Recently, Alibaba has completed its rectification and fully stopped the "either-or" practice, marking a symbolic event in the reshaping of the e-commerce landscape. Looking back over the past three years, with Alibaba's initiation of rectification in 2021 as the starting point, the Chinese e-commerce industry has undergone dramatic changes. The rise and fall between platforms indicate that the era of e-commerce oligarchs has passed, and a "three superpowers with multiple strong players" structure is taking shape, with Chinese e-commerce now having a more significant impact on the global e-commerce market.
At present, the Chinese e-commerce industry is showing unprecedented vitality and potential. However, with the emergence of issues such as the saturation of user scale, the end of traffic dividends, and the slowdown in performance growth, the domestic e-commerce industry has entered an era of stock competition, leading to platforms falling into inefficient "involution." Therefore, exploring new growth poles has become an urgent task for e-commerce platforms.
Many e-commerce industry insiders have pointed out that AI technology is rapidly integrating into the operational genes of e-commerce enterprises, and AI will become the biggest variable in the future of the e-commerce industry. "Generative AI is empowering logistics, store opening, product listing, marketing, and other e-commerce segments, providing new momentum for industry development. The integration and application of AI with e-commerce will become the biggest development trend in the future."
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The "three superpowers with multiple strong players" structure is emerging.
On August 30, the State Administration for Market Regulation announced that Alibaba Group has completed three years of rectification, fully stopped the "either-or" monopolistic behavior, and achieved good results in compliance rectification.
The completion of Alibaba's rectification is seen as a milestone in the reshaping of China's e-commerce landscape. During Alibaba's three-year rectification period, the e-commerce industry structure in China has undergone tremendous changes: traditional e-commerce platforms such as Pinduoduo and JD.com have developed rapidly, with Pinduoduo's market value surpassing Alibaba in 2023; emerging e-commerce platforms like Douyin, Kuaishou, and Xiaohongshu have entered the market and, with the support of live commerce, have become rapidly rising "newcomers."
Zhuang Shuai, the founder of Bailian Consulting, analyzed that the era of e-commerce oligarchs is long gone, and the current Chinese e-commerce industry presents a "three superpowers with multiple strong players" competitive landscape, where "three superpowers" refers to traditional e-commerce platforms like Alibaba, JD.com, and Pinduoduo, and "multiple strong players" refer to emerging e-commerce platforms like Douyin, Kuaishou, and Xiaohongshu.
Observing the changes in the e-commerce market competition landscape, the most significant indicator is the GMV (Gross Merchandise Volume) market share. Over the past three years, Alibaba, once the "e-commerce king," has seen its market share continue to decline, while the market shares of e-commerce platforms such as JD.com, Pinduoduo, Douyin, and Kuaishou have rapidly increased, with Pinduoduo's growth rate being particularly notable.
A comprehensive review of data from multiple institutions reveals that the period with the fastest change in e-commerce GMV market share should be from 2017 to 2021. Data from the Research Department of CICC shows that during this period, Alibaba's e-commerce GMV market share dropped from 72.1% to 49.2%, while e-commerce platforms such as JD.com, Pinduoduo, Douyin, and Kuaishou developed rapidly. From 2021 to the present, Alibaba's GMV market share has continued to decline slightly, while the other e-commerce platforms have continued to develop rapidly. Sandalwood e-commerce monitoring data shows that in 2023, among the e-commerce market (JD.com, Taobao, Tmall, Douyin, Kuaishou, Pinduoduo), Alibaba's e-commerce platform GMV market share was 45%.
Since the beginning of 2023, the market share of several major mainstream e-commerce platforms in China has basically stabilized. The latest statistical data disclosed by Yinma Data Research and Huachuang Securities indicates that as of March 2024, the GMV market share of Alibaba's Taobao was 44.5%, JD.com was 19.4%, Pinduoduo was 20.1%, and Douyin's small shops and Kuaishou were 9.1% and 6.9%, respectively. On a quarter-over-quarter basis, Pinduoduo, Douyin, and Kuaishou are still increasing their market shares.In the major mainstream e-commerce platforms, Pinduoduo's growth momentum is particularly rapid, and the most unexpected result is the report card that Pinduoduo handed in for 2023. The financial report shows that Pinduoduo's total revenue for the year 2023 reached as high as 247.6 billion yuan, with a year-on-year growth rate of 90%; the net profit attributable to the parent company for the year was 60.027 billion yuan, a year-on-year increase of 90.33%. During the same period, the growth rates of Alibaba and JD.com were far behind Pinduoduo. In terms of market value performance, due to the unexpected performance, Pinduoduo's market value has surpassed Alibaba several times, which is called a historic moment in China's e-commerce industry.
Looking at Douyin and Kuaishou, in recent years, these two platforms have relied on new business forms such as live e-commerce and short videos to develop rapidly and have grown into strong competitors for traditional e-commerce platforms. In 2023, with Kuaishou officially entering the "trillion club" of GMV, China's e-commerce market has already had five platforms with a GMV of more than one trillion, including Alibaba, JD.com, Pinduoduo, Douyin, and Kuaishou. Compared with traditional e-commerce platforms, Kuaishou and Douyin have greater content traffic and user stickiness, and the e-commerce business of these two platforms has developed rapidly mainly because content e-commerce platforms have a natural traffic advantage, and the path to e-commerce transformation is smooth, so the e-commerce business has developed rapidly.
Similarly, under the path of content e-commerce, Xiaohongshu e-commerce has also achieved rapid development since 2023. The scale of Xiaohongshu e-commerce is far less than Douyin and Kuaishou, but its growth rate is not lagging behind. At the beginning of 2023, Xiaohongshu's "Dong Jie Live Broadcast Room" and "Zhang Xiaohui Live Broadcast Room" became popular, among which Dong Jie's single live broadcast brought in a GMV of more than 80 million, driving the e-commerce heat of the entire platform. Data shows that during the 2024 6.18 promotion period, the number of live broadcast orders on Xiaohongshu e-commerce reached 5.4 times that of the same period last year, and the number of users purchasing in the live broadcast room reached 5.2 times that of the same period last year. Compared with the e-commerce revenue scale of 1 billion to 1.4 billion yuan in 2020, the growth rate of Xiaohongshu e-commerce since 2023 has exceeded market expectations.
Cross-border e-commerce has emerged as the "Four Little Dragons"
As domestic e-commerce is developing rapidly, China's cross-border e-commerce platforms have quickly grown into an undeniable "new force" in the overseas market. Fast fashion e-commerce platform SHEIN (Xiyin), Pinduoduo's Temu, AliExpress (Sumeitong), and TikTok Shop launched by ByteDance are called the "Four Little Dragons" of cross-border e-commerce platforms by the industry. 2023 was a year of rapid growth and expansion in the overseas market for the "Four Little Dragons."
A report released by market analysis agency Data.ai at the beginning of the year shows that SHEIN once again won the championship of global shopping APP downloads in 2023, with Temu, Amazon, and AliExpress ranking second, third, and ninth in the 2023 shopping APP download volume, respectively. This is also the second consecutive year after 2022 that SHEIN has topped the global shopping app download list.
The "Four Little Dragons" have been able to rise rapidly mainly because each platform has its own advantages. Wang Yujian, an expert from the Shenzhen Logistics and Supply Chain Standards and Policy Research Expert Committee, said that the "Four Little Dragons" platforms have fully utilized big data, artificial intelligence, and other advanced technologies to optimize user experience and improve operational efficiency, and have innovated in business models, such as Temu's social fission and low-price strategy, SHEIN's "small order and fast return" model, etc., these innovative models have attracted a large number of users and promoted the rapid development of the platform.
Specifically, the advantages and characteristics of each platform, Pinduoduo's Temu's characteristics are fast, low price, and a full management model for platform sellers, backed by Pinduoduo with strong financial reserves, operational advantages, etc.; SHEIN's characteristics are first-mover advantage, apparel category, strong "flexible supply chain" and other advantages; TikTok Shop's characteristics are obvious traffic advantages, and traffic is monetized through e-commerce; the characteristics of AliExpress are complete categories, clear brand, and user base advantages.
Among them, the full management model is a model that the cross-border e-commerce "Four Little Dragons" focused on investing in 2023. Under the full management model, the supplier only needs to provide the goods to the platform, and the platform will help the merchant complete the marketing operation, logistics and warehousing, after-sales service and other links, and the model is aimed at factory-type sellers. For sellers, full management is also the lowest cost method for testing models and trial and error. At the end of 2022, Temu and AliExpress took the lead in launching the full management model, followed by many platforms.
As a globally renowned e-commerce platform, Amazon originally had a unique advantage in the overseas market and was also the collective "opponent" of Chinese cross-border e-commerce. However, Chinese cross-border e-commerce platforms such as SHEIN and Temu have successively entered the market, and these e-commerce platforms have brought some pressure to Amazon in terms of high growth, rich product categories, and full management operation models. The most typical example is that during the 2024 overseas "Black Friday" shopping promotion, Amazon is no longer the only winner of online e-commerce platforms, and the "Four Little Dragons" have achieved a significant increase in sales by starting the promotion in advance, extending the promotion time, and increasing the promotion discounts.In response to the rapid growth of China's cross-border e-commerce platforms, Amazon has been continuously implementing a series of adjustment measures since 2023, with "acceleration" being given a particularly important position by Amazon. After facing the "low-price" challenge from the "Four Little Dragons" full-service model in terms of pricing, Amazon has clearly stated that it will further accelerate in 2024 to deliver goods to customers more quickly.
Why the industry is undergoing such drastic changes:
Starting with Alibaba's rectification initiative in 2021, the e-commerce landscape has been transformed in the past three years. Industry insiders analyze that the rapid changes in the industry are driven by a combination of factors including competitive environment, technological innovation, and changes in consumer habits.
Wang Yu Jian said that since Alibaba was required to rectify, the competitive landscape of China's e-commerce has changed. Thanks to the strengthening of antitrust regulation, Alibaba was asked by the State Administration for Market Regulation to rectify its "choose one of two" monopolistic behavior, a move that significantly altered the competitive environment of the e-commerce industry and provided a more equitable competitive ground for other e-commerce platforms.
At the same time, the national level has been continuously issuing relevant rules to strictly regulate the e-commerce industry. In May of this year, the State Administration for Market Regulation issued the "Interim Provisions on Counteracting Unfair Competition Online," which will come into effect on September 1, 2024. It explicitly prohibits merchants from engaging in "false or misleading commercial propaganda" and clearly imposes severe penalties on malicious order placement and other behaviors. It also urges platforms to strengthen the regulation and management of competitive behaviors within the platform and to regulate issues such as obtaining competitive advantages through the abuse of data algorithms. These provisions further improve the rules and regulations of e-commerce competitive behavior and provide protection for the orderly and standardized operation of the market.
The rapid innovation and iteration of technology are also important factors catalyzing changes in the e-commerce industry. Wang Yu Jian said that on the one hand, the rapid development of mobile internet has diversified the forms of e-commerce platforms, with short videos, live broadcasts, and "planting grass" (product recommendations) giving rise to emerging e-commerce platforms such as Douyin, Kuaishou, and Xiaohongshu. On the other hand, e-commerce platforms are currently making full use of technological innovations such as big data and artificial intelligence to enhance user experience and operational efficiency. For example, Pinduoduo uses AI algorithms to recommend products, improving users' shopping efficiency; Douyin and Kuaishou use short video and live broadcast technology to achieve direct interaction between products and consumers.
Under the influence of emerging technologies, consumer habits and needs have also changed quietly. Traditional e-commerce platforms are mainly based on the shelf-style e-commerce model, with the shopping logic of "people find goods," where consumers search for products when they have needs; while "planting grass," live broadcasting, and short video e-commerce are based on the shopping logic of "goods find people," which is the path adopted by e-commerce platforms like Douyin, Kuaishou, and Xiaohongshu. It is the platform that attracts consumers by pushing content that users are interested in, then recommending related products, and ultimately attracting consumers to place orders.
Wang Yu Jian pointed out that as consumers' demands for price, quality, and personalization increase, different e-commerce platforms meet these diversified needs through different strategies, thereby attracting a large number of users. For example, Pinduoduo attracts price-sensitive consumers with a low-price strategy; influenced by the habits of watching short videos and live broadcasts, consumers are increasingly accustomed to placing orders through short videos or live broadcasts, and short video platforms like Douyin and Kuaishou attract a young consumer group through content marketing and live broadcast sales.
Exploring the New Blue Ocean of AI E-commerce
Although China's e-commerce is showing unprecedented vitality, with the emergence of issues such as the user scale reaching its peak, the end of traffic dividends, and slowing performance growth, the domestic e-commerce industry has entered an era of stock competition, and exploring "new growth poles" has become the top priority for e-commerce platforms.Multiple e-commerce industry experts have pointed out that AI technology is rapidly integrating into the operational DNA of e-commerce enterprises, and AI is set to become the biggest variable in the future of the e-commerce industry. Zhuang Shuai stated that the evolution of the e-commerce industry is still driven by technology, and the rapid development and maturation of AI are changing and influencing the e-commerce sector.
Mo Daiqing, Director of the Network Retail Department and Senior Analyst at the E-commerce Research Center of iResearch, said that AI technology is accelerating its implementation in e-commerce applications. The development and popularization of AI have made it one of the core factors in innovative business models, which is reflected in the main application scenarios of the e-commerce industry, including shopping guidance, operational analysis, and customer service.
Mainstream e-commerce platforms such as Taobao and JD.com have already taken the lead in deploying AI in e-commerce, with Douyin following suit. The most prominent example is JD.com's AI digital human Liu Qiangdong live-streaming to sell goods. On April 16, 2024, the "Cai Xiaondong" AI digital human created by JD Cloud's Yanxi made its live-streaming debut, appearing simultaneously in the JD Home Appliances and JD Supermarket procurement live rooms. In less than an hour, the live room's viewership exceeded 20 million people. At that time, netizens commented that the "Cai Xiaondong" AI digital human almost perfectly replicated Liu Qiangdong's expressions, postures, gestures, and voice tone, making it almost indistinguishable from a real person.
This year, JD.com has comprehensively deepened the application of AI technology in the e-commerce field, launching more than 20 innovative measures, including "AI assistant for store opening, free AI tool generation of text and images, videos, and live streams, and AI customer service"; it has upgraded the AI algorithm capabilities in the product release process and optimized the interaction interface, introducing intelligent product release functions, among others.
On Alibaba's side, multiple teams within the Taobao Tmall Group have been exploring and practicing AI business and have widely applied AI technology to various business scenarios. In March 2024, the Taobao Tmall Group's self-developed large model "Taobao Xingchen" was officially launched online. This is the first self-developed large model publicly released by the Taobao Tmall Group, mainly providing intelligent services in business scenarios such as product copywriting, product merchant operations, product data analysis, and marketing strategies to help merchants reduce costs and increase efficiency. The 1688 platform under the Taobao Tmall Group, targeting the source manufacturers of industrial belts, has released a free "AI Business Assistant," which is equivalent to equipping merchants with a digital employee team. Through 1688's AI technology, it better and more quickly understands buyer needs and discovers more effective business opportunities.
In May of this year, Douyin E-commerce tested its first AI e-commerce service for consumers, "AI Shopping Assistant," which is embedded in the Douyin Mall and allows users to enter its interface by clicking "Summon Assistant." Subsequently, the "AI Shopping Assistant" will organize and display corresponding products based on the user's purchase needs, including text and image introductions and price information.
The rapid development and maturation of AI are quietly reshaping the face of the e-commerce industry. Ma Shuzhong, Dean of the Institute of Chinese Digital Trade at Zhejiang University, analyzed that the core of future platform and merchant competition lies in AI's efficient matching capabilities, and the construction of the digital supply chain in the AI e-commerce era will accelerate. Driven by technology, the future business, whether online or offline, B2B or B2C, domestic or international, will increasingly have no boundaries.