It will not come as a surprise that Alibaba retained its dominance over the e-commerce sector in China in 2016. The e-retail giant’s business to consumer (B2C), market place Tmall beat competitors with a 56.6% share sales. Tmall has however notably lost a percentage of its share to JD.com who ranked second with 24.7% share, up by over 4% from the previous year.

JD has cleverly differentiated itself from Alibaba by managing its own stock, product inventory and by shipping directly to customers. Their business model is different as Tmall focuses on simply connecting buyers and sellers. It is interesting to see JD grow with the company reporting a net revenue of over $9 billion in the third quarter of 2016, this is a year over year increase of 38%.

The market shows no signs of slowing down

Both companies are taking advantage of a company that is showing no signs of slowing down, JD are evidence that as the market grows there is room for greater diversification outside of the Alibaba empire. B2C ecommerce in China totaled RMB 4.7 trillion ($707.5 billion) in 2016, up 23.9% from RMB 3.8 trillion ($572.0 billion) in 2015.

JD have established a strong niche in electronics

JD have focused on building their reputation in electronics, appliances and technology based products. This is the primary reason for their growth with consumers viewing them as the more reputable platform for such purchases. It is evidence of the importance of building an area of specialism in order to compete with the larger, established players.

There are now 550 million smartphones in China and the popularity of digital appliances is only increasing.

Business to consumer grows

iResearch also reported that B2C platforms will continue to steal share away from consumer-to-consumer (C2C) ecommerce sites over the next few years, as the quality of goods becomes an increasingly important factor in consumer purchasing decisions.

Consumer to consumer platforms such as Alibaba’s Taobao have faced criticism on the quality of products and sales with a gradual shift towards B2C. It is time they took stock and took JD as serious competitors.

JD’s Reputation Grows

JD only focus on business to consumer sales and benefit from a growing reputation through their comprehensive marketing strategy in China. They have focused a lot on grass roots marketing with social media, forums and community outreach programmes developing loyalty for the brand.

When it comes to e-commerce platform brands reputation is vital in a country where consumers have often been cheated or let down by poor quality goods in the past. JD have (like Alibaba) become associated with quality, international products, this hallmark of ‘imported goods’ is becoming more important.

 

The greatest delivery network in the world

China boasts the most extensive delivery network globally in terms out scale and efficiency. This has largely been pioneered by Alibaba but with road and infrastructural improvements across the nation JD.com has also benefited. Increased increase and accessibility as well as the growing internet penetration rate has offered a wider potential consumer base for JD to capitalize on.

Competition is good thing

Competition is important with Alibaba holding onto near total dominance for too long. Competition with JD will heighten the importance of offer quality Chinese customer service, speedy delivery and a quality product range as the Chinese consumer’s attitude shifts towards higher quality purchases.

Smaller APPs also represent a threat

Smaller Apps also are galvanizing much support. ‘Little Red Book’ are a strong player in the developing social commerce app market mixing a messaging/news feed style platform with stores.

 

Users tend to share image of themselves with their purchases, it is proving to be a highly popular formula in China. Social Media has become such a natural part of daily life that it is a logical step to combine it with the consumer’s passion for online shopping.

see more Guide to understand Chinese small App

‘Madhatter’ is another example of an app offering interesting commerce services. They have developed a bidding system where periodically, items will be offered at flash sale prices based on a ‘bidding war’ between users active at the time.

This incentivizes continual engagement in a novel way with users winning gifts and prizes at random if their status is online. More interactions equates to more sales..

The growth of these other players could represent a threat to Alibaba’s dominance as different niche communities are tapped into in this way.

This is evidently a fast changing market place with the growth of social commerce the main trend this year. Alibaba remain dominant but have lost market share to JD.com who are set to increase their reach through a year of intelligent marketing activity. When it comes to emerging apps the landscape is changing at a breakneck speed but it’s important for brands to develop a presence on these platforms too.

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