(JIN DING / CHINA DAILY)
Recently, some observers said that growth deceleration and continued regulatory scrutiny could dampen e-commerce in 2021. Yet the full-year results may prove not that different from last year, especially given the enthusiastic response of consumers to this year's Singles Day (Nov 11) e-shopping gala.
Alibaba and JD.com kicked off promotions on Oct 20, since the latter are no longer restricted to a 24-hour time window. Last year, Alibaba's Tmall reported sales of $75 billion in the first 10 days of November, 26 percent more than the previous year. This year, the Singles Day turnover is expected to increase in absolute terms, even if the growth rate slows due to last year's high base.
In times of uncertainty, consumers become more cost-conscious. But broad discounts and promotions are expected to translate into record sales during Singles Day.
In absolute terms, China’s e-commerce market has even greater potential, due to the large population base, expansive middle-income group and rising living standards
Thanks to an earlier start and huge promotions, this year's Singles Day has attracted a record 290,000 brands (over 90,000 more than just two years ago), and more than 14 million discount deals. eMarketer projects that Alibaba is likely to remain China's largest e-commerce player in 2021(with an expected market share of 47 percent), followed by JD.com (17 percent) and Pinduoduo (13 percent). Douyin, the Chinese version of short video-sharing app TikTok, and Kuaishou also participated in the promotion kickoff.
This year the "Big Three" (Alibaba, JD.com and Pinduoduo) could account for more than 75 percent of the e-commerce market, which incidentally has room for more competitors and competition, in view of China's expansive market, huge population and rising living standards. Competition will also drive new modes of e-commerce, such as livestreaming social commerce, which could grow by more than 95 percent this year.
Last year, e-commerce achieved 20 percent growth to reach $2.2 trillion, according to eMarketer. And despite an international landscape of misguided trade wars, geopolitics and pandemics, this year's forecast will remain close to last year's.
Singles Day 2021 is also reflected in the rise of smaller cities in the expansive e-commerce market. In China, urbanization began in the coastal regions, which also are home to the tier-one cities (except Beijing). Over time, urbanization has spread to other tiers of cities and, since the early 2010s, the central government has been promoting the development of small and medium-sized cities－those with populations between 1 and 5 million.
To sustain the growth momentum, Alibaba, JD.com and other Chinese e-commerce players are also targeting these smaller cities. That makes perfect business sense. While upper-tier cities are significantly bigger and have higher living standards, the smaller cities enjoy a greater growth momentum. A recent Bain survey showed there is likely to be more first-time Singles Day shoppers from the tier-three, tier-four and tier-five cities, as opposed to tier-one cities.
Over two decades ago, when I was working with leading global e-commerce companies and venture capital in New York City, "Black Friday", following the Thanksgiving Day, was the barometer of US consumption. In 2005, it was coupled with "Cyber Monday" as e-commerce enterprises began to promote online shopping in the United States.
Until recently, these twin sales bonanzas were indicators of the state of e-commerce worldwide that was dominated by US-based first-mover enterprises.
How times have changed in just two decades. Today, China's Singles Day is bigger than Black Friday and Cyber Monday combined. And yet the underlying institutions and financial instruments are still－though rapidly－evolving in China, as exemplified by the huge Guangdong-Hong Kong-Macao Greater Bay Area initiative fueling regional integration, coupled with Beijing's large information technology enterprises and Shanghai's great R&D expansion.
Furthermore, the use of e-commerce reflects the basic difference between the US and China in technology platforms and diffusion. In China, more than 90 percent of e-commerce sales take place through mobile devices, as opposed to 43 percent in the US. And early adopters in China are driving the new global consumption patterns.
In 2020, e-commerce retail in China was an estimated $1.3 trillion, which is expected to increase to almost $2 trillion by 2025(49 percent), while boosting growth in Asia (51 percent), according to Statista Digital Market Outlook.
Comparable figures in Europe (42 percent) and North America (35 percent) are likely to prove lower despite huge fiscal packages, ultra-low rates and rounds of quantitative easing. China's e-commerce retail market has been the largest in the world since 2013. Given sustained peaceful conditions, it has the potential to continue increasing for years in relative terms. And new and disruptive innovations can further prolong this expansion.
In absolute terms, China's e-commerce market has even greater potential, due to the large population base, expansive middle-income group and rising living standards. The quest for "common prosperity", which both Alibaba and JD.com have now embraced, will further boost that potential.
The author is the founder of Difference Group, and has served at the India, China and America Institute (US), Shanghai Institutes for International Studies (China) and the EU Centre (Singapore).
The views don't necessarily reflect those of China Daily.