What happened: When you buy a product online, chances are it will be through one of just six companies. Unbelievably, almost 60 percent of global e-commerce is concentrated in a handful of retailers. Four of these are Chinese, of which Alibaba Group owns two. Taobao and Tmall, according to Activate Consulting, had a collective total sales percentage of 19 percent in 2019 (and this was before the pandemic). The other two consist of JD.com, with 9 percent, and Pinduoduo with 4. In the other corner are Western rivals Amazon and eBay together with 16 percent. Of the six companies that share a smaller but still substantial share (5 percent of global shares), a further two are Chinese: VIP.com and Sunning (of which Alibaba holds a stake). Altogether, this means that 44 percent of global sales come through six Chinese-owned companies.
The Jing Take: What these figures indicate is that, as the largest e-commerce market in the world, China has an insatiable appetite for digital shopping. And, what’s more, the tech to facilitate it. Conglomerate Alibaba Group, in particular, realized this potential by devising one of the most well-rounded retail offerings in the world. It now controls all touchpoints including logistics, wholesaling, financial and cloud services, film production — the list is impressively extensive. Moreover, since 2014, it’s been complementing its online dominance with physical retail through the acquisition of brick and mortar. In October alone, it announced it will spend about $3.6 billion to take a controlling stake in one of China’s largest big-box and supermarket chains, Sun Art.
Furthermore, Ant Financial’s Alipay holds 54 percent of China’s mobile payments. The acquisition of analytics firm Parklu this week indicates that China’s data is worth paying for, and Alibaba holds the metrics of many businesses in China. Now, with the recent Double 11 Shopping Festival, which it invented, Alibaba has just taken in $74.1 billion gross merchandizing volume. Jack Ma’s wings might have been clipped recently by the intervention of the Chinese government in the Ant Group IPO, but this is a very different kind of monopoly — and a highly profitably one at that.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.