Business

Alibaba’s e-commerce empire is under threat from Douyin, Pinduoduo


Alibaba's e-commerce empire is under threat from Douyin, Pinduoduo

This week, Alibaba announced it is reorganizing its e-commerce businesses into two units.

Beijing: For more than a decade, Alibaba Group has been China’s undisputed e-commerce king, but towards the end its throne has shown signs of slipping, plagued by a host of active competitors. into this field.

This week, Alibaba announced it was reorganizing its e-commerce businesses into two units, one for China and the other overseas.

In China, its two main markets – Tmall for established brands and Taobao that welcomes all types of merchants – process more than $1 trillion in orders a year.

But Alibaba is seeing significantly slower growth in customer management revenue (CMR), the proceeds of which it charges merchants for services that typically account for one-third to one-half of the total. company revenue. It grew just 3% in the July-September quarter, down from a 20% gain a year earlier.

Last month, Alibaba also cut its annual revenue forecast while sales or gross merchandise value (GMV) for Singles Day, its banner shopping event, grew by just 8.5% this year – a level smallest increase to date.

Those disappointing numbers are partly due to regulatory changes and slower economic growth caused by the pandemic that have left shoppers reluctant to splurge.

But they also highlight the increasingly fierce competition and the fact that several rivals have stolen Alibaba in the fastest-growing sectors of Chinese e-commerce.

Merchants and analysts cite ByteDance’s Douyin – China’s sister app to TikTok and a relative newcomer – as the force to beat in live-streaming e-commerce, while Nasdaq-led Pinduoduo Inc. listed has taken the lead in the field of budget and rural e-commerce.

“Other platforms are growing faster than Alibaba, which means they are eating Alibaba’s lunch,” said Lu Zhenwang, CEO of Shanghai-based Wanqing Consultancy.

In a statement to Reuters, Alibaba said it has always faced stiff competition. It added that it offers merchants a powerful live streaming tool in Taobao Live and its Taobao Deals platform for discount shopping and the Taocaicai platform for community group purchases that have won market share. in the lower end markets.

An upcoming Douyin

Douyin is aiming to increase GMV to more than 1 trillion yuan ($155 billion) this year, according to a source from the company with direct knowledge of the matter. The source was not authorized to speak to the media and declined to be identified.

This is more than six times the 150 billion yuan it was on track to earn last year – a figure given by sources in November 2020.

Douyin declined to comment on his e-commerce business.

The app, which boasts more than 600 million daily active users, started allowing merchants to open stores on its platform in 2018. This year, the company helped brands open top stores. easier.

Yatsen, the parent company of Chinese cosmetics giant Perfect Diary, plans to invest more in Douyin’s presence. By comparison, sales on Tmall, which account for about 40% of revenue, are dwindling.

“Douyin, right now, is becoming a very important factor for the brand’s growth,” Chief Executive Officer Huang Jinfeng told an analyst call last month.

Merchants are drawn to the amount of time users spend on Douyin – an average of 1,871 minutes in October compared with 350 minutes on Taobao, according to consulting firm Questmobile, according to consulting firm Questmobile.

Furthermore, while Alibaba’s viewership tends to focus on China’s biggest live-streaming celebrities – Li Jiaqi, known as Lipstick Brother, and Viya, a former singer – they are just two people. In contrast, Douyin can attract a large number of live streamers.

Zen Yan, a 42-year-old auditor living in Beijing, is an avid Douyin shopper.

“It’s easy to spend an hour or more surfing on Douyin every day after work, and there are so many influencers selling all sorts of things,” she says.

Cheap and powerful

At the other end of the e-commerce spectrum is Pinduoduo. It’s popular among China’s rural residents thanks to its low pricing and group-buying model that encourages users to share their purchases on messaging platforms to get cheaper prices.

Its GMV grew 66% to 1.67 trillion yuan in 2020. While a more modest 20% GMV growth is expected in the fourth quarter, according to Goldman Sachs, will still be much stronger than Alibaba’s recent results.

Pinduoduo declined to comment.

Rural e-commerce is more geared towards human business than conventional e-commerce, analysts say, and Alibaba is many years behind Pinduoduo in forming relationships with merchants and retailers. important local production.

“For consumers who are used to Pinduoduo for cheap purchases, it can be difficult for them to switch to a new platform,” said Daphne Tuijn at Shanghai-based analytics firm Chaoly.

Alibaba has also been unable to engage in viral marketing as effectively as Pinduoduo, hampered by not having direct access to a messaging platform like Tencent Holdings’ WeChat, she added.

Opponents and regulations

Alibaba is revamping its e-commerce business – the new reorganization was announced after launching Taobao Deals last year and renaming two community marketplaces to Taocaicai in September.

Even so, its challenges remain abundant, and analysts doubt that Alibaba can go back in time to a time when it was showing the fastest growth in Chinese e-commerce.

Douyin and Pinduoduo are just two of at least 10 established competitors. JD.com remains its closest competitor while Meituan and Baidu Inc, giants in the food search and delivery space, are expanding their e-commerce offerings. At the same time, smaller startups are targeting niche segments like footwear and makeup.

And while its impact is hard to quantify, Alibaba has also been traumatized by a regulatory crackdown that forced it to abandon its policy of requiring interested sellers to exclusively set up shop on its platform. me.

“I don’t believe Alibaba can reverse the situation… it can only adopt a defensive strategy,” said Lu of Wanqing Consultancy.

(This story has not been edited by NDTV staff and was automatically generated from the feed provided.)

.



Source link

newsofmax

News of max: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button
Immediate Matrix Immediate Maximum