SHANGHAI: Discount e-commerce will dominate globally with the upcoming important holiday shopping season in the West and Singles’ Day in China, analysts say.
Platforms in China, the world’s largest e-commerce market, recently said they were facing a “value-to-value decline” caused by economic instability and a slower-than-expected retail recovery after the lifting of coronavirus restrictions late last year. It talks about “battle”.
Meanwhile, in many other parts of the world, from Southeast Asia to North America and Europe, consumers have fallen in love with fast-growing platforms like PDD Holdings Inc.’s Temu and ByteDance Inc.’s TikTok Shop. ships cheap products from China. Living expenses are a top priority for many people.
Although China has been a major exporter of many consumer products for many years, this recent global export trend due to e-commerce market dynamics has shocked online shopping around the world.
China’s low-cost platforms and multinational companies shipping from the country are likely to shape the final quarter of the year, which includes the all-important holiday season and China’s biggest shopping festival.
“These market dynamics, which first emerged or were invented in China, are now common in the Western world,” said Sharon Gai, former head of global key accounts at Alibaba and author of Rethinking E-Commerce. is in control,” he said.
“[Other online retailers]are seeing a huge influx of cheap Chinese products from the likes of Tem and Shein, and the boat is rocking. They don’t know if they can compete,” she says.
However, the trend toward lower-cost platforms is not occurring in isolation, and is driven by the macroeconomic challenges faced by various markets, such as increasing stress due to economic uncertainty in China and inflation in the US and European markets weighing on consumer spending. Partly reinforced by economic challenges. .
Fast-growing discount competitors, such as China’s Pinduoduo and Douyin, and Temu and Shein, which serve markets from Canada to Australia, as well as Latin America and some Asian markets, have also taken advantage of subsidies themselves. They’re spending billions of dollars. And discounts to expand market share among consumers who are more satisfied with buying his $10 dress or his $5 headphones than expensive items.
Amazon plans to increase discounts during “Prime Big Deal Day” from October 10th to 11th.
“From an e-commerce perspective, you’ll definitely notice that there’s a lot of discounting going on right now on Amazon as well,” said Humphrey Ho, U.S. managing partner at digital advertising agency Hylink Digital. said.
The race to the bottom in many markets is likely to intensify further with the entry of TikTok shops, which will see the U.S. focus on products made in China, similar to the success of Shein and PDD Holdings’ Temu. .
TikTok Shop is already preparing merchants to offer deep discounts and promotions during the US holiday season. The company is waiving fees for sellers to offset the cost of these discounts and encourage sellers to leave Amazon and bring more products to the TikTok Shop.
Indonesia is considering completely banning e-commerce on social media to protect offline sellers following concerns that TikTok shops could flood the market with cheap goods .
The growing global market share of inexpensive online players is also filling the space in the low-cost sector of e-commerce, which has existed for some time. Previously, many of the world’s leading platform players focused on selling high-margin products to achieve profitability.
“There was a clear void in the online experience for discount retailers…There’s still a lot of room for growth in the discount space,” said Louis Ma, a technology analyst specializing in U.S. and Chinese companies. .
Around the world, management is now focusing on pricing pressures as discount online retailers expand their market share. In a call with analysts after Chinese e-commerce giant Alibaba reported its latest quarterly results last month, Trudy Dai, CEO of Taobao and Tmall Group, said, “The battle between value and money will continue.” “This will continue and become a major area of investment.”
Giants Alibaba and Jingdong grew faster than expected in the latest quarter, but PDD Holdings’ discount e-commerce platform Pinduoduo attracted China’s price-conscious customers, boosting sales by 66% year over year. % increase made the growth seem small. The company’s international shopping site Temu continued to grow rapidly elsewhere.
While the current structural and macro environment is paving the way to the bottom of this race, changes in broader trends may also result in a shift in focus for both e-commerce shoppers and platforms. .
“Within China, platforms are just responding to a moment of consumer confidence. In Western countries, consumers driven by inflation are experiencing a moment of economic insecurity, so they are looking for cheaper options. They want things,” Ho said.
“If consumers are having a good time financially, they will always ask for an upgrade. Once the economy starts to recover, this could impact and slow down the growth of these (discount-heavy) platforms. .”
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