Sharing some observations on the differences of eCommerce between the US and China.
In the US, people mostly buy from Amazon and eBay. And when they do, they go directly to those websites with their intent to purchase a specific product (or find something within a specific product category). People generally don’t go to Amazon to just explore the latest offers or open the eBay app because they have 5 minutes to kill.
In China however, eCommerce is happening differently. First of all, there is a massive dominance of apps-driven eCommerce (as opposed to desktop) which are all very slick and easy-to-use. Second, while intent-driven purchases exist, there is a growing segment of exploration-based purchases. People would open their apps before going to bed and browse for 30+ minutes to see what offers there are. What makes these apps so successful is that they are extremely “sticky,” mostly by a range of social mechanisms and gaming elements that make them hard to leave. It’s often referred to as “inspiration shopping.”
Little Red Book aka Xiao Hong Shu (30M monthly actives and a valuation of $3B) for example is an app full of influencers that write reviews or share mini-articles about their experiences in the realm of beauty, fashion, food, travel, and entertainment. Users, mostly female and affluent, look for inspiration. It’s a bit of a social network mixed with an eCommerce platform. Call it social commerce.
Pinduoduo is another example of a Chinese company that has perfected this social commerce approach. They have 157M+ monthly active users and 10x’ed their valuation within one year from $1.5B to $15B. Sort of Facebook-Groupon mashup, people spot deals and then recruit their friends to buy at a discount. It also comes with gaming elements, doling out coupons and rewards. Their users are mostly in lower-tiered cities, especially elders, who find the other major eCommerce apps difficult to use. They filed for a $1B US IPO last week.
In trying to understand the eCommerce landscape here in China, I couldn’t help buy notice a major difference: in the US, social and eCommerce are two different worlds. Very few companies have managed to bring these two things together (Pinterest and Instagram are trying by facilitating commerce on their social platforms, but with mixed success). In China however there is a bunch of companies who have successfully built experiences that bring these two worlds together.
Personally, I believe there is a big opportunity in this space, and think that some of these business model innovations and new eCommerce experiences will soon find their way into international markets.