Article originally published on Sept. 1, 2017, last updated on Aug. 1, 2021
What are the top B2C e-commerce platforms in China?
China’s B2C e-commerce market totaled approximately US$391.77 billion in 2016, growing 31.6% from 2015. According to iResearch, the B2C market made up 55.3% of the online shopping market in China.
The main players in the B2C market include Alibaba’s marketplace, Tmall, as well as the fast growing Jingdong or JD.com. While Tmall and JD.com are the most recognizable platforms, there are several other platforms growing in popularity and market share.
Tmall – Tmall (天猫) is currently the top B2C e-commerce platform in China. In 2016, Tmall made up 56.6% of market share. Tmall has done particularly well as it connects buyers with sellers on its platform, allowing it to grow quickly.
JD.com – Popularly known as JD.com, Jingdong (京东) ranks second with 24.7% of market share. JD.com has been able to grow quickly through management of its own inventory which allows the company to ship directly to customers.
Suning.com – Suning is an online appliance and electronics retailer. Suning has a cooperation with Alibaba whereby Alibaba has 49% stake in the company. In 2016, Suning ranked a distant third with 4.3% of market share.
Vipshop – Vipshop, or vip.com, is an online discount retailer, offering branded products to Chinese consumers. It now has over 2,200 brands on its platform In 2016, vip.com ranked fourth with 3.5% of the market.
Yihaodian – Yihaodian, which translates to “number one store” in Chinese, is an online grocery business. In 2015, Walmart acquired full ownership of Yihaodian, but sold it to JD.com in 2016 in exchange for 5% stake in JD.com shares. Yihaodian ranked fifth with 1.1% market share.
Is it possible to run an e-commerce store in China without speaking Chinese?
It is possible but not recommended. Of course, much depends upon the exact nature of the e-commerce business. But in general, at some points, Chinese language skills will become necessary, as will an in-depth understanding of the Chinese consumer base.
It is possible to run a cross-border e-commerce business through global platforms like Tmall Global, and not have to establish legally in China. However, just having a store on Tmall Global will not guarantee business success – far from it. Companies should also recognize that they will need a marketing plan in order to reach out to potential consumers and stand out from the immense competition.
As e-commerce has grown, so has a number of companies that focus on marketing for companies on platforms like Tmall and WeChat. These companies can also build brand awareness, and help legally set up in China if necessary.
What are the differences between Alibaba, Tmall, and Taobao?
Alibaba Group is the parent company of the Alibaba universe of businesses. Alibaba.com is a global B2B wholesale trade platform, whereas Tmall is a B2C retail platform and Taobao is a C2C trade platform. Taobao includes a wide range of sellers, including individuals with side businesses, as well as secondhand retailers. As such, products on Taobao are generally cheaper, but the platform carries higher risks of delayed shipments, customer service issues and fake brand products.
Tmall stands for Taobao mall, and it is described as a curated version of Taobao. In order to sell on Tmall, companies must undergo a rigorous screening process, which includes submitting business licenses and contracts, as well as paying higher fees and deposits. Many brand names now have stores on Tmall, reducing the risk of fakes and increasing customer satisfaction.
While they are both leading e-commerce platforms, Taobao and Tmall are not competitors. They attract different customers, with cost-conscious ones scouring Taobao, and quality and brand conscious shoppers predominantly using Tmall.
Tmall vs. Tmall Global
Tmall Global is the international variant of Tmall catering to foreign brands that do not have a business entity based in Mainland China, a Chinese corporate bank account and have not yet registered their trademark(s) in China.
While offering faster access to the Mainland Chinese consumer market, it does have its drawbacks; namely:
- Storage of goods in bonded warehouses in China’s free trade zones (FTZs) vs. warehouse based within China;
- Slower product shipping and handling times;
- Potential issues arising from Customs clearance;
- And inability to resale returned goods within the Chinese market.
Due to these logistical shortcomings, Tmall Global is not ideal to support Influencer and Key Opinion Leader (KOL) led sales campaigns, guerrilla marketing, and seasonal sales and distribution plans.
NOTE: In early 2021, Tmall dropped “years of presence in mainland China” requirement after requiring foreign brands to operate their Chinese entity for at least 3 years in mainland China to qualify listing on their platform previously.
What is JD.com?
Jingdong, formerly known as 360buy and commonly referred to JD.com is a Chinese e-commerce company. It is one of the largest B2C online retailers in China, and the competitor to Alibaba’s Tmall.
JD.com started out as an online retailer of mainly electronics, mobile phones and computers, but now sells a wide variety of consumer goods including clothing and apparel, household goods, children’s toys, athletic equipment, books, medicine and more.
Unlike Alibaba, which operates through third-party providers, JD.com has built its own logistics network and is thus able to promise fast delivery times to customers. Its logistics arm, JD Logistics controls the company’s delivery and warehouse infrastructure. JD.com has said that it plans to expand its infrastructure and invest in automation, AI and big data, including drone deliveries.
The company continues to grow rapidly increase its B2C e-commerce market share. According to the company’s Q1 2017 financial results, JD.com’s net revenue was RMB 76.2 billion (US$11.1 billion), an increase of 41.2% year-on-year. The company fulfilled 477.1 million order in Q1, an increase of 39% from the same period in 2016. Gross merchandise volume (GMV) increased by 42% to reach RMB 184.1 billion (US$26.7 billion).
In the second quarter of 2021, JD.com captured Net Revenue of RMB 253.8 billion (US$39.3 billion) and Net Service Revenue of RMB 34.1 billion (US$5.3 billion). Annual active customers reached 531 million people, a 27.4% increase over the same quarter last year.
Different Selling Models: Direct Purchase Import Model vs. Bonded Import Model
What is O2O?
O2O stands for Online-to-Offline commerce, and is used to describe a business strategy where potential customers are drawn online into physical stores. It is described by many as a combination of online retail and traditional brick-and-mortar retailers.
Through O2O, companies attempt to identify potential customers through emails, internet advertising, social media and more, and then deploy an incentive to attract that customer into the company’s physical space.
There are many combinations of O2O. Customers can place orders online and then pick up the items in-store; customers may return items they bought online to physical stores; or customer can shop online while at the physical store and get them delivered to their preferred address.
The goal of O2O is to build brand and product recognition online, allowing customers to become acquainted with the company before entering the brick-and-mortar shop. It seeks to combine the wide spread of online marketing with the shopping advantages of physical stores, where customers can visit to see how an item looks or feels before making a purchasing decision.
What are the top SME B2B e-commerce platforms in China?
In 2016, the small to medium enterprise (SME) business-to-business (B2B) e-commerce market totaled RMB 23.6 billion (about US$3.6 billion), making up about half of the total e-commerce market in China. The top player in the SME B2B space is Alibaba, which has a wide lead against its competitors.
Alibaba.com – Alibaba.com is a leading platform for global wholesale trade. It is the main leader in the SME B2B market, making up 47.5% of market share in 2016 according to iResearch.
Global Sources – In addition to its online market, Global Sources also creates trade shows, magazines and apps to facilitate trade between mainland China and the world. The company is a distant second to Alibaba with 5.6% market share in 2016.
JQW – JQW offers SMEs opportunities on its e-commerce platform to promote their own businesses and products to potential buyers. The company also offers SMEs other promotional and marketing services such as web design, search services and advertising. JQW has 2.6% market share in 2016.
DHGate – DHGate helps to facilitate the sale and purchase of wholesale consumer products between SMEs. The company also provides an all-in-one solution, including international payment services, logistics, escrow protection services and internet financing. In 2016, DHGate has 4.8% market share.
HC360 – In addition to a demand and supply platform, HC360 offers complete business solutions to SMEs including marketing solutions through its Mai-Mai-Tong product while offers multi-channel online and offline products, such as HC trade catalogues and a yellow page directory. It had 4.6% market share in 2016.
How E-Commerce companies became dominant players in online advertising revenue.
In the rankings for Online Ad Revenue generated by internet-related companies in China, three out of the top five are eCommerce platforms. All three, Alibaba (阿里巴巴, ranked #1), JD.com (京东, ranked #4), and Pinduoduo (拼多多, ranked #5) experienced significant ad revenue growth of greater than 25% in 2019. In fact, Pinduoduo grew its ad revenue by a whopping 132% Year-on-Year.
These eCommerce giants’ growth successes have even impacted the formerly dominant player in online ad revenue, China’s internet search engine giant Baidu (百度). Baidu’s online ad revenue actually fell by 4.64% in 2019.
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