China’s E-Commerce Giants Battle for National Expansion through Diversified Delivery Strategies

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By Susan Beardslee | 4Q 2019 | IN-5657

 

Lower-Tier Consumption Growth Offers Relief to Offset Slowdown

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Chinese e-commerce giants are changing strategies in response to reduced growth rates and continued economic tensions. Still, across the country, more than 100 million packages are shipped each day. The largest e-commerce giants intend to deliver any of their orders to any of their in-country locations within two days. Recently, nearly 70% of Chinese e-commerce orders were delivered same-day. Transactions in first-tier cities including Shanghai, Guangzhou, Beijing, and Shenzhen have slowed, however, leading competitors to add a greater focus on lower-tier cities for growth. Over 50% of China’s population resides in rural locations. An estimated 5% of consumers in these lower-tier cities are said to have comparable incomes to the average American. Pinduoduo (PDD), Tmall and Taobao Marketplace (Alibaba), and Vipshop (Tencent) confirmed increases in lower-tier city consumption through comments in their quarterly earnings...

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