Alibaba Faces Increasing Pressure in China
Just looking at the overall market for mobile payments and shopping in China suggests that Alibabaâ€”which counts Alipay as part of its operationsâ€”should be on top of the world. A new report sent our way from eMarketer, meanwhile, suggests that the company isn’t so bulletproof thanks to a growing wave of competitors in the field.
eMarketer’s look at the ecommerce landscape in China reveals that most of it is dominated by 10 major firms. These firms control about 85 percent of all the online shopping in the country. Alibaba holds the top spot, as might be expected, and controls by itself 58.2 percent of all ecommerce sales. The next closest competitor is JD.com, which accounts for 16.3 percent.
Immediately, this may not seem like much in the way of competition; Alibaba holds a clear majority, and the top two firms in the field by themselves account for almost 75 percent of the market. The eMarketer study, though, found that there’s a clear threat to this duopoly, in the form of new firms offering â€śauthenticâ€ť branded goods. The Chinese seem to be evincing a preference for these branded products and are starting to migrate to where they can be found.
Pinduoduo, for example, now holds 5.2 percent of the online market by itself, thanks to growth in China’s lesserâ€”tier 3 and tier 4â€”cities. Instead of pursuing Beijing, it’s going after a more penetration-based strategy to seize market that may not be immediately more loyal to Alibaba. Gome, meanwhile, holds a slim 0.7 percent of the market, turns to social sharing to drive its marketing, and is increasingly focusing on analytics as a marketing strategy, turning its online data into a means to support its offline operations.
While Alibaba may not be particularly concerned about companies that wield sub-whole-number percentages of the market, it may well appreciate that those numbers could change. So Alibabaâ€”by way of its subsidiary Ant Financialâ€”has been working to shore up its market in a months-long process that we’ve been following: multinational releases for the sake of the growing Chinese tourist class.
In the end, competition makes businesses better, and means more options for the consumer. It’s proven itself true for centuries, and now, we find that even China is no different when it comes to competition.