Alibaba’s sales is only 5 percent of total retail in China and JD.com’s sales of electronics products represent about 2 percent to 5 percent of total electronics retail as well, according to Dangdang.com’s CEO Li Guoqing.
If you only look at the Chinese ecommerce giants’ recent financial report, most people would agree that the competition has settled because Alibaba alone has accounted for about 80 percent of the market share in online shopping sales. The combined sales from Alibaba and JD.com have close to about 90 percent of the Chinese online retail market.
However, at least one executive of a Chinese e-retailer thinks the position of those leaders is not secure. “The size of the business is not equal to competitive advantage and competitive threshold. The market will be settled only if the marketing leaders have some unique edges and generate difficult barriers to entry,” says Li Guoqing, cofounder and CEO of Dangdang.com, in a speech in One Thousand Ecommerce Professionals Seminar in China:
Alibaba’s sales only account for about 5% of retail sales of China and that is not a enough barrier to entry. At same time, JD.com’s electronics sales only represent 2% to 5% sales of electronics products in China. If some companies get a right new business model, there are still plenty of chances to beat those current leaders.
Li says people seldom know Vipshop, the number 4 internet retailer China 500, and Yhd.com, the number 7 internet retailer China 500, three years ago, but now they have become ecommerce leaders in their categories in China.
In other words, new horizons may be coming for niches within China’s ecommerce market in the same way that we see companies like Warby Parker and Zappos coming up in the USA. Keep on a lookout for these small well-branded niche companies in China, while you look past the big guys like Alibaba and JD.