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.
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. | 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.
