China has the most developed e-commerce landscape in the world. Learn which companies take the top 5 spots in this article for 2019.
According to Jiguang’s report at the end of November 2018, the total number of online shoppers using Chinese e-commerce apps installed on their mobile devices grew from 207 million to 783 million within just one year. The penetration of e-commerce in China has reached 71.1% of the total Chinese population. With the population of China reaching over 1.4 billion this means there are over a billion people on China’s shopping apps. In terms of spending, Emarketer estimates that spending on China’s shopping apps reached USD 1.53 trillion!
With Chinese shopping apps experiencing such tremendous growth, competition is becoming more and more fierce. New players are forced to fight for even a sliver of market share but nonetheless, there has been a steady stream of new entrants to the market causing constant shifts in the Chinese e-commerce landscape.
Foreign brands players entering the market should take their time in choosing which marketplace to work with. In this blog we’ll cover the prime selling points, focuses, and specializations of the largest Chinese shopping apps. Hopefully, this will be the perfect article to inform you about which Chinese e-commerce platform to choose for your business.
Ranking: Top 5 Chinese Online Shopping Apps in 2019
The widespread availability of smartphones gave rise to the popularity of mobile shopping apps which has helped further drive the growth of Chinese e-commerce. Chinese Shopping apps have become the most popular way for users to access online shopping. According to research from China Internet Watch, over 80% of Chinese online sales were generated from mobile apps, and this trend is expected to continue in the future.
Check out the below graph to see the number of MAUs on China’s largest e-commerce platforms for an idea of the rankings. However, remember MAUs does not necessarily translate into revenue, so take these figures with a grain of salt.
The China e-commerce market continues to see tremendous growth, but it’s impossible not to notice that the growth is gradually slowing down. With more and more competition entering the market the landscape has seen consistent innovation. However, challenges lay ahead, as new laws put into effect in early 2019 have increased the administrative burden many of these platforms face.
#1. Top Chinese Shopping Apps: Taobao—The Undisputed Leader in the Chinese E-Commerce Market
Average Monthly Users (MAUs): 540.27 billion
Install Penetration Rate: 52.5%
The Alibaba-backed app has always been a synonym for “online shopping” in China. Ever since its launch in 2003, it remains the most preferred Chinese shopping app and continues to act as a trendsetter for other e-commerce platforms. Operating on a C2C business model, Taobao allows the sale of goods and services between individuals.
For a direct comparison, it acts like the Chinese equivalent of E-bay (without the auction style) with a marketplace focused business model. Any person in China can register to easily to become a merchant and sell to users on the platform, with Taobao acting as the platform and agent in between.
With this business model, it’s no surprise that there is a huge range of products and services available on the platform. Nearly anything you can imagine can be found on Taobao and even things that might be beyond your imagination. The dominant position of Taobao is due to its advanced logistics providers, strong incentives for both purchasers and sellers, and its place as the trendsetter for Chinese e-commerce.
The Double 11 Festival Showcasing Total GMV Of Alibaba’s China E-Commerce Platforms in 2018.
One example of Taobao’s dominance was the creation of the Double 11 shopping holiday in 2009. Due to the popularity of this shopping holiday, Brands and competing Chinese online shopping sites have had to follow the trend and offer promotions on the same day in the hopes of capturing a piece of the pie. Even foreign brands that do not usually participate in third-party shopping festivals, like Apple, now offer promotions on this day.
When we take a look from last year’s data, on the day of Double 11, Mobile Taobao’s daily active users saw a rise of 63.4%. The Double 11 shopping festival dwarfs other popular shopping holidays like Black Friday in the US. The creation of this shopping holiday has been called by many as an “E-Commerce Miracle.”
For 2019, Alibaba has just announced a partnership with Starbucks, that enables a seamless beverage and food-ordering experience by using the app. By the end of April, Alibaba offered on-demand delivery services for more than 2,100 Starbucks stores in 35 Chinese cities. Collaborations like these and its non-stop desire for innovation makes Taobao the undisputed leader of Chinese shopping apps.
#2. Top Chinese Shopping Apps: Pinduoduo—Where Group Buying and Social Commerce Meets
Average Monthly Users (MAUs): 283.27 billion
Install Penetration Rate: 22.4%
Ever since its launch in 2015, Pinduoduo has seen explosive growth. Within just three years of launching Pinduoduo rose to become the 2nd most popular Chinese shopping app. In fact, it is the fastest growing app in the history of the Chinese Internet. Its Chinese name 拼多多 literally means to combine a lot of purchases.
What makes Pinduoduo different is that its primary features revolve around group-buying. This means that the more people buy a product the cheaper the products get. Naturally, this leads to users sharing the products with others in the hopes of getting cheaper products.
To further incentivize newly registered users, there are special RMB $1 deals to help users get familiar with buying on the platform. Regular flash sales and limited time offers occur every day to boost the customer return rate. By setting up time limitations it shortens the customers’ decision-making process and encourages impulsive buying.
Statistics on the second largest Chinese Shopping App, Pinduoduo (Source: Techcrunch)
Pinduoduo integrates its paying method with the largest standalone social media app in China, WeChat. The more users share about their products, the greater the chance they have of receiving a discount, which leads to tons of deals on Pinduoduo being shared across social media platforms like WeChat.
Through utilizing this word-of-mouth business model, it has generated a huge amount of sales through users posting and sharing product information. This organic content voluntarily generated by the customers themselves makes Pinduoduo one of the most unique of China’s online shopping sites.
The platform has proved most popular to residents of 2nd and 3rd tier cities, with lower income and consumption power. However, it should be noted that Pinduoduo’s users are on the platform looking for deals, so this might not be the best platform for selling premium goods. Pinduoduo’s unique business model has led it to climb the rankings and secure its place among the top Chinese shopping apps.
For more on Pinduoduo, check out the link below!
#3. Top Chinese Shopping Apps: JD.com—Luxury Goods, Top-Notch Logistics, and More!
Average Monthly Users (MAUs): 263.64 billion
Install Penetration Rate: 22.3%
JD.com (otherwise known as JingDong) started with a focus on the direct sale of electronic products in the 1990s. However, JD only really started to grow when it took its business online. It slowly added more and more categories until it developed into the all-around China e-commerce marketplace it is today!
The company has been recognized as a secure provider or not only domestic products but also goods from around the world. With just a push of a button, customers can get direct access to many global brands, including those which do not even have a physical presence in the country. With its nationwide logistic network, JD.com offers both same-day and next-day delivery. By getting its hands on the logistics network as well, JD, in fact, is the only Chinese e-commerce platform that controls every part of its supply chain.
JD.com has even launched its own shopping holiday in the same vein as Alibaba’s Double 11. JD’s shopping holiday is called 618, and is celebrated during the first 18 days of June. Like Double 11 other platforms have begun to participate in this holiday. This holiday has developed into the second largest Chinese e-commerce holiday behind double 11 over the last few years.
JD even opened up its logistics arm, JD Logistics, for investment in February 2018. It was able to raise $2.5 billion at a $13.5 valuation. Its logistics arm has given it a competitive advantage among the competing Chinese shopping apps.
JD’s worth is further proved by its collaboration with Walmart. Since 2016, the retail giant was confident enough to hand over all of its Chinese e-commerce business to JD, in exchange for a 5% equity share. Speaking of shareholders, JD is also backed by Tencent with maintains an over 21% equity stake.
JD.com is a leader in terms of luxury sales among China online shopping sites. With its well-developed logistics network, it is on its way to expanding its business empire globally by bringing more overseas brands into the Chinese market.
More and more foreign luxury brands including Swiss independent luxury watch brands ORIS, Tissot and TITONI, Italian fashion house MOSCHINO, etc, have also confirmed strategic partnerships with JD. For luxury buyers looking for security in their purchasing and exposure to overseas brands, JD.com is the ideal Chinese shopping app.
#4. Top Chinese Shopping Apps: Vip.com—Branded Goods on the Cheap!
Average Monthly Users (MAUs): 93.4 billion
Install Penetration Rate: 16.4%
Vip.com specializes in online discounted sales in branded goods. It partners up with brands to sell their extensive inventory through flash sales. Their site is advertised with the slogan “全球精選 正品特賣” which can be translated as:” We sell authentic products from global brands with significant discount prices”.
Recognizing the craze for luxury goods and foreign brands, Vip.com advertises itself with an emphasis on product authenticity and quality, differentiating itself from the dominance of low-priced Taobao goods and higher priced goods from platforms like JD & Tmall.
Ever since the launch of Vip International in 2014, the site has insisted on purchasing goods directly from their place of origin, to ensure the quality of the product by intensely controlling the supply chain. More foreign brands are introduced to China through this purchasing model, making Vip.com the exclusive seller for them in the Chinese e-commerce market.
Daily deals like those shown above are posted daily on VIP.com. This is an attractive platform for those looking for deals on branded and trustworthy items. It’s through these deals that VIP.com is able to differentiate itself from other Chinese shopping apps.
In the year 2018, Vipshop has shifted its focus to emphasizing its apparel category. It has been a booster for its profitability due to the generous amount of clothing people purchase online and has set it apart from other platforms focusing on more competitive areas. All of this has helped VIP.com cement its position as one of the top Chinese shopping apps.
#5 Tmall: The Premium Chinese E-Commerce Experience
Average Monthly Users (MAUs): 80.2 billion
Install Penetration Rate: 8.4%
As an offshoot of Taobao, Tmall concentrates on the selling of branded goods with a B2C business model. It is, in fact, the biggest B2C platform in China. Compared to Taobao, brands on Tmall are seen as more trustworthy, as buyers are buying directly from businesses rather than individual sellers.
Tmall and JD.com together account for over 80% of B2B China e-commerce transactions. With B2C e-commerce transactions making up nearly 60% of all online purchases and spending reaching an estimated 8 trillion renminbi, it’s clear to see why this platform makes the top 5!
Only companies with an overseas business license or domestic Chinese business operations can set up a Tmall store. With Alibaba as an agent, brands can manage their own sales and website. Among the top 5 shopping apps, Tmall is the one closest to shopping in an actual shopping mall. The brands run their business on Tmall in the form of a “flagship store” which is heavily customizable allowing brands to maintain their image and showcase their brand values.
Even the homepage of Tmall looks more premium, with less text, clutter, and daily deals on the homepage. All of this contributes to Tmall’s image as the premium Chinese Shopping App.
In 2019, Alibaba expects to help another 1,000 international brands to launch their Tmall stores. For overseas brands who depend heavily on their brand values and maintaining their brand image, Tmall one of the best options Chinese e-commerce platforms to get started with.
Chinese E-Commerce Trends: What You NEED to Know for 2019
Emarketer reports that in 2018 Q1 2017 reports that Chinese national online retail sales of goods and services reached 1.4 trillion. RMB. That was an increase of 32.1% compared to data from three months prior to that. Several research organizations state that with the rising number of Chinese gaining international exposure by going aboard and concerns around local product safety, more and more consumers are turning to cross-border sales and domestic e-commerce.
According to data from China Internet Watch, the population of consumers who buy foreign goods online is estimated to exceed 200 million by 2020, and total online sales are predicted reach 1.9 trillion RMB.
Thanks to the tremendous number of shoppers in China, the country keeps setting records for global retailing and has become a must-win market for retailers and online businesses alike. While having a strong understanding of the various Chinese shopping apps is important, it’s also very important to understand the latest trends. To identify opportunities in the market, it is essential to know the latest Chinese e-commerce trends, so check out the next section below!
When It Comes to the Chinese E-Commerce Market, Youngsters Rule
Millennials and Gen Z accounts for 85.1% of the online sales in China, according to China Internet Watch. From a numbers perspective, this means that 85.1% of Chinese e-commerce users are aged between 16 and 35 years old. When we look at users on a generational level, we can clearly see that these two generations are incredibly important for businesses that rely heavily on e-commerce, so this should be taken into account when forming a marketing strategy.
Born in the age of Chinese economic reforms and under the one-child policy, the overwhelming majority of this young generation grew up with the undivided attention of their parents and grandparents. Since many of them are still studying or only recently graduated most are still unfamiliar with the working life and find themselves searching for ways to gain recognition from their peers or a sense of achievement. These generations have had a tremendous amount of foreign influence, as compared to previous generations, with many traveling or studying abroad. This foreign exposure has led to a craving for international brands and luxury goods.
The younger generations in China are difficult to advertise to. As they’ve grown up around the internet and been under a constant barrage of advertisements their whole lives, they’ve learned to tune out most traditional advertisements. Brands have had more success with more engaging and interactive campaigns created specifically to target them. Their online behavior is also more fragmented meaning they visit a range of different sites for different purchases. Choosing the right Chinese shopping apps for your products can be essential to getting your product in front of them.
Experiential Marketing & Pop-Ups have proven effective for targeting the younger generations of Chinese consumers
In terms of categories, they are willing to spend a considerable amount of money for the pursuit of beauty and health. This has led to drastic increases in the YoY sales volumes of products in the cosmetics, skincare, and supplement categories. These generations are also having an enormous impact on the luxury industry, with brands scrambling to create marketing strategies to attract their business.
The Pet Economy: Pets Have Become the Masters
The growing popularity of pets in China has made the country a magnet for companies in the industry. The China Pet Product Association reported that the rate of pet ownership has been growing at 15% per year. Since over 70% of Chinese pet owners are Millennials this has also led to a significant increase in pet products being purchased through online shopping sites.
The younger generations in China have increasingly put off getting married and as a result, many live alone or with their parents. Many Millenials and Gen-Z have turned to pets as a solution to offset loneliness and offer companionship. The market for pets and pet-related goods has tripled in the last 5 years.
According to You Chong Research, the pet market in China reached RMB 175 billion in 2018 and is on track to grow to 198 billion in 2019. However, this trend is really only just getting started. With the number of pets owned standing at only 0.065 per person in China, far below the 0.57 rate in the US, the market has enormous potential and will certainly see growth as more and more Chinese choose to add pets to their families.
There’s plenty of options for pet owners on Chinese e-commerce platforms like Taobao and others
The Rising Popularity of Social E-Commerce
More and more Chinese consumers have begun to tune out traditional advertisements due to the overwhelming amount of them they see on a daily basis. This trend has led to the increasing popularity of a new form of Chinese e-commerce, social e-commerce.
If you wanted to define Social e-commerce in a simple way, it’s essentially just the combination of e-commerce and social media. People ask for comments and reviews of products in their personal networks and receive recommendations from people they know about and trust.
Weibo Window is an example of e-commerce and social media combined. Users can view product recommendations, make their purchase, and show it off all on one platform!
This greatly simplifies the customer’s deliberation process and helps quicken the customer journey. Along with these social media elements users now have access to advanced payment methods like WeChat Pay and Alipay, making the entire shopping process incredibly smooth. All of this has led these apps to become increasingly more popular. Platforms like XiaoHongShu are growing rapidly, and it’s likely we’ll see it get into the ranks of the top 5 Chinese shopping apps in the coming years.
XiaoHongShu has skyrocketed to popularity in recent years. Particularly among young female Millenials and Gen-Z
While consumers have always used social media to do their product research and look for recommendations platforms like XiaoHongShu (Little Red Book) allow users to find authentic reviews from their network and make a purchase all on one platform.
Social commerce has been found to be a major driver of impulse purchases. In a recent report from Nielsen China where they interviewed 3,531 online shoppers, they found that 54% spent more on online shopping than they anticipated and 80% stated that social recommendations drove impulse purchases.
Wechat Stores, Weibo Window, Pinduoduo, and Xiaohongshu are all examples of this growing new trend of social e-commerce.
The New Chinese E-Commerce Law of 2019: The Death of Daigous?
China has long had a reputation for producing and selling fake, counterfeit, and “Knock-off” products. This latest law is an effort from the Chinese government to clean up the country’s reputation and hold platform operators, third-party merchants, and individual online retailers accountable.
There have always been laws preventing the sale of online goods, but under previous laws, only individual sellers could be charged. With this new law in place, the Chinese government has given e-commerce platforms and shopping apps the responsibility of policing their own sites to ensure that counterfeit goods are not sold on the platform.
While the primary reason for the law is clear, including in it are provisions for other important aspects of e-commerce, like consumer protection, data management, cybersecurity, and more.
One area that consumers and businesses alike may notice significant changes in is the Daigou industry. What is a Daigou you ask? Have you ever seen Chinese shoppers in foreign countries purchasing large amounts of luxury goods, baby products, or a local delicacy? Chances are you’ve spotted a Daigou, which roughly translates to “Buy on Behalf”.
Daigous stuffing products into suitcases is a common sight in Hong Kong, Japan, Korea, and elsewhere.
Daigous are individuals who operate in a sort of “grey market,” purchasing goods overseas and selling them to domestic Chinese buyers in exchange for a fee. Due to high Chinese taxes, this process is often cheaper than buying something domestically. Many businesses and research institutes estimate that the Daigou industry is worth tens of billions of dollars each year, and since goods brought back are designated as “personal items” the government misses out on some large potential tax revenues.
However, this new law aims to change that, by forcing Daigou merchants to register and pay taxes on goods that they bring back to China or face massive fines. This has the potential to hurt China’s e-commerce growth and businesses that rely on Daigous in the short-term.
Want to Get Started Selling on China’s Shopping Apps?
Or feeling overwhelmed with the enormous opportunities in the China e-commerce market? Don’t know which Chinese shopping app is right for your brand? Why not start by having some guidance from the experts first!
Dragon Social is a China Digital Marketing Agency dedicated to providing expert solutions to businesses around the world! Our team of professionals will take a deep dive into your business and determine the optimal channels and strategies for promoting your business in China, so be sure to contact us for a free consultation!
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