INDUSTRY WATCH
THE CHINESE E-COMMERCE MARKET HAS PIONEERED TECHNOLOGICAL AND STRUCTURAL ADVANCEMENTS THAT SIGNIFICANTLY CHANGED ONLINE SHOPPING OVER THE LAST DECADE .
The COVID-19 pandemic has caused many traditional brick-and-mortar businesses to start shifting towards or leaning further into online business models . China has been ahead of the curve in developing an economic infrastructure that allows for digital commerce to strive .
The Chinese e-commerce market is expected to grow 11.6 % annually between 2021 and 2025 to reach a staggering US $ 3.3 trillion in 2025 . Now more than ever , Chinese customers are purchasing online at a faster pace than their counterparts in many other countries .
Group buying
Pinduoduo is an e-commerce platform launched in 2015 that leverages social communities to enable customers to buy products in a group . These joint purchases allow the groups to receive better discounts from sellers . The purchases are often integrated with social media platforms , such as WeChat , to incentivize friends and family to participate in certain purchases . Pinduoduo has seen great success from this new business model , with 585 million active users and an annual GMV of US $ 144 billion .
Toby Zhang , CEO of Shop LIT Live
Historically , China has suffered from a lack of physical retail infrastructure in its lower-tiered cities and many shoppers had no choice but to move online . Throughout recent years , e-commerce allowed customers from more rural or remote areas to access a much broader range of brands and products . This differs from the US where a higher percentage of people are able to shop at physical retailers relatively close to their homes .
In 2017 , a leading e-commerce giant , Alibaba sold US $ 25.3 billion worth of products in 24 hours in celebration of the 11 / 11 global shopping festival . In comparison during that same year , Americans spent US $ 14.5 billion across Thanksgiving , Black Friday and Cyber Monday combined . The trend has intensified over the years . In 2019 , 855 million Chinese customers shopped online – versus 247 million in the US – Chinese online retailers are continuing to dominate the market and are here for good .
While group purchasing already exists in the US ( for example , Groupon and other discount sites ), Pinduoduo has tapped into a new approach that seems to encourage higher engagement and viral success . Since Pinduoduo integrates with social media platforms , users are able to easily leverage their networks for purchases . The convenience leads to more successful , and discounted , buys – which leads to higher customer usage in a virtuous cycle .
With less focus on premium brands , Pinduoduo ’ s customer base is predominantly based in secondtier cities or rural areas where in-person shopping is more challenging . By leveraging a group buying site , Chinese customers are able to purchase products that would otherwise be difficult to access . This model also allows a brand or manufacturer to sell through more inventory and ultimately reduce superfluous costs – passing those discounts on to the customer .
In addition to customer behaviors , the Chinese e-commerce market has pioneered technological and structural advancements that significantly changed online shopping over the last decade . Thus , China ’ s experience can serve as a helpful reference as we look towards the future of digital commerce in the West .
KOC marketing
Traditionally , marketing in China had largely relied on A-list celebrity endorsements to reach buyers . While this had worked in the past , Chinese customers have become savvier and realize that these paid
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