerce with the goal of connecting Chinese manufacturers with international buyers.
- The company’s Taobao, launched in 2003, revolutionised the consumer-to-consumer (C2C) model, while JD.com emerged as a direct competitor, focusing on the B2C model, and soon became China’s go-to online shopping platform.
- By 2010, China’s e-commerce landscape had grown exponentially. During this time, Singles’ Day (November 11) emerged as the ultimate shopping event, with Alibaba’s platforms shattering global records with billions in sales every year. By the way, Alibaba’s Singles' Day 2020 reached an astounding $74 billion in sales! To put things into perspective, the same year, Amazon's Q4 net sales amounted to approximately $125.56 billion.
- The Chinese e-commerce industry reached the number one position globally around 2013. In 2014, Alibaba’s IPO on the New York Stock Exchange raised $25 billion, making it the largest IPO in history at the time.
- By 2015, more than 70% of e-commerce transactions were conducted via mobile phones. This "mobile-first" model, unlike the desktop-centric e-commerce growth seen in the West, gave Chinese companies a head start in leveraging smartphones for online shopping.
- As of 2024, China’s e-commerce sector stands at an incredible $2 trillion market size, accounting for over 50% of global e-commerce sales.
Here are some of the platforms playing a significant role in China’s e-commerce landscape:
Taobao
- Taobao is a C2C (consumer-to-consumer) platform, allowing individual sellers and small businesses to set up online stores.
- Fun Fact: Taobao was launched in 2003 as a response to eBay’s presence in China, and by 2011, it had overtaken eBay in China, becoming the dominant e-commerce site.
- Known for its massive product variety, from budget-friendly goods to unique items not found elsewhere.
- Taobao’s Singles' Day (November 11) sales often exceed $25 billion, breaking global e-commerce records every year.
Tmall
- Tmall (also part of the Alibaba Group) is Alibaba’s B2C (business-to-consumer) platform, focusing on serving brand-name and established businesses.
- Fun Fact: Tmall is known for its strict quality control, ensuring that only trusted businesses can list products, making it a premium platform.
- It caters to top-tier brands like Nike, Apple, and Unilever, allowing them to directly reach Chinese consumers in a more secure and official environment.
- Tmall Global allows foreign businesses to sell directly to Chinese consumers without needing a local presence.
AliExpress
- AliExpress is Alibaba’s international B2C platform, which connects Chinese businesses with consumers worldwide.
- Fun Fact: AliExpress’s global reach extends to over 200 countries, and it has become particularly popular in Russia, Brazil, and Spain.
JD.com (Jingdong)
- JD.com is one of China’s largest B2C platforms, directly competing with Tmall in the retail sector. Unlike other platforms, JD.com often handles the inventory and logistics of products directly, offering a high degree of control over product quality and delivery.
- Fun Fact: JD.com was founded in 1998, and unlike many e-commerce platforms, it started as an online electronics store before expanding to a broader range of products.
- JD.com is known for its fast delivery service, often providing same-day delivery in major cities, thanks to its efficient and high-tech logistics network.
- JD.com has been a leader in AI-driven logistics, using robots and drones to streamline deliveries in urban and rural areas.
Pinduoduo
- Pinduoduo (PDD) is a unique platform that blends social networking with e-commerce, allowing consumers to group-buy products at discounted rates by teaming up with friends or strangers.
- Fun Fact: Founded in 2015, Pinduoduo quickly became a $100 billion company, outpacing JD.com and becoming one of the fastest-growing e-commerce platforms in China.
- Pinduoduo’s model targets lower-tier cities and rural consumers, offering them access to affordable products through group purchases, a model which has gained immense popularity
WeChat and Mini Programs (WeChat Shops)
- WeChat, a multi-purpose app developed by Tencent, integrates a wide range of functions, including e-commerce through Mini Programs, which allow businesses to set up online stores within the WeChat ecosystem.
- Fun Fact: As of 2024, WeChat has over 1.2 billion active users, making it the most popular app in China.
Douyin (TikTok China)
- Douyin is the Chinese counterpart to TikTok, and it has become a major player in social commerce by enabling users to purchase products directly through live-streaming sessions or short video content.
- Fun Fact: Douyin has over 700 million active monthly users, and it surpassed Alibaba’s Taobao Live in terms of revenue generated through live-streamed sales by 2020.
- Douyin uses short-form video content to create engaging and immersive shopping experiences. Brands can sell directly to viewers during live streams, a trend that has become a core feature of the platform.
Suning.com
- Suning.com is a leading Chinese e-commerce platform known for its electronics, home appliances, and retail goods, competing with JD.com and Alibaba in the broader e-commerce market.
- Fun Fact: Suning started as a brick-and-mortar electronics retailer before transitioning to e-commerce in 2009.
- Suning is known for its strong offline-to-online (O2O) integration, combining physical retail locations with its e-commerce platform to offer consumers a hybrid shopping experience.
Xiaohongshu (Little Red Book)
- Xiaohongshu (also called Little Red Book) is a social media platform and e-commerce hybrid, focused on lifestyle products, fashion, beauty, and health.
- Fun Fact: Xiaohongshu has over 300 million users, with a strong following among Gen Z and millennials who use it for product reviews, recommendations, and shopping inspiration.
- Xiaohongshu integrates user-generated content with e-commerce, allowing users to share reviews and experiences about products and then purchase them directly on the platform.
- Alibaba’s platforms like Tmall and Taobao leverage AI and machine learning to offer personalized product recommendations. Alibaba's “Intelligent Recommendation Engine” processes more than 10 terabytes of data every hour to make real-time suggestions to users.
- In one instance, a Chinese live-streamer named Viya sold $11 million worth of goods in just 18 minutes, including a single bottle of perfume worth $1,800 that was sold to her viewers
- JD.com's automated warehouses can operate 24/7, processing over 100,000 orders per day with minimal human intervention. Their AI-powered delivery drones are able to navigate complex urban environments and deliver products in as little as 30 minutes.
- WeChat alone has over 1.2 billion active users, and over 600 million users shop on the platform monthly.
- In China, some people have coined the phrase “Pinduoduo shopping” as a euphemism for getting crazy good deals. Essentially, Pinduoduo users are willing to invite their friends to join a group buy to get huge discounts. It’s like a virtual coupon frenzy.
- In 2019, Taobao launched a “Fashion Police” feature, where an AI tool would help users spot fashion “crimes”—from ill-matching outfits to outdated trends.
- The WeChat app once introduced a new emoji that became wildly popular. It was a little dancing crab that represented wealth.
What about some fun facts about the Chinese entrepreneurs?
- Jack Ma, the founder of Alibaba, was rejected from Harvard 10 times and was turned down for a job at KFC.
- Lei Jun, the founder of Xiaomi, has a habit of wearing the same black t-shirt for public appearances, a tribute to Steve Jobs’ style.
- Zhang Yiming, the founder of ByteDance (the parent company of Douyin), has an odd routine—he’s known to spend hours in the office working but prefers to communicate with employees via written messages rather than face-to-face. He’s sometimes referred to as the “Silent Leader.”
Here you have the promised videos:
The rise of Pinduoduo and Temu: profits and secrets - video
How Alibaba Revolutionised E-commerce - video
China E-Commerce Market at a Glance - video
This newsletter is build on audience request. If you have any topic suggestion or feedback, please PM me.
