Industry Report: Alibaba on the Rise While Google and Amazon Wage War at Home

Export Now | Industry Report

Anyone wondering about the future of E-commerce in China doesn’t need to look far to see emerging trends, and massive market growth. Die-hard followers of news in the export industry will already be aware Alibaba.com is China’s largest eCommerce portal. What they might not be aware of yet is the fact that Alibaba.com’s sales are set to outstrip both Amazon and eBay this year. Amazon and eBay combined, that is.

While eCommerce wars rage at home between giants Google and Amazon, massive online markets continue to develop and mature in China.

“Google fights to unseat Amazon as the top online mall

Trying to stave off the competition from Amazon, Google has recently changed Google Shopping to require e-commerce companies to pay to be included in shopping results, so product listings are now ads. Inclusion used to be free. If a company does not pay to be listed, consumers will not see what they have to offer.

 …

“Alibaba Says Sales Better Than Amazon And eBay…Combined

Zeng Ming, the chief strategy officer of the Alibaba Group, China’s largest e-commerce company, told reporters this weekend that the firm’s sales this year will be greater than Amazon (AMZN) and eBay (EBAY) combined.

Ming also said that the company is aiming for 3 trillion yuan ($473 billion) in annual transaction value from its Taobao e-commerce units on average over the next five to seven years.  The Taobao unit’s sales for 2012 are expected to hit 1 trillion yuan this year, company founder Jack Ma said last year.  Alibaba does not how much Taobao contributes to the top line, but Taobao is the main retail brand of Alibaba Group.

So if you want to give paid listings in Google a shot, or wait to see how Amazon responds, go for it. Maybe you’ll see your revenues go up like the source quoted in the FT article above. However, if you are a long term thinker and have a macro level perspective on the industry, you’ll see Alibaba as the new gold standard. As the bread and butter of the future of online commerce.

As the legacy online giants in the US go to war over market shares and try to exclude each other from the search engine rankings, lesser known and grander opportunities abroad become more and more appealing.

—–

If you and your company have been considering expanding into into the Chinese eCommerce space, feel free to check out additional informational posts on our blog, or drop us a line and speak to one of our Export Now specialists.

Chinese Advertisers Follow Audiences Online 

As readers demonstrate a clear preference for online media over print, news organizations are putting more resources into digital platforms, e-commerce is growing and advertisers, too, are spending money where they know they can find the audiences they need — online.

In China, this shift has led to explosive growth for e-commerce platforms, including the largest online shopping site, Tmall.

It has also meant substantial growth in online advertising in China. Data collected by iResearch, shows that from 2002 to 2012 Internet advertising rose from a negligible amount to about 79.1 billion Yuan — about a third of the more than 200 billion Yuan spent on advertising in total and second only to TV advertising (which accounts for 86.1 billion Yuan).

The report found that in 2011, for the first time in China, advertisers spent more on online ads than they did on print ads.

Another report, from Companies and Markets, pointed to these factors:

The rising number of tech savvy population and introduction of new technologies made online shopping safer and user-friendly and all these factors support online advertising demand in the country.

Advertisers are putting their money where the audiences are. In China, as in the rest of the world, that means online.

FURTHER READING:

China’s Online Ad Spend Tops Print

The Quiet Driver of Economic Growth: Exports

China's first e-commerce service report, released at the first China E-business Service Conference on Dec. 15 in Shanghai, said the market size of China's e-business is taking a leap. According to the report, by the end of 2011, the number of China's e-business service companies will break 150,000, and the whole e-business service industry will take in a combined annual income of 120 billion yuan.

Top Chinese sports brand Li-Ning is making a second pass at the U.S. market and for now their strategy is branded e-commerce. "The biggest brand you've never heard of ... now available here," proclaims the greeting on a bold red background on www.Li-Ning.com, which officially launches Monday. The company's first English-language consumer website has already picked up some popular U.S. e-commerce tactics, like free holiday shipping and a Facebook page. The company's founder, former Chinese Olympic gymnast Li Ning, has ambitious plans to challenge rivals like Nike on their home turf with his namesake brand.

E-Commerce China Dangdang Inc. reported a loss in its third quarter, weighed down by declining gross margin and higher operating expenses. The online retailer, which went public in December, said Wednesday that it lost 73.4 million yuan ($11.5 million), or 15 U.S. cents per American depositary share. That compares with a profit of 32.7 million yuan in the prior-year period.

Market research firm Synovate has some new insights into Chinese netizens usage of the web – how it differs between poorer and richer cities, that more people than ever in China go online on their mobiles, how e-commerce has exploded even in less prosperous cities, and that the internet has (for the first time) surpassed television in terms of engagement levels. It’s a part of Synovate’s Media Atlas China study, which surveyed 66,000 consumers across 88 'tier one' to 'tier five' cities and rural areas across mainland China. Before we get to the meat on the bones, we have to gnaw at the gristle of what exactly constitutes these levels of cities. So here’s a quick primer on China’s cities:

For U.S.-based retailers, running a successful global e-commerce business takes the right balance of strong local marketing and effective operations. While it is essential that retailers cater to local customer experience expectations, it is also critically important to abide by local laws and regulations. Following are six recommendations on how to drive effective global e-commerce for retailers that are just starting to sell online internationally as well as those that want to refine their current global strategy.

For foreign companies looking to dip a toe in the fresh pool of Chinese e-commerce space, the waters are warm and inviting. After all, China’s middle class will swell to about 800 million people in the next 20 years, according to Acquity Group, a brand e-commerce and digital marketing firm that just released a new report on the Chinese digital market. Chinese online consumers have a total spending income of more than $2.7 trillion. The population is widely distributed, the report finds, but the Internet and mobile penetration rates are growing, reaching 34% in January 2011 with about 457 million users.

More and more indie designers are emerging in China and they need a place to connect them with potential buyers. Founded by media veteran Zhao Jinwen, Wowsai is positioned to be such a platform for indie designers and people who prefer quality products and craftsmanship. Its categories cover clothes, gadgets, stationary, accessories, shoes, bags, home accessories and so forth. Except for buying online, you can also create a "Gallery" to collect all the interesting stuff, just like the "Treasury" feature for Etsy. Yes, be it layout or features, Wowsai looks exactly like Etsy, the e-commerce website focused on handicrafts or vintage items as well as art and craft supplies launched on June 18, 2005 with sales of over US$ 420 million last year. From 'Made in China' to 'Designed in China'

Think about your product being the first one in a Chinese city full of hundreds of thousand of upmarket discretionary spenders. If the current research has got it right, China is the new test bed for trendy items and serious brand big box purchases. Bragging rights to a unique and exclusive item might be worth sending samples of, just to get the buzz value and and let consumer interest grow. One sandwich box or branded frisbee might get thousands of clicks o the dot-com of choice. Savvy B2B managers should be compiling ideas for doing small to medium size business ventures with Chinese businesses, since China’s e-commerce market is scheduled to surpass the United States trade commerce volume by the year 2015. If online shopping is tabling off in the North American retail markets of b2b and online commerce, the Chinese intend to spend trillions of renminbi on products online. Devices, applications, games and books are ready to buy online.