E-commerce is becoming the preferred way to shop for most Chinese consumers, and while some companies such as Alibaba or JD.com are starting to tap international markets and becoming known globally, Chinese shoppers in the mainland have access to a slew of niche platforms that you may have never heard of.
By the end of 2018, a total of 610 million Chinese had shopped online, accounting for 73.6% of the country’s entire internet population, according to a report by the China Internet Network Information Center. Research firm McKinsey estimates that by the end of 2019, online retail sales in China are expected to hit USD 1.5 trillion, which is more than total retail sales of the ten next largest markets in the world, including the US, UK, and Japan.
Still, e-commerce in China has vast room to grow, as online retail sales only account for about 24.5% of entire retail sales in the country, according to the Chinese National Bureau of Statistics.
With the growing market and sophistication of Chinese consumers, companies are looking to attract new customers with niche platforms. To analyze this sector, KrASIA’s parent company 36Kr recently released a list of outstanding e-commerce players in China, during its flagship annual event WISE New Economy Conference held last month in Beijing.
The list includes major players such as Alibaba’s Tmall and Taobao, JD.com, and Pinduoduo, but also wants to draw the reader’s attention to 10 less-well-known but promising firms that might become the next big thing in the e-commerce space.
Let us have a look.
1. NetEase Yanxuan
Yanxuan is the e-commerce platform of Chinese gaming giant NetEase. The platform, which was established in April 2016, offers a wide variety of merchandise including clothes, skincare products, and alimentary products. Most of the goods sold on the platform are produced by original design manufacturers (ODM) and later offered under the brand Yanxuan.
Yanxuan’s ODM model directly connects consumers and manufacturers, and features products with a high cost-performance ratio, said the company in a press release, adding that this model is different from Taobao’s C2C mode and JD.com’s B2C model.
“C2C offers a wide range of products and the price is relatively inexpensive, but problems arising from this model are also evident: such as products with inconsistent quality and high choice cost, said NetEase.” The B2C model, represented by JD.com, is welcomed by consumers due to its incomparable convenience, supported by self-built logistics. However, the branded goods sold via this model carry less competitive prices because of the intermediaries involved,” added the company.
Yanxuan is currently the only e-commerce business of NetEase, which sold its import e-commerce platform Kaola to Alibaba for USD 2 billion in September 2019.
Before the acquisition, Kaola and Yanxuan both generated USD 764.3 million in revenue for NetEase in the second quarter of this year, up 20.2% year-on-year. NetEase stopped disclosing its e-commerce revenue separately in the third quarter.
Yanxuan has a flagship store on Alibaba’s Tmall and JD.com respectively.
Beijing-based Plum, which was set up in 2017, connects individual owners of luxury goods with potential customers who want to buy these products at a relatively lower price.
The startup says that it has established 20 steps for verifying whether an item is authentic or not, adding that 80% of the goods finally listed are usually sold within 30 days.
Plum closed its Series B+ round financing, collecting USD 20 million in August.
The company’s founder Xu Wei told 36Kr in August that the platform has reached a five-fold rapid growth in its GMV and in the number of users in the past six months, without disclosing further details.
The online platform suning.com is the e-commerce arm of appliances and tech retailer group Suning.com Co., commonly known as Suning. The platform sells electronic devices, appliances, clothing, and snacks. The site went live in January 2010 to fight back Alibaba and JD.com, which were luring the firm’s offline customers.
Suning.com has undergone several name changes as its business scope has changed over time. The firm’s history dates back to 1990 when a company called Suning Jiaodian Group Company was established in Nanjing, capital of East China’s Jiangsu province. The company, which first sold air conditioners, gradually grew to be one of the top two retail giants in China and got listed on the Shenzhen Stock Exchange in 2004 under the name Suning Dianqi (Suning Appliance).
Alibaba’s Taobao held nearly 20% shares of Suning.com by the end of the third quarter. Suning.com announced in June that it would buy an 80% stake in Carrefour China at RMB 4.8 billion (nearly USD 700 million) for its 210 supermarkets and 24 convenience stores. The company had also bought 37 department stores from commercial property group Wanda by the end of the third quarter of this year, according to Suning.com’s quarterly report.
In the first nine months of this year, Suning.com booked RMB 201 billion in total revenues, up 16.2% year-on-year, and made RMB 11.9 billion in net profits, up 94.3% year-on-year. The company sold goods worth RMB 275.9 billion in total at the end of the quarter, and online transactions from its own website suning.com and its flagship store in Tmall generated RMB 171.4 billion.
Zhejiang-based Yunji is a membership-based social e-commerce platform offering an array of products ranging from cosmetics to food. The platform was established in May 2015 and currently has more than 10 million members.
Yunji works under a membership-based model. Currently, users gain membership in the platform after making a purchase of more than RMB 398 (USD 56) and can later enjoy major discounts on other products. Members can also enjoy 40% discounts and get refunds if they succeed in getting others to become members.
Previously, membership was only granted after paying a one-time fee of RMB 398, but the firm faced legal issues when Chinese authorities fined the company roughly RMB 9.6 million in 2017 for utilizing pyramid scheme laws.
The company raised USD 121 million in its IPO on the Nasdaq in May this year.
Gross merchandise volume (GMV) on Yunji in the third quarter of 2019 increased by 69.8% year-over-year to RMB 9.2 billion (USD 1.3 billion), the company disclosed on December 2, adding that it booked RMB 2.7 billion in revenues and RMB 51.3 million in net losses, narrowing slightly from the same period in 2018.
5. Xiaomi Youpin
Xiaomi Youpin features products made by Xiaomi’s affiliates in the smart home sector, such as water heaters of Yunmi, and electric toothbrushes of Soocas, two of the companies where Xiaomi is an investor.
The platform distinguishes itself for a crowdfunding channel where it helps producers to gain cash before production, and also gauge market interest before mass-producing a product. For example, a crowdfunding campaign for a car model called Bestune T77 went live on Xiaomi Youpin on July 25. Under this campaign, each of the 245 supporters paid RMB 3,777 (USD 550) as a deposit, which is then counted as part of the final sum the customer will have to pay for the car.
For the six months ended June 30, 2019, the GMV of Youpin e-commerce platform grew to RMB 3.8 billion, representing a year-on-year increase of 113.9%, Xiaomi said in its 2019 interim report. The company added that in June 2019, more than 65% of Youpin’s GMV came from non-Xiaomi smartphone users.
Xiaomi also owns mi.com, a platform that features all Xiaomi’s own products, mostly smartphones, wearable smart bands, and TVs.
Beijing-based MissFresh is an online platform offering more than 2,000 types of products including fruits, vegetables, meat, and dairy products sourced directly from farms.
The startup, which was founded in 2014 and counts Tencent among its investors, also operates a self-owned courier fleet in 17 cities, and owns more than 1,500 self-owned front-end warehouses to guarantee delivery within one hour.
MissFresh had more than 10 million monthly active users on its app during the third quarter of 2019, and it has beaten other players with a market share of over 50% in China’s first-tier cities including Beijing, Shanghai, Guangzhou, and Shenzhen. In contrast, Alibaba’s Hema came in second with a 30% market share, 36Kr reported citing data from industry tracker Trustdata.
7. Dingdong Maicai
The startup, which was set up in Shanghai in March 2014, is a platform offering mostly vegetables, fruits, and meat. Dingdong Maicai allows its users to book online what they need and promises deliveries within 29 minutes.
The company says on its website that it has operated 345 front-end warehouses in Shanghai by May 2019, where it has served more than five million households. The company also said that it has further entered Shenzhen in August, without revealing how many warehouses they are running there now.
Dingdong announced in July that it had closed its Series B round financing, according to Crunchbase, without mentioning the actual sum raised to the public. Starquest Capital, Qiming Venture Partners, CMC Capital Group and Bertelsmann Asia Investments were among its investors.
Biyao is a platform that merchandises products manufactured by suppliers for large brands like Chanel and Lancôme, among others. The platform claims to offer high-quality goods at low prices since it cuts out intermediaries, connecting customers directly with top manufacturers.
The firm was founded by Bi Sheng in Zhuhai, a coastal city in Guangdong province and went online in July 2015. Bi is also one of the founding members of China’s largest search engine Baidu.
In addition to various products including cosmetics, clothes and home appliances, Biyao also offers vegetables and fruits sourced directly from production sites.
Biyao, which calls itself the first Customer-to-Manufactory (C2M) e-commerce platform, said it had made a profit by the end of 2016, without revealing the sum, according to its official WeChat account. The company has also not disclosed its fundraising activities.
Beidian is a membership-based social e-commerce platform featuring branded products for parents and kids. The company was set up in August 2017 in Hangzhou, capital of Zhejiang province.
Users, most of whom are female, can shop on the platform like on any other e-commerce site, but can also pay RMB 99 to become Vip members, KrASIA found on Friday. Members will enjoy discounts when purchasing goods and can also become “group leaders” automatically without paying additional fees. Group leaders can get refunds of RMB 50 yuan if another user signs up for a new membership, and can also form groups via social channels such as WeChat to get additional returns when followers buy products.
Beidian also offers training, including online marketing materials and face-to-face classes to support its users to become “entrepreneurs”, says the company.
The platform directly manages the delivery and supply chain, including sourcing products from brand owners, factories, and agricultural production sites.
At the beginning of 2019, Beidian had more than 50 million members and 13.3 million monthly active users, according to data by QuestMobile.
Hillhouse Capital, Sequoia, and Sinovation Ventures are among Beidian’s investors.
Yoho!Buy is a fashion platform that lists more than 100,000 products sourced directly from more than 1,400 brands worldwide. These products are mainly clothes, shoes, and bags.
The platform was incubated by fashion media company Yoho, a company which was set up in 2005 in Nanjing, capital of Jiangsu province, with the intention to focus on the street fashion industry in China.
Yoho!Buy targets less price-sensitive buyers from 18 to 25 years old, who “are willing to showcase their personality”, says the company.
The platform also offers a pre-loved sneakers trading market within the Yoho!Buy app.
36Kr is KrASIA’s parent company.