New research from eMarketer reveals that Alibaba’s dominance in China might not be as untouchable as it seems, as niche players start to rise up to take their share of the e-commerce pie.
Alibaba reportedly holds a 58.2 percent share of China’s e-commerce market, followed by JD.Com who has secured a 16.3 percent share. However, despite these gawk-worthy figures, eMarketer suggests fresh competition from smaller e-tailers could pose a threat to Alibaba and JD.Com’s online pedestals.
Pinduoduo (PDD) is one such brand gaining momentum in China, as consumers start turning to specialist retailers that sell “authentic goods” when getting their online shopping fix.
The Groupon-style e-tailer was originally founded by a former Google employee in 2015 and gives consumers direct access to wholesale products at competitive prices. The brand has reportedly attracted the new breed of price-conscious e-commerce customers that eMarketer classes as Tier 3 and Tier 4, to take out its 5.2 percent market share.
“China’s smaller cities such as Tier 3, Tier 4 and lower are less urbanized than Tiers 1 and 2, but they are growing rapidly in e-commerce participation as digital buyers in those cities begin to seek out the benefits of more affordable yet genuine products online,” said Monica Peart, eMarketer’s senior director of forecasting.
According to Peart, consumers in Tier 3 and 4 areas have been flocking to sites like PDD, as they are priced out of the bigger platforms like Alibaba and JD.Com.
“Smaller e-commerce players such as relative newcomer Pinduoduo have benefitted from this trend as buyers in lower-tier cities have been less tolerant of the higher prices found on large players such as Alibaba and JD.com, but they are quick to seize upon the relative deals found on Pinduoduo’s platform,” she said.
Two other brands taking advantage of this shift consumer spending are electronic retailer, Suning and discount fashion e-tailer, Vipshop, who hold a two and 1.8 percent market share respectively.
Suning, in particular, has gone through a period of rapid growth over the past few years, after partnering with Tencent, JD.Com and real estate developer, Sunac to help build its e-commerce and offline retail experiences.
Vipshop has also taken advantage of investments from JD.Com (seven percent) and Tencent (5.5 percent), to help build its online offerings.
Australia has seen similar patterns take shape, with smaller sites like LivingSocial, GraysOnline and DealsDirect.com.au all ranking in the top 15 online shopping and auction sites, according to recent research from Roy Morgan.
Much like in China, the big players like eBay and Gumtree still hold the largest market share, attracting 9.4 and 5.6 million monthly visitors respectively, but other sites like Kogan.com and Catch are quickly gaining traction.