With a population of 1.4 billion people, including a large percentage that regularly adapts to some of the most advanced technologies available today, it’s no surprise that China is home to the world’s largest online retail market. Brands have long been on high alert concerning their IP abuse in China, which is sensible since over 50% of global ecommerce market transactions come from the online shopping-inclined country. The overall demand for affordable products combined with China’s embrace of simplified shopping resulted in $1.33 trillion worth of online retail transactions in China in 20181—an amount that is projected to grow steadily in 2020.
As the landscape of the Chinese ecommerce industry expands, we will continue to highlight up-and-coming marketplaces that brands should be cautious of; however, we’d also like to reinforce the importance of gaining control of your brand’s presence across the major marketplaces where counterfeits and infringements have long persisted. In order to develop the most effective and targeted brand protection plan, it’s essential to get a full understanding of where your brand is most affected, which is likely to be across the biggest platforms in the world’s largest online retail economy. Therefore, in light of the upcoming Chinese New Year celebrations, which are likely to periodically spike online sales, we’ve analyzed the top five most popular Chinese ecommerce platforms for brands to be mindful of this season.
1. Alibaba & Alibaba Group
Alibaba is the undisputed leader in the Chinese ecommerce market. With several offspring platforms that cater to specific consumer needs, the Alibaba group makes up 58% of online retail sales in China2 and counted 785 million monthly active users across all of its shopping properties during the last quarter of 20193. Founded in 1999 by Jack Ma, the business has spent three decades at the forefront of the ecommerce market. While Alibaba remains primarily a B2B platform to connect manufacturers to buyers, the holding company has branched out to establish a number of other platforms for a variety of target markets, including:
- AliExpress; Alibaba’s internationally-focused online retail service that connects Chinese sellers with consumers outside of China. The platform reaches users from over 230 countries and has more than 20 million daily visits.4
- Taobao; with a B2C or C2C business model, consumers can buy directly from businesses as well as other consumers, giving small businesses and individuals the opportunity to open stores online. Taobao reportedly has 666 active monthly users.
- Tmall; unlike Taobao, which primarily offers cheap goods for low prices, Tmall is geared toward China’s middle class, stocking their online stores with brand name goods at mid-range prices.
- Kaola; just last September, Alibaba acquired Kaola, one of the only cross-border ecommerce markets in China, putting locals in touch with products made in Europe, Australia, and the Americas. The platform counts roughly 30 million registered users.
Alibaba has had a widely publicized relationship with counterfeits in the past, propelling them to form their own anti-counterfeiting alliance in 2017. And while they claim this initiative has led to improvements in anti-counterfeiting across their platforms, they still host a significant number of infringing products that pose a great threat to brands. In our experience, Alibaba is fairly receptive to responding to takedown requests and infringement notifications, due in part to our brand protection experts’ frequent communication with the Alibaba team, which helps reduce the response time and increases takedown rates.
What began as an online direct sales platform for electronics, Jingdong has grown into one of China’s largest B2C platforms. With subsidiaries that support international trade as well as sales to overseas Chinese nationals, JD covers a multitude of sales channels, which led to a significant increase of net revenue in the second quarter of 20195. JD.com is China’s second-largest B2C marketplace, hosting over 300 million registered users, and it’s the most advanced high tech and AI delivery company in the world thanks to its drone delivery system.
The platform claims to have a strict “zero-tolerance” approach to counterfeit goods, which includes their one-strike policy for merchants selling counterfeits. However, despite their efforts in policing the problem, counterfeits regularly appear on the marketplace and the platform is known to be unresponsive when contacted for takedown requests by businesses and individuals alike. For this reason, in addition to the potential language barrier, it can be difficult to defend your brand by yourself. At Pointer, we have fluent Chinese speakers and relationships with major platforms, including JD.com, to facilitate the takedown process.
In an incredible feat, considering China’s ecommerce market had been mostly taken up by long-standing industry players like Alibaba and JD.com, Pinduoduo launched in 2015 to become the fastest growing app in the history of the Chinese Internet. Backed by Tencent, the platform disrupted China’s ecommerce market by implementing an innovative approach to online retail habits, which ultimately helped it prosper in a short amount of time. Much like Alibaba and JD.com, Pinduoduo is a marketplace that offers a wide range of products to its users. What sets it apart from its competitors is its social application. By integrating the listed product information on social media platforms, Pinduoduo applies a group-discount mentality to its ecommerce strategy, allowing consumers to share the low-priced items with each other, generating further discounts and forming shopping teams. Due to it’s heavily discounted goods and the satisfaction that comes with social shopping, the platform has amassed roughly 93.4 million monthly active users.
Unfortunately, the platform is rife with counterfeits. Many well-known brands have taken action against Pinduoduo for its compliance with infringing product listings, which had led to several lawsuits6. Infringing items on Pinduoduo are often found with additional characters or slightly altered versions of the brand name in an attempt to differentiate them from the authentic products. If your brand is in demand with price-sensitive shoppers, then keeping tabs on Pinduoduo should most certainly be a part of your defense strategy.
Though significantly smaller in terms of monthly active users than the other platforms listed, VIP.com is, in fact, the largest discount store in China, and sits as the fourth-largest ecommerce site in the country. It focuses on offering branded products at severely discounted prices by establishing partnerships with popular brands and selling their overstock and excess inventory to its users. Though with 93.4 million monthly active users, more than 20,000 brands across a wide variety of industries, and 20 million daily visitors, VIP.com is a platform with plenty of potential for brand abuse. It’s through platforms like VIP.com that grey trade and parallel importing is most prominent due to the demand for branded goods and the platform’s partnerships with authentic companies. It could very well be that certain items are being sold without approval from third-party sellers or through an unauthorized distributor. Integrating a solution for distribution chain management would be a great idea for brands that have partnered with platforms such a VIP.com.
Though not an official ecommerce platform, WeChat is China’s most popular social app, lending itself to a variety of functions for its 980 million monthly active users. Its social take on ecommerce was an expected move considering its parent company, Tencent, is also the backer of Pinduoduo, which has been fully embedded inside WeChat, allowing for a seamless liaison between the platforms. While its primary use is still for chat, it recently began exploring its retail options, including 580,000 mini programs made available to consumers that incorporate in-app payment solutions and offline services. Brands will want to keep the popular platform on their radars since a considerable amount of shops have begun to sell products and advertise through these chat groups and mini brand apps within the platform.
If your brand is in high demand in China, it may be time to look into an effective brand protection strategy. Defending your business in the largest ecommerce market in the world is the first step in gaining control of your online abuse and preventing future damage. For more detail on how Pointer can help you defend your brand and your business, contact us today at firstname.lastname@example.org to start the conversation.