Singles Day is the biggest global retail event. In the world's largest e-commerce market, China, sales growth dropped from 36% to 27% last year. In addition to that, new Internet user growth is leveling off. This has forced gargantuan e-commerce players Alibaba and JD.com to partner up with smaller popular competitors such as Vipshop and Little Red Book to take advantage of new niche markets.
Growth in Chinese e-commerce is still going strong, but not quite as strong as it had been going in the past. Big players like Alibaba and JD.com are making partnerships to help stop the shrinking growth. Digitalcommerce360 tells us their collaborations represent the future of Chinese e-commerce, showing that one platform can't satisfy every consumer's needs. Foreign brands need to take this into account, and plan carefully to differentiate their brand in a more and more crowded market.
Alibaba's Little Red Book
Alibaba owns Taobao. Taobao is quite good at selling low-end and mid-end women's apparel and accessories, but it struggles to attract high-end customers. That's because Taobao is a marketplace for hundreds of thousands of third-party sellers, which means they have a lot of problems with fake products beings sold and reviewed. In December, the platform started to utilise peer product reviews supplied through Little Red Book, which is a popular social community with over 100 million users.
On the platform, the reviews look a bit like Pinterest posts, supplying content on experiences from travelling all the way to cosmetics. The reviews can be positive or negative, and Taobao's algorithms decide which ones are shown.
Little Red Book started out as an overseas travel community platform, shifting later into e-commerce. The content is usually more reliable than standard customer reviews, and many customers shopping on Taobao trust the reviews more.
Alibaba Has Luxury Consumers In Its Sights
It has always been tough for Alibaba to get consumers to buy luxury items on its platforms. That's why, in 2015, they invested over $100 million in Mei.com, a leading flash-sales site that offers high-end European products. There's a direct link on Tmall's front page to Mei.com now, so Mei.com also benefits from a large organic user base. Also in the Alibaba camp, Yoox Net-a-Porter and Mr. Porter are setting up shops on Alibaba's Luxury Pavilion page on Tmall.
JD.com Wants More Female Customers
Because JD.com made a name for itself by selling electronics to mostly male customers in Beijing's tech district (Zhongguancun), they have always struggled to get female customers. Female consumers make up the majority of e-commerce consumption, but on JD.com, they are still a minority. They're willing to buy fast-moving consumer goods like nappies or baby lotion, but don't usually think of JD.com when they want high-end beauty products or other luxury items. JD.com are taking care of this issue with a number of investments and partnerships, for example:
- Farfetch (global luxury goods platform, June 2017)
- Vipshop (women’s apparel & luxury flash sales site, Dec 2017)
- Meili (livestreaming + 18-24-year-old female apparel, Jan 2018)
- Secoo (online luxury retailer, July 2018)
Farfetch, Vipshop, Meili and Secoo are part of the global retail alliance that JD.com put together to compete against Alibaba, who had an early advantage in the sector of women's apparel. These win-win situations let JD.com give logistical support with its in-house, nationwide JD Logistics network of warehouses and fulfillment centres. JD.com receives wider product selection and data insights into the sector of women's apparel and luxury products themselves. The wider selection and data helps JD.com to fine-tune algorithms for product recommendations and advertising.
Vipshop and Secoo can both boast stores on JD.com's platform, benefiting from wider exposure to JD.com's massive organic user base.
Partnerships in the B2B world are being taken advantage of even by the largest players. Because the Chinese market functions differently than markets one might be familiar with, it is important to take advantage of all the help one can get.