Opportunities and hurdles in China’s vast e-commerce market

At first sight, the China e-commerce market looks like a marvelous gateway to the land of 1.3 billion consumers. However, there are some key differences between the e-commerce world here and elsewhere.

Brands are not in control of their online commerce in China the way they can be elsewhere.

There is room in most markets for brands to run their own online sales sites, giving them greater control over the brand and their data. Amazon does not dominate e-commerce and e-commerce does not dominate retail as much as Alibaba dominates retail in China.

China E-C players are also dominant in the digital advertising / media/ lifestyle ecosystem

Amazon is a pure e-commerce player who does not own an advertising inventory or digital ecosystem outside their own assets. Alibaba on its own and JingDong through its strategic partnership with Tencent are also the largest owners of inventory, apps and consumer interactions at various points, allowing them to put up walled gardens around groups of media, apps and ecommerce. This makes performance marketing, attribution and optimization practically impossible within the China e-commerce platforms.

China E-C players (especially Alibaba) are in a position to dictate to brands and exploit this strength very aggressively

Given the dominance of the platforms, advertising, pricing and promotion strategies are often modified in order to play ball with the big platforms in the hope that Ali will allocate them marketing resources and access to consumers.

Every year, during Alibaba’s Tmall Double 11 shopping festival (the biggest online shopping event in the world) brands are “encouraged” to spend money doing special ads on mainstream, media within the same visual symbol of the Tmall Cat – this earns them credits and access to tremendous promotional resource and traffic during Double 11. Proud icons like Maserati, North Face and so on all have ads in this format

Despite these hurdles, there are regular success stories of brands that came from nowhere and hit 100 million RMB in their first year. Clearly, there are ways to navigate the challenges of e-commerce in China so as to win.

Jacquelyn has over 20 years experience in branding and marketing, with specific expertise in the China e-commerce ecosystem for both multinational and startup brands. She has helped several brands navigate a change from B2B to B2C business models. Reach out to her for more information and insights on branding and commerce in China.

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