Alibaba is facing competition from small players

6 years ago - Published in Finance

Alibaba continues to dominate e-commerce retail sales in China with a 58% share of the market but it faces increasing competition from rivals, according to research by eMarketer.

A list of the top ten e-commerce retailers in China found Alibaba continued to occupy the top spot, followed by JD.com which secured a 16.3% share of all retail e-commerce sales.

Together the two e-commerce giants account for three-quarters of the market, however, the report reveals they are facing fresh competition from the likes of electronic retailer Suning, which accounts for 2% of e-commerce sales and online discount fashion site Vipshop, which holds 1.8% of the market.

Suning has invested in technology and multichannel integration over recent years in a bid to bolster its market share. The company has also partnered with Tencent, JD.com and real estate developer Sunac to develop commercial property which integrates e-commerce and offline retail experiences.

Meanwhile, Vipshop has benefited from investment from Tencent and JD.com, which own 7% and 5.5% share, respectively.

The report also revealed the e-commerce giants are facing competition from smaller, specialist niche players, which are popular with Chinese consumers.

Pinduoduo, or PDD, is a Group-on style retailer that provides social buying and has secured a 5.2% share of the market. The company, which was launched by a former Google engineer, has found success targeting Tier 3 and 4 cities in China. Another rising star is homewares and household goods retailer Gome, which accounts for 0.7% of the market.

Monica Peart, senior director of forecasting at eMarketer said new players which are targeting different areas of the market were proving popular with Chinese consumers.

“China’s smaller cities such as Tier 3, Tier 4 and lower are less urbanized than Tiers 1 and 2, but they are growing rapidly in e-commerce participation as digital buyers in those cities begin to seek out the benefits of more affordable yet genuine products online.

“Smaller e-commerce players such as relative newcomer Pinduoduo have benefitted from this trend as buyers in lower-tier cities have been less tolerant of the higher prices found on large players such as Alibaba and JD.com, but they are quick to seize upon the relative deals found on Pinduoduo’s platform,” said Peart.