What brands need to know about Chinese e-commerce platforms?
E-commerce development in China is a relevant consumer trend
Cross border e-commerce
Chinese e-commerce marketplaces are a source of effective marketing strategies and marketing solutions
Main Chinese ecommerce platforms
Little Red Book (Xiaohongshu)
E-commerce in China - FAQ
The number of people who actively use Chinese e-commerce apps grows every year. More than 70% of Chinese consumers already use e-commerce services for sales and marketing. If we take into account that the population in China is 1.4 billion people, then it is necessary to note that e-commerce applications in China are used by more than one billion people, which demonstrates a large potential of the Chinese e-commerce market.
As the number of applications increases the competition is growing rapidly – new players have to compete for even the smallest market share. For foreign brands, it is important to understand all the subtleties of Chinese marketplaces and Chinese e-commerce landscape in advance. In this article, we will tell you about the Chinese ecommerce world and the most popular e-commerce platforms in China and how to choose the most suitable one for your business.
Nowadays China faces a speedy digitization process supported by the Chinese government and becomes a global leader in this direction. Back in 2020, the number of annual active consumers using the Internet was 989 million, which is 3.4 times more than in the United States.
At the same time, most Chinese consumers are spending more and more time on mobile services: according to McKinsey, in 2017, the average time spent using a mobile phone was 278 minutes, and by mid-2020 it had grown to 358 minutes.
Of course, these factors lead to an increasing number of e-commerce transactions and the development of the Chinese ecommerce market, which in 2021 in China accounted for half of the gross merchandise volume of ecommerce sales in the world. Besides, a quarter of the physical volume of goods in Chinese total retail sales is sold through online channels, which is well above the average number for the world – 18%.
Marketplaces are comfortable for Chinese consumers, because developed logistic systems in China let people make orders and receive goods in both larger and smaller Chinese cities. E-commerce platforms like Taobao mall let everyone sell different goods from Chinese farmers' products to computer equipment seller’ electronic products. Besides, nowadays it is easy to buy goods from mobile devices and pay through convenient payment systems like Alipay without closing your messaging app.
Nowadays Chinese companies develop cross border trade. Popular cross-border marketplaces with high monthly traffic include Tmall Global, JD.hk, RED store, and other popular cross-border marketplaces to easily start selling in China.
Chinese e-commerce websites not only give local and international brands an opportunity to sell products on the Chinese market, but also allow you to use a lot of effective instruments that let you increase sales in China.
Modern marketplaces, especially Chinese ones, give clients an opportunity to analyze traffic in detail and make conclusions about trade activity. Based on intellectual analisis engines, Chinese marketplaces like Taobao let you better understand main metrics related to your trading activity and effects of your marketing approach determining your product’ sales in China.
Undoubtedly, marketplaces can give you an opportunity to advertise your product and make it more popular among Chinese consumers. For example, it is possible to use different popular approaches like targeting and context advertising, or you can implement a KOL marketing approach being a more accurate and interesting way to attract your clients.
Targeting and context advertising
Chinese ecommerce platforms include wide advertising functions for your product promotion. There are different advertising formats like targeting or context advertising that you can use. Some marketplaces obtain developed systems of intellectual advertising services. As for Alibaba Group, it has its own advertising ecosystem, for example, the Alimama platform helps sellers in Taobao and Tmall promote their brands and products through different advertising types.
KOLs and live streams
Modern Chinese consumers face advertising too much, therefore traditional advertising approaches in China are becoming less effective. In this case there are some more popular and reliable methods related to organic advertising and social e-commerce.
For example, Chinese consumers often make purchasing decisions based on other reliable opinions, that are often presented by KOLs (key opinion leaders) in China. Some Chinese ecommerce platforms specialise in KOL-marketing, for example, Xiaohongshu, which is both a social network and an e-commerce platform.
Besides, Chinese ecommerce platforms introduce new interesting approaches to attract an audience, for example, Taobao launched Taobao live, including lifestyle sharing platform features, which lets KOLs and brands’ representatives demonstrate main characteristics of products and successfully sell them through social e-commerce mechanisms.
Speaking about top e-commerce platforms in China, we would like to pay you attention to the following ones: Taobao, Pinduoduo, Tmall, JD, Little Red Book. Despite differences in estimated monthly traffic, each of the big Chinese ecommerce platforms has its own unique features like goods items, promotion methods, target audience, etc. – all these things we consider below.
The undisputed leader of the e-commerce market is Taobao. Taobao is an e-commerce platform owned by Alibaba Group, estimated monthly traffic is 755 million active. The Chinese ecommerce app has literally become synonymous with "online shopping” in China. Since its launch in 2003, Taobao has remained the leader of the e-commerce market and determines trends for other popular Chinese ecommerce platforms.
Taobao uses the C2C business model, which allows for commercial activities between individuals. If we compare it with the analogues we know, then this is a cross between Ebay (only without an auction system) and Avito.
Anyone in China can register a store on Taobao and become a seller, and the platform itself acts as an intermediary. With such a system, it is not surprising that a huge variety of products and services of different quality are available on Taobao.
On Taobao, you can find almost everything you could imagine: from a dinosaur costume for Halloween to digital keys for STEAM games. A convenient logistics system allows you to deliver goods in a short time (if your products are already in China).
A clear example of the success of Taobao is the creation of the shopping festival 11/11 or "Bachelor's Day" - an analogue of the American "Black Friday", which has been held every November 11 since 2009. Not only Chinese, but also Western brands competing for the attention of the Chinese buyer began to participate in the event.
Subsequently other e-commerce platforms began to hold their festivals on this day. Every year this "celebration of shopping" breaks records. In 2020, Alibaba decided to extend the 1-day festival and hold it for 11 days from November 1 to November 11. More than 470 brands sold goods worth more than 100 million yuan ($15 million).
Alibaba also started to introduce social networking functionality to its platforms: both in Taobao and in Tmall. The most popular and sensational tool is live streaming. Bloggers rent special rooms with good equipment and for several hours talk about the products of the brands with which they cooperate.
Through the integration of social networks and e-commerce, Alibaba managed to attract bloggers from other platforms, which further drove sales growth. In addition, it simplified the purchase process: a direct link to the product in the form of a flypage is displayed immediately at the moment when the blogger talks about it.
Unlike Taobao, Tmall with estimated monthly traffic being 512 million in 2020 uses a B2C model and the process of registering a store is much more complicated – you will definitely need a business license. Tmall thoroughly verifies brands before they can start selling on the site. Therefore, it is considered that the products on Tmall deserve more trust from Chinese customers.
Tmall has two versions: Chinese and international one for cross-border e-commerce – Tmall Global. Tmall Global supports cross border trade and lets brands sell in China without Chinese license and physical stores in Mainland China, Tmall Global is a great way for companies without Chinese business license.
Tmall is said to be the app that looks most like a simulation of shopping in a real shopping mall. Companies can open "flagship stores" and customize the design completely for themselves, attracting even more customers.
Even Tmall's homepage looks a grade higher, with less text, clutter and daily offers, which supports Tmall's reputation as a premium shopping app in China.
Tmall is one of the best e-commerce platforms in China for those foreign brands whose products are more expensive.
JD.com (also known as JingDong) started its business with offline electronic appliances sales in the 1990s. However, JD really began to grow only when it launched online sales.
In 2020, estimated monthly traffic reached 472 million active buyers. Gradually adding more and more categories, the platform has turned into a universal e-commerce platform that attracts millions of users every year.
Thanks to its advanced logistics system, JD.com offers delivery both on the same day and the next day. With such a system, JD is essentially the only e-commerce platform in China that controls every part of its supply chain.
JD.com even launched its own shopping festival in the same spirit as 11/11 on Alibaba. It is called 6.18 and is celebrated during the first 18 days of June. Like the "Bachelor's Day”, other platforms began to participate in this holiday. Over the past few years, the festival has grown into the second largest e-commerce celebration in China after 11/11.
JD.com is the leader in sales of luxury goods among Chinese e-commerce platforms. More and more foreign luxury brands, including premium Swiss watch brands ORIS, Tissot and TITONI, Italian fashion house MOSCHINO and others confirm the strategic partnership with JD. JD.com is a platform that unites lovers of luxury goods and online shopping, and will be an excellent solution for those brands that belong to the premium segment.
The company is considered a reliable supplier of not only Chinese, but also foreign goods. At the touch of a button, customers can get direct access to many global brands, including those that do not even have a physical presence in the country.
Besides, JD develops cross-border e-commerce direction, related to operating the JD Worldwide platform (JD.hk). Created in 2012 as a platform for foreign companies and international brands planning to enter the Chinese market, the marketplace gives opportunities to use developed international logistic systems and sell in China without registration of a legal entity, obtaining a Chinese business license and creating a Chinese bank account, etc. Thus, if you represent foreign brand, pay attention to JD Worldwide, being one of the most comfortable sites for cross-border e-commerce in China.
Little Red Book, literally from the Chinese "Little Red Book", has been in existence since 2013 and is an application that combines social communications and an ecommerce platform. In 2019, the platform had more than 250 million registered users, estimated monthly traffic was 85 million monthly active users in 2020.
Xiaohongshu is a platform where users post product reviews, give shopping tips, and talk about themselves and their lives. Since most of the audience is female, the two main categories of goods are clothing and cosmetics.
Noticing the demand of users for foreign goods, Xiaohongshu in 2014 launched its own cross border shopping platform - RED store. It enables users to buy foreign goods directly in the app. Xiaohongshu entered into strategic partnerships with many international brands, including Lancôme, Swisse and Innisfree (brands can open an official brand account or store on Xiaohongshu). In 2017, the sales volume of the platform reached 6.5 billion yuan.
The success of Xiaohongshu is explained by the fact that the content is created by the users. The sales cycle is arranged as follows, users:
Read product guides and watch product reviews from other users.
Buy goods in the app.
Publish their own product reviews.
Share their shopping experience with other users.
Xiaohongshu makes the most of content marketing to its advantage. The platform invites famous bloggers and KOL to create personal accounts and share their experiences with other users. For example, Fan BingBing, a Chinese actress and singer, gained more than 12 million subscribers in Xiaohongshu. Her subscribers are so active that every face mask she has ever talked about has been sold out on the platform. With the help of opinion leaders, Xiaohongshu was able to attract significant traffic and further increase audience loyalty.
Little Red Book is one of the best e-commerce platforms based on user-generated content with an innovative business model. Xiaohongshu offers various content formats, both short TikTok-type videos and regular Instagram-style posts. It is also possible to have live streams which are now common in China. If your target audience is young girls who understand global trends, then you should definitely try selling on Little Red Book.
Pinduoduo is considered the fastest growing e-commerce platform. Since its launch in 2015, Pinduoduo has been demonstrating rapid growth. In 2020, the app became the second most popular after Alibaba services in terms of the number of active users per month. Estimated monthly traffic was 720 million users in 2020. Pinduoduo 拼多多 literally means combining a lot of purchases from Chinese.
The main difference of Pinduoduo is the use of group purchases in e-commerce. The more people buy a product, the cheaper it is. Users share purchases with other people, and then buy the product much cheaper than its initial cost.
In order to attract new users, Pinduoduo constantly conducts some kind of promotions. Flash sales and time-limited offers take place in the platform every day, which increases the percentage of user returns. Such restrictions do not allow you to think for a long time, but immediately make an impulsive purchase decision.
The more users talk about their purchases, the more chances they have to get a discount, which leads to the fact that information about products on Pinduoduo is distributed through social networks such as WeChat. Pinduoduo agreed with the main Chinese Internet holding company Tencent and was able to integrate their e-commerce platform into the most popular social site in China. Pinduoduo also integrated WeChat Pay, unlike other platforms that use Alipay.
Thanks to the use of the buzz marketing business model, the company has a huge volume of sales. Organic content created by users allowed Pinduoduo to become one of the most unique e-commerce platforms in China.
The platform has become the most popular among residents of the 2nd and 3rd level cities, which are characterized by a lower level of income and consumption. Therefore, the platform may not be the best solution for the premium segment.
In this part we would like to answer some popular interesting questions related to the Chinese e-commerce industry and famous Chinese marketplaces.
There are a lot of e-commerce platforms operating in China, and there are many more than we have covered in this article. Apart from having reviewed marketplaces, you may consider some other ones with high estimated monthly traffic like Kaola, VIP, Suning.com of Suning commerce group, etc.
Besides, if you are interested in wholesale trade, then you should pay attention to 1688.com.
Answer to this question depends on your business strategy. For example, if you are interested in selling widely available goods and use C2C model marketplaces, the best way is selling on Taobao. As for B2C, one of the most popular ways is Tmall, but its competitors like JD and Pinduoduo are every year strengthening their positions on the Chinese market. If you are interested in working with female consumers and your business is based on the sale of cosmetics or fashion, then working with Xiaohongshu may be the best option.
In this case, the meaning of 618 is encrypted in the date: 6 - June, 18 - the period from June 1 to 18. On June 18, 1998, JD company was founded. The period from June 1 to 18 is one of the world's largest shopping festivals, which is held at the JD.com site.
11.11, Double 11 or the Singles’ Day is a day that symbolizes loneliness, but is also considered as good for starting a new relationship. Alibaba Group has used this date to launch China's largest shopping festival and social commerce programs, which ensures a billion dollars worth of goods sold each year on this special date.
E-commerce in China is so developed that it can be difficult to comprehend. The variety of sites frightens and complicates the choice of foreign companies that want to place their online store in China. We hope this guide has helped you better understand the main trends of e-commerce development in China and key features of leading digital platforms for sales in China. Working with online platforms is the main trend in Chinese retail that is widely followed by Chinese companies. Furthermore, China is a highly competitive market. Therefore, international merchants, foreign businesses, and well known brands should put emphasis on working with the most popular online marketplaces in China.
If you need professional support to enter the Chinese market and launch your brand promotion in China, contact us and we are always ready to help you! China Digital Marketing Agency has a wide experience of working with niche international brands, we specialize in marketing and promotion in Mainland China, we are ready to help you with entering the Chinese market, conducting market research, developing marketing strategy and increasing consumer engagement with social media platforms and search engine optimization.
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