Why China Leads the Future of Retail?

Let's be honest about the pandemic, they have been really good for E-commerce growth and basket size growth. Yet as grand as Amazon is, it's really the evolution of Single's day that shows how China will lead the future of E-commerce.

As a stock picker the Last Futurist has to note how Pinduoduo and JD.com have evolved in 2020. One year ago $PDD was a stock at $31.68. Today it's $143.55. $JD was $32.17 and one year later it's $87.74. So what's going on here? The answer is simple, China is winning in how E-commerce sales are scaling.

Chinese e-commerce giants Alibaba and JD.com have racked up around $115 billion in sales across their platforms during the Singles Day shopping event, both setting new records. Analysts are split over whether this year’s record Singles’ Day shopping spree represents a rebound in consumption in China. Globally E-commerce sales during the pandemic is up around 40%.

In America you have Amazon and that's it. In China you have a trinity of E-commerce leaders in Alibaba, JD and Pinduoduo, with a fairly good supporting caste of E-commerce players.

Alibaba said its total gross merchandise value (GMV) over the 11-day period, a figure that shows the total value of orders across Alibaba’s shopping platforms, totaled 498.2 billion yuan — or $74.1 billion. That figure nearly doubled last year’s 268.4 billion yuan. Black Friday in the west has also become a 10-day event with Cyber Monday that starts earlier each year, but it's nothing compared to Single's day.

Singles Day is typically a 24-hour shopping event that takes place on Nov. 11 in China, but this year Alibaba and JD.com began their huge discounts from Nov. 1. Amazon's Prime Day is neat, but it has no character. It's just a bunch of retailers trying to compete with Amazon's own discounts. It has no culture.

Pinduoduo $PDD last week announced its first-ever quarterly net profit as a publicly traded company. That is, it's just getting started. Its IPO in 2018 was at $19. The way it's utilized group-buying, rural targeting and social commerce is unlike anything in America, not even replicable to non-Asian markets for the most part. In social commerce, collectivism wins and mobile consumers win as well.

Clearly Pinduoduo's stock is overvalued at these levels, but JD has superior logistics and grocery penetration. Alibaba will become a technology company comparable and eventually surpassing Amazon in breadth and business model diversification. Yet it's Alibaba's stock that is most undervalued due to antitrust regulations that are new and might see it slow down a bit.

Single's Day is doubling from 2019 to 2020. Meanwhile, JD.com’s transaction volume over the same period totaling 271.5 billion yuan ($40.97 billion), more than the 204.4 billion yuan it recorded in 2019. As impressive as Amazon, Shopify and Target's numbers have been of late, China's retail numbers in E-commerce have been a lot more impressive and this says a lot about the pandemic and about the future of retail.

Alibaba is expecting imported goods to be a big hit with Chinese shopping because fewer are travelling abroad to buy foreign products. Tmall, a shopping platform run by Alibaba, has brought more than 2,600 new overseas brands to China for the first time. Recently, Shopify has integrated Alipay for many of its retailers in making a push in China. Cash is dead in China, but not in the rest of the world.

Alibaba to focus more on turning future 11.11 editions into ‘fun-filled’ event, less on breaking records. But what is Amazon doing? It's not creating a culture of celebration, heck it cannot even get its game studio right. It makes one wonder if Western retailers understand how to integrate social commerce into their business models. Live streaming has fueled commerce and E-commerce in China. Walmart partnering with TikTok is not the answer.

To counter the rise of Pinduoduo, Alibaba and JD have launched rival apps. For example, last year, JD rolled out a group buying app called Jingxi. Alibaba has an app called Taobao Tejia, which has massive discounts on products all year around. So what's happening here? China's innovation in E-commerce is making them superior to their western counterparts. Real innovation is occurring in the future of retail in China, where the world's most important consumers live today.

While there was a time China copied, cloned and stole IP from the west, the West is not good at doing the same from Chinese E-commerce leaders. Mini-apps, social commerce, live-streaming, super-apps, QR code payment systems - are all absent from American retail technology. It's no wonder all America has is Amazon and Walmart in E-commerce options. The Duopoly systems aren't working to spur legit innovation in the retail sectors, even as Covid-19 destroys small business retailers in North America, there's nothing much to replace them with. 

Chinese consumers are more mobile driven consumers, and that has placed them in the middle of the future of retail. American's technology innovation platforms are stifled by duopolies that don't care about real innovation but are profit-centric. In China, with a commitment to antitrust regulations, the future of retail is bright because real free-market competition is now occurring. The Chinese consumer benefits from all the innovation in the sector, and 11.11 is the perfect example of this.

What has Amazon done for me lately? It's funneled wealth into convenience capitalism while our small businesses were destroyed ("disrupted") and as they will continue to be with the next great shutdown of the Winter of 2021. Learn to innovate, or China will win the future of retail.