Chinese-style ecommerce, which blurs the lines between retail, social media, gaming, payments and other offerings, could become the global industry model.
The migration of consumers from physical stores to online platforms was hastened by the pandemic. Likewise trends in ecommerce have accelerated. But while Western firms like Amazon and Walmart are booming, China is the one leading the trends. Chinese tech firms have shown more innovation, serving up online retail in new ways and livening up the shopping experience with a vibrant mix of customer engagement frills. China is also blazing trails through the regulatory thicket, launching an antitrust probe into ecommerce behemoth Alibaba in December.
China has the world’s biggest ecommerce market, surpassing that of America in 2013. It has been able to grow to an impressive size relatively quickly, due in part to retailers and consumers leapfrogging into the digital space. Having less physical store space to begin with eased the transition. The market is now worth $2 trillion, more than that of America and Europe combined.
China’s ecommerce industry is also more dynamic. New competitors like Meituan and Pinduoduo have arisen, diminishing Alibaba’s dominance. Since its 2014 IPO, then the world’s biggest-ever, Alibaba’s share of the industry’s market cap has slid from 81% to 55%. Competition has spurred innovation, notably the dissolution of borders between services. Western firms tend to be siloed into retail, payments, social media or other niches. But as The Economist describes, “online-shopping platforms in China now blend digital payments, group deals, social media, gaming, instant messaging, short-form videos and live-streaming celebrities.” Chinese consumers are hooked.
The question now is whether the Chinese ecommerce model will become the global standard. It is certainly gaining ground outside rich Western countries. Ecommerce firms in South-East Asia such as Grab and Sea, Jio in India, as well as Mercado Libre in Latin America are taking on a resemblance. Signs of Chinese influence, in terms of ideas and business tactics, can also be seen in multinational consumer goods companies, which are often untethered from regional predispositions. Unilever, L’Oréal and Adidas make more revenue in Asia than in America, and their executives are tuned into what China is doing in digital marketing, branding and logistics.
As tech firms in the West diversify, siloes are beginning to dissolve, with social commerce, live-streaming events and other Chinese-style features working their way onto social media sites like Facebook. Traditional retailers are also branching out. Walmart hosted a live shopping event on TikTok in December. If the success of ecommerce firms in China is any indication, Western companies would do well to continue in this direction. Consumers also stand to benefit from more innovation and competition in the industry as ecommerce evolves with an eye towards the East.
