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Author's profile photo Michael Renz

eCommerce is almost all about marketplaces in China

With 1.3 Trillion USD in eCommerce transaction, 47% of the global eCommerce is generated in China, up from only 1% about a decade ago, and continues to see high double-digit growth Year-Over-Year.

Structural differences
Compared to the west it’s important to note the structural differences if it comes to the business model. Only, around 10% of Chinese e-commerce takes place directly between consumers and retailers. Instead, most occur on digital marketplaces such as Tmall,, and Taobao. The local tech champions Alibaba Group and Tencent dominate this domain by exchanging around ¾ of the trades. Merchants selling directly to the consumer via a self-owned online store has little to no relevance, with some exceptions in specific industries, e.g. in the segment of luxury goods.

Tight connection of commerce and Payment
Another mentionable difference is the native integration of payment providers into the platforms, WeChatPay and Alipay are the dominant payment methods in China for online and offline purchases. Having Payment, Sales Channel and Data under one roof creates a unique environment propelling innovation in commerce, with China serving as a testbed for new ideas that will propel the future of global e-commerce.

The Trillion Dollar Opportunity
O2O, some call it “the industry’s stupidest acronym”, other “the trillion dollar opportunity”. Online-to-Offline a step toward Omni-channel, is a concept very visible in China for many years, largely because of the viral spread of QR codes, which act as the natural link for online to offline scenarios. Why is this so important? Because around 80% of all retail sales still happen inside physical stores. However, 80% of offline sales are influences from a digital touchpoint. This gap has come to be known as the “Trillion Dollar Opportunity”.

Todays Challenge
As novel the vision to orchestrate Pricing, Marketing, Inventory, and Customer Service from a single cockpit is, it is unfortunately not a simple configuration setting in your backend, it’s a continuous journey of optimizing the cross-channel operations, process by process, channel by channel, which is also true for the self-claimed Omni Channel solutions in the market. The heterogonous, fast-changing landscape of marketplaces makes it difficult, if not even impossible, to offer an out of the box solution. To provide customers with a single buyer’s journey across sales channels, the baseline is to have a central core, which offers complete and state-of-the-art interfaces to integrate the data from multiple channels together to ultimately use the aggerated information whenever and wherever a lead gets in touch with your brand. Without an open, extendable central core, companies are left with no way to participate in the race.

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