And for more information on this topic, read Econsultancy’s post highlighting more than 25 statistics that show the phenomenal size of the ecommerce marketing China

1. Mobile ecommerce

At the start of 2014 Chinese analysts suggested that mobile ecommerce, or m-commerce, would really take off in China. It’s hardly surprising that this trend was predicted.

At the end of 2013 the China Internet Network Information Center (CNNIC) reported that 81% of Chinese internet users access the internet using a mobile device. In 2012 this figure stood at 74.5%.

The m-commerce sector in China is currently growing faster than the ecommerce sector. All Chinese ecommerce companies have begun to pay a lot more attention to their smartphone and tablet apps.

Way ahead of the field is Alibaba. Alibaba’s Taobao and Tmall platforms account for around 76% of all m-commerce transactions in China. Go Globe has produced an excellent infographic detailing the mcommerce sector in China, the key takeouts of which are:

  • Shopping on mobile spending will grow 91% from 2013 to 2014.

  • The growth on mobile will slow between 2015 to 2018 as ecommerce gets closer to saturation point.

  • 69% of Chinese consumers have purchased a product or service through their smartphone (compared to 46% of US consumers).

  • Four out of five mobile purchases on Taobao platforms are made using an iPhone or iPad.

  • 23% of mobile payments are via a mobile payment system such as Alipay or Tenpay.

Many companies such as Amazon, eBay, Groupon and Square are targeting the m-commerce sector. But in China it’s clear that m-commerce is beginning to mature and that this trend is set to continue.

2. Mobile payments

Making a payment with a mobile phone is directly linked to the m-commerce trend I detailed above. As I alluded to, the growth of the m-commerce sector in China has precipitated a growth of third-party mobile payment services.

As with ecommerce in general, Alibaba leads the way when it comes to online payments. Alipay Wallet, the mobile app version of Alipay, is by far the most popular mobile wallet in China. But Tencent’s offering, Tenpay, is embedded in its popular mobile app WeChat.

Recently, even Baidu has joined the third-party payment bandwagon. On April 15 it launched Baidu Wallet and will focus on competing with Alipay and Tenpay for payments made on mobile devices.

Analysts in China are seeing a lot of innovation in how a smartphone can be used to help pay for products and services. In January Alibaba joined with Sino Corp. to launch a payment option on Sina Weibo, the microblogging platform. Users will be able to use the app to make quick payments by scanning a QR code.

Other innovations such as e-credit cards, financial ecommerce funds and mobile payments using QR codes, SMS, mobile apps, NFC and mobile POS are all being developed giving consumers a number of choices for using a smartphone to pay for products and services.

Tencent and Alibaba are battling for the mobile payment sector as Chinese consumers begin to revolutionise how they pay for goods and services. Mastercard found in a recent global study that China is making the shift from cash to cashless more rapidly than most western countries.

3. Online to Offline (O2O)

O2O works by using online social platforms to help online consumers use real services. This sector is just a natural consequence of the growth of mobile ecommerce and the mass adoption of mobile in general in China.

The migration from PC use to mobile use is making it easier for services that can’t fully move online, such as hotels and taxi services, to target customers with ecoupons, evouchers and etickets. And the proliferation of mobile payment systems is further helping to facilitate this trend.

A good example of O2O in practice was the taxi-hailing app war between Tencent and Alibaba at the beginning to 2014. Users of WeChat and Alipay were encouraged to use Didi Taxi and Kuaidi Taxi respectively to order and pay for a ride in advance. By doing this the basic cost of a 3km journey was reduced from US$1.75 to US$0.15.

Didi Taxi app

As well as helping offline businesses to take a slice of the ecommerce pie, O2O is playing into the battle of supremacy for mobile payments in China. Even Baidu has recognised that O2O could propel the company into the ecommerce sector, especially as they have recently developed Baidu Wallet to facilitate mobile payments.

Tencent leads the way in O2O because of WeChat’s 355m monthly active users. Although Alibaba does not have a mature mobile presence to facilitate its O2O aims, it does have large amounts of consumer data that it has accumulated from users of Taobao and Tmall.

This information has helped Alibaba to work with traditional offline retailers to compile inventories and promote these on Alibaba’s online shopping networks. Customers are then able to browse retail stores and purchase goods by paying using Alipay Wallet and receive the discounts associated with buying goods online.

4. Social media

Chinese ecommerce companies are starting to understand the importance of harnessing social media to enhance their marketing activities. Gone are the days of simply having a passive relationship with people who might use your products or services.

Chinese netizens have fully embraced the social media revolution. The amount of social media platforms in China is amazing with networks dedicated to everything from instant messaging, microblogging, travel, shopping and dating.

In the past a company would use social media channels to make announcements about new products and services. This way of communication with consumers has changed. The trend in 2014 has seen companies use social media networks to interact directly with current and potential customers.

The trend in China is towards using social media as a bridge between consumer and company. And as 500m of China’s 618m internet users use a mobile device to access the internet, m-commerce has become even more important.

Building relationships with customers locally is the key to using social media successfully in China.

5. Competition for Alibaba

Alibaba is the undisputed king of ecommerce in China. It has an ecommerce empire that spans B2C, B2B and C2C web portals, online payment services, cloud computing services and financial investment vehicles.

By the end of 2013 Alibaba had:

  • 50% B2C market share

  • 50% B2B market share

  • 50% third-party payment market share

  • 95% C2C market share

But 2014 has seen Alibaba’s dominance be attacked by Tencent in particular. WeChat has seen Tencent push deeper into Alibaba’s ecommerce territory.

Alibaba is currently preparing for its US IPO and this has given analysts a chance to have a detailed look into the ecommerce behemoth.  But what is clear is that by the end of 2014 Alibaba will have some serious competition in China in the ecommerce sector.

This is no bad thing either. The essence of a market economy is competition and is indeed the spirit of the internet in general. The incursion into Alibaba’s ecommerce territory from Tencent and also Baidu is a good thing for the ecommerce industry in China in general.

If you have any questions about these trends then please leave a comment or contact me via my social media channels.