In recent years, Alibaba Group has been the unchallenged e-commerce monarch in China, but recently its crown has begun to dwindle due to an increasing number of fierce rivals entering the market.
In recent years, Alibaba Group has been the unchallenged e-commerce monarch in China, but recently its crown has begun to dwindle due to an increasing number of fierce rivals entering the market.
With this week’s announcement, e-commerce giant Alibaba has split its operations into two units: one for China and one for international markets.
Tmall and Taobao, China’s two most popular online marketplaces, handle about $1 trillion in orders each year in the country. However, Alibaba’s customer management revenue (CMR), which generally accounts for one-third to one-half of its entire income, has seen a steep decrease in growth. Increase in the July-September quarter was only 3%, down from 20% growth in the same period last year.
Singles Day, Alibaba’s most important shopping event, had the weakest gain in GMV this year with an 8.5% increase in sales or gross merchandise value (GMV). Due to regulatory reforms and pandemic-induced weak economic development, consumers have been unwilling to spend money on new products.
However, they also point out that Alibaba’s competitors are catching up to them in several of China’s fastest-growing e-commerce markets.
Pinduoduo Inc, a Nasdaq-listed company, has gained the lead in rural and budget e-commerce, while Douyin, the Chinese TikTok’s sibling app, is the force to beat in live-streaming e-commerce, according to merchants and experts. Other platforms are “eating Alibaba’s lunch,” the CEO of Shanghai-based Wanqing Consultancy stated.
Competition has always been fierce, Alibaba said in an interview with Reuters. Taobao Live is a formidable live-streaming tool for merchants, and Taobao Deals and Taocaicai are increasing market share in lower-tier marketplaces, according to the company.
Douyin’s Next Big Thing
Officially informed sources say that Douyin expects its GMV to rise to $1 trillion yuan ($155 billion) in 2019. The source refused to be named because he or she was not authorized to talk to the media.
As of November 2020, it was expected to make 150 billion yuan, which is more than six times what it made in 2018.
There was no reaction from Douyin on their e-commerce company.
In 2018, the app, which now has more than 600 million daily active users, started enabling merchants to build shops on its network. This year, the firm has made it simpler for companies to build their own flagship locations. Chinese cosmetics major Perfect Diary’s parent company, Yatsen, intends to increase its investment in its Douyin presence. Tmall sales, which make up around 40% of its total income, are declining.
Last month, CEO Huang Jinfeng told investors that Douyin was becoming a “very significant component” in brand development.
According to Questmobile, Douyin users spent an average of 1,871 minutes on the app in October compared to 350 minutes on Taobao.
