China domestic market explained (1688, Taobao, JD, Pinduoduo)

Consider buying from Alibaba instead of AliExpress for your ecommerce business. 1688 and Taobao are good options, but Pingdd and JD are even better. Don’t be overwhelmed by all the choices – I’ll explain each platform so you can easily choose the right one for your business in the Chinese online market. Let’s dive in!

China Internal B2C Market

The China online market has an Internal market for Chinese citizens and an External market for foreigners. This episode will focus on the Internal B2C market – Taobao, JD, and PDD. Taobao holds 55%, JD takes 22%, and PDD has 13% of the market share in 2020. These 3 giants make up 90% of the market. Let’s explore the differences between the platforms and how they can benefit international businesses.

Taobao was founded in 2003 by Jack Ma, who also created Alibaba, AliExpress, and 1688. Despite starting as an English teacher, his communication skills and leadership abilities helped him become the richest man in China at the age of 57. Taobao initially sold clothes and fashion materials, but has now grown into a massive platform where you can find anything you need. Jack Ma’s entrepreneurial skills allowed him to beat eBay for dominance in China’s ecommerce industry.

JD was established in 2004 by Richard Liu, who is ten years younger than Jack Ma. While in college, Liu started creating and selling software to other companies in order to make money. He has always been a tech-savvy person who likes to simplify things and make them more efficient. When he started JD, he focused on selling 3C products, which was simpler because customers only had to compare the parameters, price and click “buy”. One key difference between JD and Taobao is that JD runs their own business and everything is under their control. Additionally, JD has implemented their own lightning-fast delivery system. Another difference between JD and Taobao is that JD specializes in selling 3C and other high-priced products while Taobao offers everything.

Pingduoduo, the third platform launched by Colin Huang in 2015, started by selling cheap fruit. Despite its success, Huang resigned as CEO to pursue his passion for computer science research. With JD and Taobao dominating high-ticket products, PDD and TB cater to low-income customers seeking affordable products for leisure. Men prefer JD for its reliability, while Taobao offers a diverse range of products and is a haven for women. PDD is suitable for low-income individuals with spare time, such as the elderly. JD features big brands and a smooth supply chain, while Taobao permits anyone to open a store. Pinduoduo is ideal for farmers or factories that produce cost-effective goods. Taobao is always a lucrative option as it stays updated with current trends, new concepts, and numerous profitable opportunities.

China Internal B2B Market

Moving on to the B2B market, we have the internal 1688 platform, as well as several other options. However, it is important to note that we do not rely on B2B platforms heavily. Instead, our approach involves using these platforms as a means of connecting with offline factories.

What’s the issue with these platforms, you ask? Well, the problem lies in the fact that online platforms prioritize seller performance metrics – sales volume, business years, and customer feedback. The more you invest in platform fees, the more your store and products will stand out. However, as a buyer making significant purchases, we only concern ourselves with price, quality, new product releases, shipping speed, and communication. As a result, our buying process involves three steps: searching online, communicating and making orders, and reaching out to the factory following good seller performance. While 1688 and other B2B platforms are excellent starting points, deep-rooted relationships with offline factories are vary important.