Jake’s Take: Adapting to China’s Evolving Retail Landscape in 2024

One of the trends that will define 2024 for China’s retail landscape is that the customer funnel is becoming wider and shallower.

A few years ago, e-commerce in China was a two-horse race with Alibaba and JD accounting for the vast majority of online sales.

That made life relatively simple for brands, since ad spend could be concentrated within these platforms. Users went on Tmall and JD with some degree of purchasing intent—and aggressive keyword bidding could drive brand recognition among users with relevant purchasing intent. Social platforms like WeChat and Weibo served as tertiary channels for connecting with customers and boosting brands awareness. But ultimately, having a highly-ranked store, strong customer service, and engaging visual content on Tmall/JD were the keys to moving customers down the funnel.

The emergence of livestreaming on Tmall then created a mechanism for fast conversions—viewers of livestreams might not have a specific purchasing intent, but they were open to buying discounted products recommended by their favourite hosts. Livestreaming made the funnel significantly shallower.

Fast forward to today, and the funnel has become even shallower—and also wider.

That’s because consumers are now learning about and researching products on a wide range of social platforms—Douyin, Kuaishou, Little Red Book, and others—which now have built-in commerce functions to facilitate instant conversions. Meanwhile, Pinduoduo has emerged as an e-commerce behemoth, primarily as a marketplace for low-price commodity-oriented goods.

Each of these platforms has developed innovative tools to stimulate demand. For example, on Douyin, consumption is stimulated by intelligently recommended short videos and influencer guided live-streaming, which reflect a consumer’s media and purchasing preferences. This model motivates consumers to make fast, emotional purchasing decisions. On Pinduoduo, which is integrated into the WeChat ecosystem, the group-buying feature incentivizes users to encourage their contacts to make purchases in order to obtain reduced prices.

The traditional e-commerce model of search-based journeys within digital marketplaces is of course still important—Alibaba is still the largest e-commerce platform with over $1.1 trillion USD in annual GMV.

But other platforms are catching up. Last year Pinduoduo and Douyin moved roughly $500 billion and $300 billion in GMV, respectively. How should brands handle this fragmented landscape?

At WPIC Marketing + Technologies, we help our brand partners activate across a wide range of e-commerce/social channels. That’s the key to having a strong digital program in China in 2024.