Online shopping direct from the factory is gaining popularity in an increasingly frugal China, where an Alibaba Group-owned marketplace for wholesalers has logged a 30% year-on-year jump in users this November as ordinary consumers hunt for lower prices.
“I buy everything from clothes to curtains and hangers,” said Cai, a 33-year-old female office worker who lives in Jiangsu province and is an avid individual user of 1688.com, the marketplace in question.
Factory-direct shopping is Alibaba’s oldest service. 1688 launched under a different name back in 1999, the year of the group’s founding. It predated Alibaba’s main online shopping site, Taobao, which launched in 2003.
When Alibaba listed on the Hong Kong Stock Exchange in 2007, its stock code was 1688. Alibaba adopted the number as the wholesale marketplace’s name in 2010.
The site now handles a vast array of items, from Christmas accessories to toys, plastic pipes and building materials. It is used primarily by small and midsize stores to purchase products and search for subcontractors, and it also includes photos of production lines and equipment.
“It’s cheap, and since you’re ordering from factories, you can get accurate answers to questions about products,” Cai said. She checks products and prices on 1688 and compares them with bargain-shopping app Pinduoduo and Douyin, a ByteDance-owned short video app that also has shopping functions, before making a final purchase.
Factory-direct shopping owes its increased popularity among consumers to the savings that come from cutting out the middleman. A recent search for a 50-centimeter stuffed animal yielded results mostly over RMB 10 (USD 1.40) on standard shopping sites, but RMB 5 on 1688.
Xiaohongshu, also known as Red, has been called China’s answer to Instagram and is full of reviews of factories and products on 1688. It even lists companies that manufacture goods for famous global brands, underscoring consumers’ interest in quality products for low prices.
Amid weak demand back home, Chinese online shopping companies are using small and midsize factories to find opportunities in demand abroad via cross-border e-commerce.
Temu, a cross-border shopping service launched in September 2022 by Pinduoduo operator PDD Holdings, is increasing its presence in Europe and the US, where consumer prices are rising.
Alibaba also plans to strengthen its cross-border business using 1688. The site “has a solid foundation and huge potential to reinvent itself for this new era,” Alibaba CEO Eddie Wu said in November.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.