China Is the Leading Country In Ecommerce
By some estimates, China accounts for as much as 40% of global retail ecommerce by gross merchandise volume. One of the factors is due to mobile payments. High mobile payments penetration rates coupled with access and convenience of online commerce has put China in a leadership position.
Whereas, the relative dearth of traditional offline retail infrastructure reinforces the elevated priority and need for ecommerce.
Roi On Tmall & Jd In Question
Tmall is the leader in China’s B2C ecommerce sector with a 59% share of the market (as Oct 2018). There are currently more than 150,000 brands on Tmall - including 18,000 international brands. And, some 80% of international brands used Tmall to initiate their market entry to China.
For top merchants with high brand awareness, Tmall and JD have proven very successful. However, as both of China’s biggest ecommerce sites have become increasingly crowded and costly, lesser known brands are feeling the pinch. Some estimates suggest that 90% of stores on Tmall make less than RMB10 million per year in sales.
Pinduoduo Making Big Gains On Mobile
As costs of awareness and acquisition increase on traditional leaders (Tmall and JD.com), Pinduoduo, together with Kaola and XiaoHongShu (also known as RED) have grown extremely quickly.
Between 2016 and 2018, growth rates for next-wave ecommerce players were:
Pinduoduo: 2,155%
Xiaohongshu (RED): 451%
Kaola: 267%
All are mobile-first and highly geared to connecting social with ecommerce and word-of-mouth sales.
Viral Growth In Wechat Lowers Cac
Pinduoduo has enjoyed huge benefit from its close connection to WeChat and the use of Mini-Programs in WeChat to grow its user base quickly and efficiently (Advantage: Tencent is an investor in Pinduoduo).
Where Tmall and JD.com have seen their customer acquisition costs) balloon, Pinduoduo is much more efficient:
Pinduoduo: US$2 CAC
VIP: US$18 CAC
JD.com: US$39 CAC
Taobao: US$41 CAC
