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Chinese Budget E-Commerce Platforms

November 13, 2020

We’ve just passed Double 11, the largest e-commerce extravaganza in the world. Given the occasion, we’d be remiss if we didn’t discuss e-commerce. Before we get to our annual summary of top trends, we thought we’d clarify a few things about Chinese budget e-commerce platforms.

China’s e-commerce landscape is rich and diverse. Currently sitting at a quarter of China’s retail sales, China’s e-commerce platforms includes online retailers, marketplaces and affiliate platforms. Within that range, there’s a number of different platforms catering to specific spending habits.

Indeed, one of the key themes over the last two years has been thrift – consumers are looking for the best deals they can find, whether online or offline.

Previously, we’ve talked about Pinduoduo. Pinduoduo, as you may recall, used group-buying as a way to blower prices of items on its platform. There’s also livestream e-commerce, which we’ve covered extensively. One of the reasons livestream has been a breakout hit is because livestream hosts negotiate with brands to guarantee the “lowest price on the internet” for their fans.

Chinese Budget E-Commerce Platforms Pinduoduo

Image: Pinduoduo APP

Below, we’ve categorized China’s budget e-commerce platforms and functions, listing whether they’re suitable or not for brands looking to enter China.

Summary of Chinese Budget E-Commerce Platforms

Platform Description Positives Negatives AgencyChina Assessment
Pinduoduo
Users:
683 million active buyers

Pinduoduo is China’s second-largest e-commerce platform in China.
Pinduoduo has taken the lead on several new trends, including social e-commerce, team purchase, and consumer-to-manufacturer demand models (C2M).

To encourage its users to spend more and buy a wider range of goods on their platform, Pinduoduo has decided to enter cross-border e-commerce. Pinduoduo’s cross-border e-commerce offer is called Duoduo International. Large international brands with multiple distributors must take care to ensure:
(1) no counterfeits
(2) distributors sell on Pinduoduo using an agreed price architecture
We believe Pinduoduo’s cross-border e-commerce platform, Duoduo International, is a net positive for brands looking for exposure to consumers in China’s lower-tier cities.
Juhuasuan (inside Alibaba)
Users: Undisclosed
Juhuasuan is a marketing platform for flash sales and group-buying deals inside Alibaba. It uses data analytics to offer flash sales to certain sub-segments, such as price-conscious consumers.Juhuasuan is available to most brands who have a Tmall Flagship Store. Using a steady stream of flash sales and group-buying deals to unlock new consumer segments can be seductive, but it doesn’t replace a clear in-market strategy.We believe Juhuasuan should be part of a brand’s mix of e-commerce tactics in China. It’s best used when the brand has a track record of operating on Alibaba’s e-commerce platforms.
VIP.com
Users:
33 million active buyers
VIP is arguably China’s largest online discount retailer. It’s an e-commerce platform that specializes in time-sensitive discounts, called flash sales. VIP typically stocks out-of-season inventory from leading brands.VIP is well known for offering flash sales for branded fashion, home goods, apparel and accessories.Given all other e-commerce platforms have flash sales, the distinctiveness of VIP’s model has diminished over time. We believe VIP is an effective way for fashion and accessory brands to clear excess inventory.
Taobao Deals
Users:
70 million monthly active users
A standalone e-commerce app from Alibaba that sells items under RMB 50.
It is reported Taobao Deals was released to combat Pinduoduo’s stranglehold of consumers in China’s lower-tier cities.
There is limited upside for most foreign brands to place their goods on this platform, unless they specialize in daily essentials, such as toiletries. There is limited possibility for items to exceed RMB 50, in the short-term. We believe Taobao Deals is ill-suited for foreign brands to use.

We trust you found that summary useful. If you’re looking at entry into China via e-commerce, talk with our research and e-commerce teams to work out the best approach for you to gain traction with online shoppers.

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