The Chinese e-commerce market is becoming an extremely competitive space.
With lots of dollars at stake, companies that were not originally e-commerce focused are expanding their services to include digital marketplaces and payments platforms.
Most recently comes the announcement that Chinese consumer Internet giant Tencent has paid $US215 million for a 15% stake in JD.com (formerly known as 360Buy), China’s second-largest e-commerce company by transaction volume. Tencent will get an additional 5% stake in JD.com after the company files for an IPO.
Tencent plans to integrate JD.com with its popular messaging app WeChat. More than 300 million people are active on WeChat each month, and the app already has its own built-in payments system. The new partnership means WeChat users will soon be able to purchase a huge array of products from within the app.
- The company logged roughly $16 billion in sales in 2013, a 67% increase over the previous year.
- More than 15% of orders were placed via mobile apps, which is significantly higher than the market average in China.
Mobile transactions will likely increase further after JD’s integration with WeChat.
E-commerce sales in China topped $US300 billion in 2013, according to some analyst estimates, and approximately 8% of those sales occurred via mobile devices, according to data from Credit Suisse. This is about seven percentage points below the share of mobile transactions on JD.com’s platform. By 2015, mobile commerce overall could account for as much as 15% of China’s e-commerce market.
By leveraging its mobile messaging app, which is already extremely popular for payments, Tencent appears to be carving out its share of the crowded e-commerce market by investing heavily in the mobile commerce future.
Here’s a look at how mobile commerce is expected to grow as a per cent of total e-commerce in China: