Singles Day has a decidedly international flavor this year at Taobao. The Alibaba-owned e-commerce platform is running simultaneous Singles Day promotions in 20 countries—a noteworthy expansion of its previous cross-border selling efforts during the Chinese shopping festival.
Taobao’s move is just one sign of the increasing globalization of Chinese e-commerce—a trend that reaches well beyond promotional set pieces such as Singles Day, which reaches a peak on November 11, and the rival 618 event, held each June.
Consider Southeast Asia. In Indonesia, Thailand, and the Philippines, Chinese-owned players—led by Alibaba’s Lazada and ByteDance’s TikTok Shop—account for as much as half of business-to-consumer e-commerce (see Figure 1). This strong position has been built up through a combination of organic expansion and acquisition, underpinned by low prices that meet the needs of many developing market consumers.
Progress has been made by Chinese retailers in other regions, too. In Latin America, the Middle East, and some parts of Europe, the likes of AliExpress (Alibaba’s global third-party marketplace), Shein, and Temu (part of PDD Holdings, which also owns the Pinduoduo platform in China) have established a solid presence. And in the US, the biggest retail market of all, Chinese e-commerce players now have a high-profile (and highly sensitive) foothold.
This international expansion has been fueled by China’s preeminence in e-commerce and the speed with which the domestic market continues to evolve. Although South Korea’s e-commerce penetration is higher than China’s, its domestic market is a fraction of the size (see Figure 2). Only the US comes even vaguely close to China’s potent combination of a colossal market and widespread adoption of e-commerce.
Crucially, the dizzying progression of the Chinese domestic market—from old-school e-commerce toward new frontiers of social media–driven retail and near-instant fulfillment—has given Chinese players disruptive capabilities that have allowed them to compete successfully in foreign markets.
These homegrown capabilities include:
- rapid product innovation, exemplified by Shein’s “test and react” approach, in which clothing designs are made in small batches, with winners scaled up in days;
- creative demand generation, showcased in TikTok’s use of must-watch content to spur impulse purchases;
- accelerated fulfilment, honed in a domestic market where delivery times are increasingly a matter of minutes;
- visionary expansion of digital ecosystems that both enriches the customer experience and opens up new profit pools in areas such as financial services and logistics; and
- skillful use of artificial intelligence in applications such as Temu’s recommendation engine, AliExpress’ vendor tools, and Shein’s inventory management.
However, for all their progress so far, Chinese e-commerce groups now face challenges that will make the next phase of their global expansion both more important and harder to achieve—as this year’s Singles Day is likely to show.
Read the article by Weiwen Han, Melanie Sanders, Derek Deng, and David Yang / Bain & Company
