The fourth quarter of 2021 saw a year-on-year increase of 33% to US$7.7 billion. Canalys predicts that by 2026, the scale of the cloud infrastructure market in the mainland will reach US$85 billion, and the five-year compound annual growth rate will be 25%.

Visit here for AI Cloud market share.

Alibaba Cloud remains the leader with a 37% market share, ranking first in the cloud market in 2021, Huawei Cloud and Tencent Cloud second and third respectively, and Baidu AI cloud fourth. In 2021, the four cloud providers jointly accounted for 80% of the market share.

Huawei Cloud reached an 18% market share in 2021, with an annual growth of 67%. The rapid growth has widened the gap between Huawei cloud and Tencent Cloud, ranking second in the market.

Tencent cloud, the third-largest provider, accounted for 16% of the market share, an increase of 55%. Tencent Cloud grew steadily as a whole in 2021, with diversified growth in multiple sectors.

Baidu AI Cloud, the fourth-largest vendor, accounted for 9% of the market share, an increase of 55%.

Top 10 forecasts for China cloud computing market 2021-2024

China’s Public Cloud Services Market to Grow to 10.5% of global share by 2024

In 2020, the overall market size of global public cloud services (IAAs/PAAS/SaaS) reached US$312.42 billion, with a year-on-year growth of 24.1%, according to IDC.

The overall market size of China’s public cloud services reached US$19.38 billion, with a year-on-year growth of 49.7%, with the highest growth rate in all regions of the world. IDC predicts that the global share of China’s public cloud service market will increase from 6.5% in 2020 to more than 10.5% by 2024.

Check out market share of IaaS and PaaS markets in China here.

CIW Subscribers (Annual) can download the chart here to see the comparison of the cloud platforms in China.

Download China Internet Overview whitepaper here.

Latest on China Cloud Computing Market

Alibaba Cloud remained the leading cloud service provider in Q4 2019, accounting for 46.4% of total spending. Tencent Cloud and Baidu AI Cloud both increased their shares to 18.0% and 8.8% respectively.

China’s top 3 accounted for 73% of the cloud infrastructure services by total spending in China in Q4 2019.

Read how some industries in China benefiting from the novel coronavirus outbreak

Alibaba Cloud offered credits to organizations to buy its Elastic Compute Service, cybersecurity and other services. It made its AI-powered platform available for free to research institutions to accelerate gene sequencing, protein screening and related work in treating and preventing coronavirus.

Tencent Cloud also made its platform available to research teams from universities across the country. It launched the Cloud Office Portfolio to support remote working, which includes Tencent Meeting and WeChat Work.

Baidu AI Cloud made its online doctor consultation platform free for any medical queries, which handled over 15 million interactions. And, it also opened its platform and AI algorithm for free to research institutions.

For full-year 2019, cloud infrastructure services spend in China increased by 63.7% to exceed US$10.7 billion.

Alibaba Cloud was the market leader, accounting for 46.1% of the market. Tencent Cloud was ranked second, with a 17.3% share. Amazon’s AWS was the third, followed by Baidu AI Cloud.

Coronavirus outbreak’s impact on China’s consumption

Amazon announced the results of China’s first Prime Day recently. Total number of orders on July 11 exceeded those on last year’s “black Friday.” Amazon China and Amazon overseas purchases and sales grew by almost 300% over last year, and the number of newly registered Prime users grew 60% over last year’s “Black Friday.”

Books, cosmetics, nursery, and toys were the most popular products during Prime Day. The Kindle Paperwhite e-book reader became Amazon China’s best-selling electronic device.

1. Sales amount: Sales during 2017 Prime Day grew 60% over that of 2016. The number of new Prime users globally reached a record, and the number of members participating in the 2017 Prime Day grew 50% over that of 2016.

2. Member discounts: Top sellers included Fisher Price sea horse dolls, Perrier natural spring soda water, Merries diapers, PHILIPS DiamondClean toothbrush heads, Human History and The History of the Future sets, and WMF pressure cookers.

3. Best-sellers: American Comotomo milk bottles, British New Era baseball caps, and Japanese Barrier Repair masks, all from overseas, were best sellers.

4. Fastest goods sold out: Among the many Prime member discounts, the fastest selling-out discounted products included Asics sports bras, Speedo swimming caps, BabyBjörn baby slings, and Penfolds Bin28 red wine.

5. Logistics: During the Prime Day peak, Amazon ensured that cross-border orders in 82 Chinese cities arrived in an average of 5 to 9 working days. The first batch of parcels for cross-border orders placed after 5 PM on June 10 had already arrived at the Amazon distribution site as of the early morning hours of the 14th, and were in the hands of customers that day.

6. Comparison with other shopping holidays: 2017 Amazon Prime Day surpassed “black Friday” and “Internet Monday” to become the highest grossing shopping holiday in Amazon’s history.

Highlights of Chinese sales

1. Wandeshi Technology: On Prime Day, DOSS brand sales reached 30 times those in a normal day in America. DOSS Touch Bluetooth speakers, which participated in a countdown promotion, sold out in an hour.

2. Liwei Electronics: During the 2017 Prime Day, Bluedio sales reached 100 times their volume for a normal day in America.

3. Ecovacs: Launched in August of last year, the Ecovacs online store participated in their first Prime Day promotion, reaching 80 times their sales in America on a normal day.

4. Kalamera Electronics: In the first three hours of Prime Day, sales of Kalamera wine cupboards reached 80% of last year’s sales for the whole day.

Vice President of Amazon Global and President of Amazon China Zhang Wenyi said, “Today is our first time to bring Amazon Prime Day to China, allowing Chinese Prime members to take part in an exclusive 46-hour ‘day-long’ shopping spree. The future will continue to bring more value-added services to Prime members.”

China’s online retail market totaled US$198.12 billion in the first quarter of 2017 with an increase of 27.6% YoY according to data from Analysis; B2C segment accounts for over 53%, led by Tmall (55.8%). Mobile continued its strong growth of 38.8% in China’s online shopping market, dominated by Tmall and Taobao (80.5%).

The total retail sales of consumer goods in China reached 8,582.3 billion yuan (US$1,245.89 bn) in Q1 2017 according to National Bureau of Statistics. Online retail market totaled 1,349.31 billion yuan (US$198.12 billion) with an increase of 27.6% YoY.

B2C Online Retail Market in Q1 2017

China’s online retail B2C market total transactions reached 720.94 billion yuan (US$105.86 bn) with an increase of 31.5% in Q1 2017, accounting for 53.4% of China’s online retail market.

Tmall remains its dominant position in China’s online retail B2C market with 55.8% market share in Q1 2017 by total transactions, followed by JD (26.7%) and Vipshop (3.4%).

Mobile Shopping Market in Q1 2017

The total transactions of China mobile shopping market reached 1,037.62 billion yuan (US$152.36 billion) with an increase of 38.8% YoY. The growth of mobile shopping in China is slowing down but the quarterly growth YoY is still over 30%.

Mobile accounts for 76.9% of total online shopping transactions in Q1 2017.

Tmall (including Taobao transactions) captured 80.5% of China’s mobile shopping market in Q1 2017, followed by JD (13.5%) and Vipshop (2%). Mobile GMV transacted on Alibaba China retail marketplaces was 2,981 billion yuan (US$433 billion), or 79% of total in Alibaba’s fiscal year 2017, an increase of 49% year-over-year.

In the first four months of 2017, the online retail sales of goods and services in China totaled 1,918.0 billion yuan (US$279.26 bn), an increase of 32.0% YoY.

In the first quarter of 2017, the total sales in China at Amazon’s overseas stores were 11 times as much as the same period two years ago.

Chinese consumers have purchased nearly 17 million pieces of cross-border directly delivered merchandise from Amazon since the official opening of cross-border direct delivery service since October 2014 according to Amazon China.

Currently, Amazon overseas stores offer Chinese consumers varieties of products from Amazon US, Amazon UK, and Amazon Japan.

Amazon China provides its Prime members unlimited free delivery. Recently, it launched priority purchase for Prime members. Amazon currently offers over 6 million products to Prime members in China.

More and more Chinese sellers expand their global businesses through Amazon. Over 45,000 sellers are in Amazon Business since its recruitment activities among Chinese sellers at the end of 2016.

Alibaba cross-border B2C platform AliExpress reached 100M buyers

The total transactions of China’s online shopping market totaled 4.7 trillion yuan (US$680 bn) in 2016 with an increase of 23.9%; and, it’s estimated to reach 7.3 trillion yuan (US$1.06 trillion)  in 2019. Tmall dominates China’s B2C online shopping market with over 56% market share.

B2C online shopping market will grow to over 60% in 2019 from 55.3% in 2016 while C2C continues to shrink.

Mobile shopping begins to dominate China’s online shopping market and will grow to 5.6 trillion yuan; 76.9% of total online shopping transactions in 2019.

Tmall continued to lead China’s B2C online shopping market with 56.6% market share, followed by Jingdong (24.7%) and Suning (4.3%).

Mobile MAUs on Alibaba’s China retail marketplaces reached 493 million in December 2016 while annual active buyers on its China retail marketplaces reached 443 million, an increase of 4 million. It has 82.6% market share in China’s mobile shopping market according to iResearch.

Jingdong annual active customer accounts increased by 46% to 226.6 million in 2016 from 155.0 million in 2015. Net revenues for 2016 were RMB260.2 billion (US$37.5 billion), an increase of 44% from 2015.

Also read: China’s cross-border online shoppers to exceed 200 million by 2020

Alibaba is ranked the world’s second most valuable retail brand with a brand value of US$49.30 billion, according to WPP’s new 2016/2017 BrandZ Top 25 Most Valuable global Retail Brands ranking.

Amazon is ranked the most valuable global retail brand with a brand value of US$99 billion in 2016; its brand value has increased by 59% in 2016 compared to a year ago.

Alibaba’s main competitor in online retail JD.com brand value grew by 37% in 2016 and made it the 11th most valuable retail brand in the world.

Top 25 Most Valuable global Retail Brands 2016/2017 (USD; millions)

The top e-commerce platforms in China are JD, Tmall, and YHD in 2016. Find out the top 10  here.

The top e-commerce platforms in China are JD, Tmall, and YHD in 2016 according to Kantar Retail.

Top 10 e-commerce platforms in 2016 based on comments from more than 200 participants from FMCG manufacturers are:

1. JD
2. Tmall
3. YHD
4. vip.com
5. Amazon
6. Suning
7. Jumei
8. Xiaohongshu
9. sfbest.com
10. Feiniu

The top roles of of e-commerce according to Kantar survey:

1. Additional sales channel
2. Brand building
3. Stronger communication with consumer/shoppers
4. Penetrating lower-tier cities or markets
5. Additional profit
6. An efficient way to enter new brands / new products into the China market

Established in 2001 as a subsidiary in China, Amazon China once went through a nosediving period. By building and promoting cross-border shopping strategy, Amazon China has begun to make some initial success in 2015.

Amazon China’s total transactions during Black Friday increased by more than six times this year compared to 2014, and spends at Amazon overseas sites have been equivalent to the sum of the past 20 years counting only from January to October 2015 according to Amazon.

Mr. Douglas Gurr, who has been President of China Amazon.com Inc. since September 1, 2014, has been focusing on the business as a cross-border site as well as helping China’s brands gain global exposure summarized three reasons contributing to the fructified sales in 2015.

Small Ideas Hatching Big Business

Amazon had a well-established “reverse” mechanism or process at being innovative and creative. Faced with a new idea, they first answered two basic questions: What do consumers really need? Could Amazon develop a unique advantage from this business? Amazon picked out the most important ideas from thousands of new ideas and gradually improved.

This way of thinking helped select out some good ideas. AGS project of Amazon was born following the path. Based on worldwide suppliers and advanced cross-border logistics and distribution system, Amazon China provided consumers high-quality product selections and lower prices without suffering long delivery time, high shipping costs and fake goods.

Exploring China’s Innovative Products

Launchpad was a project providing a platform for excellent products and startups in China. The project could effectively help startups reach tens of millions of Amazon consumers worldwide and benefit consumers and innovators at last. Launchpad was operated during Black Friday shopping festival in 2014.

Own-branded Products Satisfying Chinese Demands

Fire tablet, which was recently released in China installing English-learning function to provide customized reading experience for different English levels of users, was a good trial at Amazon China. New Fire tablets with English-learning function was only marketed to China’s consumers.

The localization of innovations was solutions to the urgent needs of China’s consumers. Amazon has been striving to support suitable products for China’s market by deep insights into China’s consumers.

Also read: China Retail V.S. Online Shopping 2015

China’s cross-border shoppers reached 18 million and generated revenues of 140 billion yuan (US$21.75 billion) in 2014 according to China Electronic Commerce Research Center and China General Administration of Customs.

Transaction values of the cross-border market in China are expected to exceed 1 trillion yuan (US$0.16 trillion) in 2018 according to China Electronic Commerce Research Center with 36 million cross-border shoppers in 2018 according to Nielsen. It will account for 16% e-commerce market.

Amazon, as the largest global e-commerce company, is undoubtedly benefiting from the expansion and growing popularity of onine cross-border shopping market. The total expenditure of China’s consumers at Amazon Global sites increased by more than six times this year compared to 2014, and spends at Amazon overseas sites have been equivalent to the sum of the past 20 years counting only from January to October 2015.

80% cross-border consumers on Amazon were under the age of 35 according to Amazon. Over 90% users have Bachelor’s Degree or above. In addition, over half cross-border shoppers gained a monthly income of more than 5,000 yuan.

Cross-border shoppers in tier-3 and tier-4 cities grew faster than tier-1 and tier-2 cities during Black Friday becoming the fastest growing regions. However, the average consumption per shopper on Black Friday was less than 699 yuan (US$108.59) in 2015 according to Alipay.

Although on Double 11 Tmall sold out 2,605 cross-border products from 41 countries only in the first 10 minutes and surpassed last year’s cross-border transactions within 105 seconds, cross-border orders on Amazon were much fewer.

However, Amazon China launched its Black Friday promotion from November 18th lasting till December 5 2015, which was longer period than other e-commerce websites in China. Sales values on Black Friday were 10 times as much as its Double 11 ones this year.

The number of online cross-border shoppers on Black Friday 2015 increased by 7 times compared to last year according to Alipay. Sales in only half a day on Black Friday surpassed total one week’s sales during Black Friday in 2014. And page views on Amazon reached a record high on Black Friday with the number of new users as much as four times more than 2014.

Bags, shoes, and personal-care products have been the most popular categories of China’s cross-border shoppers on Amazon since 2014 while shoppers liked beauty makeups best on Taobao.

Beijing cross-border shoppers preferred air purifiers, vacuum cleaners, water purifiers and masks. Shanghai shoppers liked to buy infant formula. Hangzhou buyers liked Cartier products and Nanjing consumers preferred cross-border beauty products.

Price (84%) and quality (81%) were top two factors for China’s cross-border consumers, followed by logistics (57%). Very long delivery time would damage the enthusiasm of cross-border shoppers. Male users are most concerned about commodity prices while the female users during Black Friday are most concerned about whether the goods are authentic.

In recent years, the gradual improvement of cross-border e-commerce policies on customs, bonded warehouse, or a host of other policies has encouraged the cross-border business in China. Besides, online shopping platforms and cross-border shopping platforms have developed to a certain scale.

Also read: China Retail V.S. Online Shopping 2015

More and more overseas e-commerce websites providing the service of direct shipping to China appear. On the one hand, they can rapidly occupy the position in the Chinese market. On the other hand, they make customers enjoy more convenient shopping.

In the U.S., many large merchants that sell products covering general goods, fashion clothes, products for infant & mom and luxury enter the Chinese market in succession, and raise the tide of directly shipping to China. Let’s take a look at a list of foreign e-commerce websites that provide the cross-border shopping to online users in China.

Amazon

Amazon, founded in America in 1995 by Jeff Bezos, is a comprehensive e-commerce brand. It provides customers with the products such as books, music, movies, digital mobile phones, home appliances, home furnishing, toys, health, cosmetics, watches and jewelries, costumes and bags and suitcases, sports, food, products for infant & mom, outdoors and leisure products. Amazon also launches the products such as Kindle series, Fire TV and FirePhone. In addition, it provides the service of directly shipping to foreign countries from Germany, Japan, France, Britain and etc.

GMarket

Gmarket is the largest comprehensive shopping website in Korea. In Korea, it ranks first in gross sales in online retail market, and mainly sells books, MP3, cosmetics, computers, home appliances, and clothes and so on.

Sasa.com

It is the well-known Asian retailer from Hong Kong who sells skin care, makeup, perfume, cosmetics, body care and health care products and covers more than 100 world-renowned beauty brands.

imoda.com

It is the first Chinese language website that has provided direct shipping to China. All goods are directly mailed to Chinese customers by the overseas top buyer shop via Fedex and DHL, and arrive at the destination within 4~8 days. It only sells fashion goods, mainly including the first and second-line international brand clothes, shoes and bags; but it can provide the prices that can be greatly cheaper than those of the products in domestic shops.

ASOS

ASOS, founded in 2000, is a global online retailer providing fashion costumes and beauty products. ASOS owns brand from London designers and the world’s third-party brand provide fashion goods for young people.

Ashford

Ashford, founded in 1997, is headquartered in Broolyn, New York, America. It is a special top online mall providing fashion jewelries and fashion watches. It is one of the largest online watch vendors in America, and well known for low discounts and variety. In Ashford, you can find out the Swiss watch, the Japanese watch, and the American watch and high-end brand watches such as Mido, Hamilton, and Casio and so on.

Puritan’s Pride

Puritan’s Pride Healthy Food Company, founded in Long Island, New York, America in 1960, has 51-year-old history so far. It is one of the largest and most complete healthy product companies. It specializes in developing, producing and selling vitamins, minerals, herbs and healthy food related to health, beauty and weight lose and so on, and provides more than 1000 kinds of nutrition.

Puritan’s Pride has more than 6 million satisfied customers. People prefer to buy its healthy product due to its high quality and affordable price. Hot products include L-carnitine anti-aging series, apple acetic acid weight loss series, and disodium phosphate anticancer series and so on.

Macys.com

Macys.com, attached to the U.S. Federated Department Stores, Inc, is a high-end department store in America. It wins the good reputation due to high-quality products and service. Macys is called the world’s largest department store by many customers, and mainly sells various men’s and women’s clothing, children’s clothing, shoes, bags, beauty makeup, jewelries, household appliances, watch and its accessories and so on.

SkinStore

SkinStore is a top international cosmetics online shopping mall. SkinStore’s products mainly refer to beauty care, beautiful makeup, shampoo and hair care, bath, products for infant & mom, perfume and so on. It also provides service directly mailing to China without transport!

GiltGroupe

GiltGroupe luxury shopping website is a creative online shopping website, opens up the “flash purchase” in America; it provides the customers from all over the world with various popular products, most of which are sold with the internal price, as low as 60% off. Every day GiltGroupe provides members with various well-known brand products, which mainly includes women’s wear, men’s clothing, children’s clothes, household products and so on.

Allyouneed

Allyouneed is a famous comprehensive B2C website in Germany, and provides the products such as beverages, daily chemicals for infant & mom, domestic products for pets, household electronics, and even fresh fruits and vegetables, especially, momand papa who focus on overseas shopping can buy the hot Aptamil, Hipp, and Holle on this website. Moreover, they also can use coupons, and no other website can compare with this website.

LuisaViaRoma

LuisaViaRoma is the top luxury fashionable boutique brand shop in Italy. Its physical flagship store has been located in Rome Road, in the center of Florence since its foundation in 1930. LuisaViaRoma.com (LVR.com), founded in 1999, is its official online shopping mall and one of the luxury shopping websites of doing online fashion trade at the earliest.

SSense

Ssense is a Canadian website, and mainly sells costumes. It provides boutique costumes such as D&G, JuicyCouture, MissSixty, G-Star and Diesel, which are not luxury costumes and its pricing can be quite acceptable.

PayEasy

PayEasy is the largest female shopping website, and it has the commodities including beauty care, make-up, bags, accessories, fashionable costumes, digital 3C, and home furnishings and so on.

Continue to read Chinese Cross-border Online Shoppers Insights

According to Weibo’s daily influence index, Tmall, OKHQB, and Dangdang performed best on Weibo among 1,613 active Weibo accounts in B2C e-commerce category in 2014.

Also read: Travel Industry Performance on Weibo 2014

Amazon China announced the official launch of the direct shipping service and a Chinese website for Chinese shopping overseas.

From now on, Amazon US, Germany, Spain, France, UK and Italy, all provide direct shipping to China. Chinese consumers can select from these six overseas sites with over 80 million products in footwear, apparel, maternal and child health and nutrition, and personal care product categories.

More country sites and product categories will be made available to Chinese online shoppers.

Amazon overseas direct shipping can help consumers quickly deal with customs clearance procedures, and provide a standard, accelerated, and express delivery services.

In order to attract Chinese consumers, Amazon US site also sharply lowered its direct shipping charge to China and shortened delivery time to an average of 9 to 15 days; the fastest shipping takes only three working days. Some China internet users already observed the reduced shipping charge of some products at Amazon US store in September 2014.

According to Amazon, not all Chinese intenret users visiting Amazon China will see the “Oversea Shopping” store and it’s uncertain when Amazon will open this to all visitors. Amazon China announced a tripartite memorandum of understanding with China (Shanghai) Free Trade Zone (FTZ) and Shanghai Information Investment Co. in August 2014.

Amazon China is among China’s top online B2C platform though it has a small market share. Amazon will also launch its Double 11 campaign this year offering promotions of brands from over 300 countries.

Find out Top 30 B2C Platforms in China here or see a comparison of Amazon with Alibaba.

Some China internet users observed the shipping charge of some products at Amazon US store are reduced, which indicates Amazon’s efforts in cross-border e-commerce.

Amazon China announced a tripartite memorandum of understanding with China (Shanghai) Free Trade Zone (FTZ) and Shanghai Information Investment Co., Ltd, under which Amazon plans to build logistics and warehousing centers in the free trade zone.

Ebrun.com posted two screen captures showing the shipping cost to China from the US on Amazon US store of last month and this month respectively.

Ebrun.com also reports that AmazonGlobal Shoes Saver program (free shipping for purchase over $150) will also be available to Chinese online shoppers, which is not applicable to Singapore and Mexico:

Amazon China announced a tripartite memorandum of understanding with China (Shanghai) Free Trade Zone (FTZ) and Shanghai Information Investment Co., Ltd. 

Three parties will carry out cross-border e-commerce business and build online cross-border e-commerce platform, with which Chinese consumers can buy products of Amazon Global conveniently which are currently only available in other countries. At the same time, SME in China and export to other countries with respective services from Amazon.

Under the MOU, Amazon China will invest and build Amazon China International Trade headquarter in the FTZ, promoting Shanghai to be a global hub for cross-border trade. Meanwhile, Amazon plans to build logistics and warehousing centers in the free trade zone. Amazon selected product will enter the Chinese foreign trade zone by cross-border e-commerce platform, while the domestic high-quality merchandise from SME easily gets exported to overseas markets.

Amazon China is among China’s top online B2C platform though it has a small market share. Compare Amazon with Alibaba, or Amazon with Jingdong to find out more.

China mobile shopping market total transactions reached RMB168.39 billion (US$27.3 billion) in the second quarter of 2014, representing 26.8% of total online shopping transactions in the same period in China, an increase of 24.6% compared with the first quarter.

China’s Top Mobile Retailers in Q2 2014

Taobao dominates mobile shopping market in China with over 84.2% market share by total transaction value, followed by Jingdong, VIP.com and mobile e-commerce operator MMB.cn.

Mobile Shopping to Continue Strong Growth in China

iResearch estimates China mobile shopping market is going to exceed RMB800 billion (US$129.7 billion) this year, 30% of total total online shopping transactions; over half of China’s online shopping transactions will be on mobile by 2016.

In 2013, China online shopping market total transactions reached RMB1892.49 billion (US$306.74 billion) and 14.5% was from mobile. 76.4% of total mobile retail GMV in China was from Alibaba (US$51 billion).

Also read: China’s Post-90s Favor Mobile Shopping

Transactions generated from Chinese B2C online retailers reached RMB284.5 billion, 40.4% of China’s total online shopping transactions in Q2 2014; and it is expected to continue to grow and surpass C2C online retail market in 2015.

Also Read: China Online Shopping Total Transactions Reached $101B in Q2 2014, Exceeding 10% of Total Retail, or B2C stats in Q1 2014

Tmall, JD, Amazon are well known online retailers in Chinese market, but who else? Here is the inforgraphic of the top 30:

Morningstar puts Alibaba’s equity value at $220 billion and expects the Chinese e-commerce giant’s IPO to raise $26 billion.

Alibaba is China’s e-commerce giant, in many sectors including B2B, B2C and C2C on both mobile and PC online shopping. Is Alibaba generating more revenue than Amazon? Let’s take a look:

Amazon’s et sales increased 22% to $74.45 billion in 2013, compared with $61.09 billion in 2012 while Alibaba had revenue of $7.7 billion last year. However, Alibaba’s net profit is more promising than Amazon:

Amazon announced its investment of USD 20 million in China’s online food retailer Yummy77.com. Amazone entered Chinese market ten years ago with the acquisition of Joyo.

Yummy77 is an online retailer targeting Shanghai, focused on fresh and gourmet food including seasonal fruit, eggs, meat, dairy products and etc. It will continue its independent operation and expand beyond Shanghai with the investment.

China’s total online shopping revenue in B2C market reached 181.92 billion yuan (USD 29 billion) in the first quarter of 2014, up by 44.6% compared to the same period in the previous year, with much faster growth than C2C market (up 18.3%) according to data from Chinese research company iResearch.

Tmall and JD.com remains the top leaders in B2C market, followed by VIP.com, Yixun.com, and Amazon China.

Word said that Alibaba’s evaluation grew 9.8% because of the Q4 good financial performance in 2013. According to Bloomberg’s data, Alibaba’s evaluation reached $168 billion, in that way, Alibaba would surpass Amazon’s market value.

Carlos Kirjner, Sanford Bernstein’s analyst, claimed that Alibaba’s evaluation was too conservative and suggested to increase Alibaba Group’s evaluation to $245 billion.

But in comparison with eBay and Amazon’s profits and market values, evaluating in regards of revenue and profit was not reasonable. High profit does not necessarily lead to high market value.

eBay’s Q4 revenue reached $4.53 billion in 2013, with 13% YoY increase; and its net profit reached $850 million with 13% YoY increase. Amazon’s Q4 revenue reached $25.59 billion, with 20% YoY increase; its net profit was $239 million, with 146% YoY increase.

eBay’s net profit was higher than Amazon’s in Q4 2013, however, Amazon’s market value reached $148.4 billion while eBay’s market value was $71.16 billion. In some ways, Alibaba’s more like eBay and Jingdong resembles Amazon.

In Q4 2013, Alibaba’s net profit reached 8.46 billion yuan (USD 1.37 billion), while Jingdong’s net lost was 110 million yuan (USD 17.819 million) and Amazon’s net profit 1.487 billion yuan (USD 239 million).

Alibaba’s Q4 net profit had a 66% YoY increase and 72% QoQ increase in 2013, which was attributed to promotion activities. During “double 11“, Taobao and Tmall’s sales hit $5.6 billion. Excluding seasonal factors, Alibaba’s net profit was still ahead of Amazon and Jingdong.

Alibaba’s net profit rate hit over 40% in 2013, while Jingdong’s net profit rate was lower than 1%.

The difference between Alibaba and Jingdong’s net profit rate was because of their different business model. Alibaba makes profit by taking commission fee from online store owners, Tmall’s commission fee boosts the fast growth of Alibaba’s revenue. Taobao drives a large free traffic to Tmall, and Tmall’s commission fee is between 3% to 5%, or even higher. As long as Tmall’s GMV grows, revenue from Tmall will keep growing.

Jingdong’s business model is to sell products online. Just like Amazon and dangdang, Jingdong has relatively low net profit rate.

Take Amazon as an example, though Amazon’s scale grows over the years, its net profit rate remains between -2% to 1%. In 2013, Amazon’s net profit rate reached 0.9% which was quite good.

One characteristic of B2C websites is that their operating cash flow will keep growing. In 2013, Amazon’s operating cash flow reached $5.47 billion, with 31% YoY increase. Its free cash flow was $2.03 billion, a lot higher than 2012’s $395 million. In the battle with eBay, Amazon came on top later.

It’s the same with Jingdong, by December 2013, Jingdong’s cash and cash equivalents totaled 10.81 billion yuan (USD 1.75 billion). What’s more, Jingdong also had the support of Tencent. It is said that WeChat will open API to Jingdong by the end of May 2014. Jingdong will open an E-Commerce Store on WeChat.

Alibaba’s business model require the growing number of stores on Tmall, however, the rising of Jingdong will steal a part of revenue from Alibaba.

As Jack Ma, founder of Alibaba, announced the strategy of “cloud app”, the two global giants in e-commerce – Alibaba and Amazon confronted with each other in cloud service.

In Beijing office, AWS (Amazon Web Service) China was fighting for their goal in the first quarter of 2014: the first batch of Chinese clients will be invited to try AWS in China. Not long ago, AWS declared its entering into Chinese market.

In Hangzhou, headquarter of Alibaba, Jack Ma gave a careful consideration during 2014 Spring Festival and decided not to focus on the wins and losses on mobile terminal at one time. “Alibaba should lay emphasis on cloud service, and cloud app will be the star of future mobile market.”

Alibaba made quick moves about cloud service in a week: On February 24, Alibaba allied with Neusoft (the biggest Chinese multinational provider of software engineering services, IT services, etc.) to develop cloud service; On February 27, Alibaba invested in Hainan Province to build a “Future City”; On March 1, Jack Ma flew to Guizhou Province to start business in cloud service.

Since the set up of “cloud computing center” in 2008, the status of cloud service in Alibaba has never been so important. Except for internet finance, it could raise the capital market’s expectation of Alibaba; compared with other enterprises such as Tencent, cloud service targeting small and medium enterprises is suitable to the advantage of Alibaba which are big data and platform.

In technology, two things were notable. One was in July 2013, Alibaba completed a three year plan of “de-IOE”, in other words, not using IBM minicomputers, Oracle Database and EMC storage. Alibaba used computer cluster of low cost PC to build supercomputer, which was the first Chinese internet enterprise to fulfill “de-IOE”. In October 2013, Alibaba finished its 5K plan independently, with a single cluster servers of 5000 computers to complete 100 TB sorting in merely 30 mins. It beat Yahoo’s record in July 2013 of 71 mins. Ali Cloud became the first enterprise to offer 5K cloud computing service.

AWS In China

AWS was launched in 2006, offer IT services and grew to be the number one in global cloud computing. Amazon announced on December 18 in 2013 to enter into Chinese market, the tenth of AWS in global market. Meanwhile, Ali Cloud and Tencent Cloud gave 40% or 50% off when AWS entered China. Besides AWS, Micosoft Cloud also came to China in 2013 and IBM planned to develop cloud computing as well.

AWS is invincible in global market, Amazon is going to conquer Chinese market. China market means everything for Alibaba, therefore it lowered its price by 30%, invested 100 million yuan (USD 16.27 million) to cultivate partners and tried to expand Ali Cloud to overseas market in 2014. It is said that “Alibaba wants to be the Amazon of China, while Amazon wants to be the Amazon of China.”

Comparisons of AWS and Ali Cloud

Price

Cloud computing’s biggest advantage is cheap price. AWS’s annual service of single-core CPU and 2G RAM costs 3,530 yuan (USD 574), Ali Cloud costs 2,368 yuan (USD 385). Dual-core CPU and 8G RAM of AWS costs 14,212 (USD 2,312), while Ali Cloud only costs 6,452 yuan (USD 1,049).

Tech

Though AWS is generally better than Ali Cloud in technology, but in China, Ali Cloud’s performance beats AWS.

Products

In Cloud Services, AWS accumulated a series of products, such as AWS IAM, Cloud Watch and CDN, etc. Their clients could have a complete solution. Alibaba announced that they would beta-launch its mobile cloud platform in the middle of March 2014, aimed at providing one-stop solution for clients.

Stability

On Christmas Eve of 2012, Netflix users could not watch videos because of Netflix cloud provider AWS data center broke down. That was the third time AWS broke down. Ali Cloud had few big clients, so there was no break down of this kind happened before. As the biggest e-commerce enterprise in China, Alibaba faced severe challenge of traffic peak during Double 11.

Resources

Amazon’s data center has the cutting-edge advantage in global, however, Alibaba is in control of scarce resources in China. Alibaba set up data centers in Hangzhou, Beijing and Qingdao, and is currently building data centers in Inner Mongolia and overseas.

AWS intended to cooperate with Chinese CDN enterprise Wangsu to avoid high expenses of purchasing BGP (Boarder Gateway Protocol). Another problem laid in front of Amazon is the regulation from Chinese government.

How Amazon Achieved Profitability

Guotai Junan Securities did a profit analysis for Amazon, it found out that if other operating revenue was excluded, the gross margin would drop by 3 to 4 percentage points. Amazon’s net profit margin was around 3% before 2011, which indicated that if other operating revenue excluded, the company’s net profit margin was zero. In the recent years, Amazon’s third parties revenue kept growing, probably accounted for 30%. Therefore, if third parties commission and advertising revenue excluded, Amazon’s net profit margin would be negative value.

According to the analysis, Amazon B2C platform brought traffic to the site, while third-party platforms, warehousing, cloud service and advertising were the key drivers of revenue.

Jingdong Compared with Amazon

Jingdong’s revenue in 2013 was approximately one sixths of Amazon, and its loss was narrowing. In the first three quarters of 2013, Jingdong realized 60 million yuan (USD 9.79 million) net profit and its operating profit margin was -0.64% which was 4.82 percentage points less than that of 2012. Its net profit margin was 0.12%, achieving profitability for the first time.

In Q3 2013, Jingdong ranked the second in China B2C market, with 18.3% share. And Jingdong led independent sale market with 39% share.

Why did Jingdong achieve profitability?

In the first three quarters, Jingdong’s operating revenue was -316 million yuan (USD 51.55 million) and its net profit was 60 million yuan (USD 9.79 million). By analyzing Jingdong’s financial statements, we could discover that interest income was 222 million yuan (USD 36.22 million), other operating income was 164 million yuan (USD 26.75 million). Interest income and other operating income added up to 386 million yuan (USD 62.97 million), deducted 10 million yuan (USD 1.63 million) tax and plus -316 million yuan (USD 51.55 million) which was equaled to net profit.

Therefore, the source of Jingdong’s profit came from interest income, government subsidies and tax refund. B2C was still at a loss, it was similar to Amazon but Jingdong’s profit was not sustainable.

How did Jingdong’s negative operating revenue narrow down?

The main reasons for Jingdong’s negative operating revenue narrowing were the decrease of capital expenditure and logistics cost rate and marketing cost. Jingdong’s capital expenditure was merely 210 million yuan (USD 34.26 million) in the first three quarters of 2013, while the capital expenditure in 2012 reached 1.287 billion yuan (USD 209.96 million). At the same time, logistics and marketing costs together dropped 2.74 percentage points. Considering these factors, Jingdong’s profitability did not turn good in 2013.

Differences between Jingdong and Amazon

1. Jingdong’s capital expenditure was far less than Amazon’s. The reason why Amazon’s net profit margin decreased since 2011 was mainly because of capital expenditure increasing. In 2011, Amazon’s capital expenditure was 1.811 billion yuan (USD 295.44 million), with an 85% YoY increase. It increased 109% the next year, reaching 3.785 billion yuan (USD 617.48 million). Though the capital expenditure in 2013 decreased slightly, it still maintained as 3.444 billion yuan (USD 561.85 million). Amazon’s large amount capital expenditure mainly used to build storage centers, which became one of main sources of income.
2. Jingdong had relatively lower technology investment. In the first three quarters of 2013, Jingdong’s technology investment was only 688 million yuan (USD 112.24 million), with 1.4% rate. While Amazon invested 4.703 billion yuan (USD 767.24 million) in the same period, with 9.62% rate. Besides, Amazon’s technology investment tended to increase prominently. It mainly invested in cloud service platform, which was another secret of Amazon’s profitability and better use experience.

Jingdong’s gross net profit was lower than Amazon, Vipshop and dangdang because of product mix. Jingdong’s logistics cost rate, marketing cost rate, and technology cost rate were all lower than the other three competitors, but it had higher inventory turnover rate which was 12.5 times in 2011. But it tended to drop slightly in the recent two years. Besides, it was also found that the difference between days payable outstanding and inventory turnover days was growing, which means Jingdong took up suppliers’ payments for goods increasingly longer.

In the first three quarters of 2013, Jingdong’s cash and equivalents was 8.812 billion yuan (USD 1.44 billion) and its accounts payable was 10.678 billion yuan (USD 1.74 billion). When restricted cash of 999 million yuan (USD 162.97 million) considered, the difference still was 867 million yuan (USD 141.44 million). It could only be paid off by getting short-term investment of 3.468 billion yuan (USD 565.77 million) back.

Financial indicators of Jingdong, Amazon, Vipshop and dangdang.

Enfodesk published its 2013 Q3 China B2C Market Report recently, China B2C market reached 162.4 billion yuan (USD 26.52 billion) with 50% YoY increase.

According to China B2C independent sale market performance, top 3 enterprises market share added up to 54.4%, 2% higher than Q2 2013. It was mainly because big B2C enterprises encroached small B2C enterprises’ market shares, Jingdong led B2C independent market with 38.8% share. Suning ranked the second with 9.9%, followed by Amazon China with 5.8%.

Because of market promotion, Jingdong website’s traffic hit apex in the middle of August 2013, and it hit another apex in the beginning of September but it soon went down by the end of September. Yixun (51buy) traffic went up in Q3 2013 with a large part of traffic guided from Tencent. Dangdang’s traffic went up in July and September for its two promotion campaigns. Suning’s traffic went up in August because of its anniversary celebration.

Tmall, Jingdong and Dangdang ranked the top 3 B2C platforms active users. Tmall active users growth slowed down, while Jingdong and Dangdang’s active users kept growing steadily.

Dangdang remained leader in conversion rate, and its Q3 conversion rate grew a little bit. Amazon China’s conversion rate increased a little by optimizing pages. Yihaodian launched market promotion in July and drove a lot of traffic, but its conversion rate dropped.

In Q3 2013, B2C clothing market reached 49.09 billion yuan (USD 8.03 billion), with 78.7% YoY increase. Vipshop had a good market performance in Q3.

In Q3 2013, B2C 3C products market reached 57.22 billion yuan (USD 9.36 billion), 35.2% of total B2C market. It increased 63.9% compared to Q3 2012. The difference between Suning and Jingdong enlarged by 2%.

In Q3 2013, Maternal and Child products B2C market reached 9.06 billion yuan (USD 1.48 billion), with 160.3% YoY increase and 26.4% QoQ increase. Maternal and Child products B2C market was growing quickly and became the new key market to fight over.

In Q3 2013, B2C publication market reached 3.87 billion yuan (USD 633 million), with 34.4% YoY increase and 6.3% QoQ increase. Dangdang remained the leader in publication market with 39.1% market share, 2% higher than Q2 2013. Amazon China ranked the second with 23.7%, Jingdong ranked the third with 16.5%.

Because 3C products had relatively high unit price, so 3C products market had a high percentage on the whole. But 3C products profit was low. Therefore, by examining B2C platforms excluding 3C products could give us a more objective assessment of B2C platforms. Non-3C products included clothing, publication, cosmetics and skincare products, maternal and child products, during which clothing had a big market share.

Sina tech news released on December 18 2013, that Amazon Web Service (AWS) achieved strategic cooperation with cloud valley belonged to China Broadband Capital (CBC). AWS finally was ready to launch AWS in Chinese market.

It’s very likely that AWS and CBC would build data base in Ningxia province and locate operating center in Beijing. The specific cooperation between AWS and CBC was still unclear, but it might refer to Microsoft’s Windows Azure model.

On November 1 2012, Microsoft agreed with 21Vianet Group, a carrier-neutral internet data center services provider in China to launch Microsoft Enterprise Cloud Services Office 365 and Windows Azure in China. Microsoft offered technology support, and 21Vianet Group operated these two cloud services in China. Microsoft successfully avoided telecom value-added services license issues.

Word had been spreading that AWS to enter Chinese market so many times. The most recent rumor was in the beginning of 2013, actually, Amazon did made several preparations for entering Chinese market. Amazon launched Chinese website by the end of 2012 and began recruiting Chinese staff. Seemingly, Amazon was about to enter Chinese market very soon, but then the cooperation negotiation was dominated by Amazon American company and it didn’t end well.

Amazon chose CBC this time probably because the latter’s success in helping Evernote enter Chinese market. AWS had developed over 10 years, in 2001, Amazon global began offering web technology support and operation for offline retailers which was the predecessor of AWS. In 2002, Amazon offered AWS paid services to third parties. Now, AWS was one of the fastest growing business of Amazon, Evercore Partners analysts predicted that Amazon’s market value would surpass USD 50 billion in 2015.

AWS was invincible in the U.S. market, but it faced fierce competition in Chinese market with Alibaba Cloud Computing, Baidu Cloud Storage, Sina Cloud and Ucloud. Ucloud CEO told media that AWS entering Chinese market would be a good thing for Chinese cloud services companies, because of its high-profile in cloud services could help developing Chinese market.

AWS still faced localized operation difficulties, Ucloud CEO said that if AWS want to win Chinese market, they need to focus on product development, technology support and sales. Kaifu Lee once told media in May 2013, that the era of global enterprises operating their businesses in China through its subsidiary coporations had failed, AWS could only had the chance to compete in Chinese market by authorizing its technology to a single Chinese company.

According to Enfodesk, China B2C market reached 162.4 billion yuan (USD 26.47 billion) in Q3 2013, with a 3% QoQ increase and a 50% YoY increase.

China online sale reached 415.3 billion yuan (USD 67.7 billion) in Q3, 41% more than 2012. B2C occupied 39% of total online sale, catching up with C2C market.

Tmall, Jingdong and Suning remained the top 3 B2C enterprises. Tmall and Jingdong both increased by 0.3%, reaching 49.2% and 18.3% share. Tencent’s QQ buy and 51buy market shares went up a little due to large traffic driving from Tencent platforms.

In Q3 2013, B2C independent sale market concentration increased, top 3 enterprises’ market shares together occupied 54.5%, increasing almost 2% compared to Q2. Jingdong led the market with 38.8%, 1.2% more than Q2; Suning ranked the second with 9.9%; Amazon China remained the third with 5.8%, but dropped slightly in Q3.

You may wonder, how much would it cost to enter major e-commerce platforms in China? Here’s an illustration with apparel and clothing category.

In the example of clothing and apparel, in Tmall, it would cost 100,000 yuan (USD 16,218) for security deposit, and 60,000 yuan service fee (USD 9,730). Commission charge is 5% of sales revenue.

Security deposit is a certain amount of money which China online shops need to payHow to B2C platforms, ranging from 5000 to 100,000 yuan (USD 811 to USD 16,215 ). Security deposit is used to prevent e-shops from cheating consumers. Once the fraud happens, B2C platforms would use the deposit money to compensate consumers. And service fee is the annual B2C platform service fee, it is paid monthly. Commission is the percentage of each trading charged by the B2C platforms. The total cost of entering a B2C platform is the sum of security deposit, service fee and commission. 

Jingdong’s security deposit is 10,000 yuan (USD 1,622), and service fee is 6000 yuan (USD 973), with a 8% commission rate. Dangdang is the same as Jingdong. Yihaodian costs even less, 5000 yuan(USD 810) security deposit and 3600 yuan(USD 584) service fee with a 6% commission rate. QQbuy costs 20,000 yuan (USD 3,244)for security deposit, 6000 yuan (USD 973) service fee. Commission is 5%. Amazon doesn’t charge security deposit and service fee, but charge a 10% commission.

In the first half of 2013, China mobile e-commerce reached 53.2 billion yuan(USD 8.6 billion), with a YoY increase of 44.1%. It is expected to reach 130 billion yuan (USD 21 billion) by the end of 2013.

In 2012, the mobile e-commerce enterprises were 250.5 million. It is estimated to be 372.5 million in 2013. By the end of June 2013, the mobile e-commerce users reached to 78.05 million, to be 155 million by the end of 2013. The mobile shopping time was between 8 -10 am and 6-8 pm, most people during which were taking a bus or metro.

When asked why shopping on mobile devices, 54% said it was convenient to do mobile shopping, 28% believed they could find cheaper products and 5% did it just for fun.

The popularity of smartphone is the driving power of mobile e-commerce. At the same time, Tmall, Jingdong and Amazon launched their mobile app, increasing shopping frequency on mobile.

Mobile shopping is not limited by time or location, making mobile e-commerce be completed any time and anywhere. The bigger smartphone screen and better webpage design have improved user experience. The app development, QR code and mobile payment all contributed to shorten shopping procedures and improve mobile shopping convenience.

More and more e-commerce enterprises are going to compete in mobile market soon.

According to Hitwise, Jingdong is the most visited B2C website with over 462 million visits, who also had the fastest month-on-month growth of 30%.  

Tmall ranks the second with over 459 million site visits, up 6% and followed by 51buy.

However, some Chinese B2C enterprises site visits dropped in May. Suning had a big drop by 16%; Amazon China visits down by 7%; site visits of Vancl and dangdang almost remain the same as April.

According to Experian Hitwise,  tmall.com was the most popular B2C website in China with 432,456,034 visits in March 2013, followed by jd.com and 51buy.com. There were also conerns that the visits growth rate of Tmall was up to 53%,  far exceeding that of jd.com.

China’s first quarter online shopping transactions was 228.2 billion yuan, down 0.8% over the previous quarter but up 40.9% over the same period last year.

Transactions on C2C sites totaled 166 billion yuan (72.8%) and B2C totaled 62.2 billion yuan (27.2%). Taobao continues to dominate the C2C market with over 95% revenue share and tmall (previously Taobao Mall) leads B2C platform trading with 51.5% market share.

No one seems to be able to replace Taobao as the number one online shopping portal whose total sales last year exceeded 100 billion yuan (about USD $15.88 billion) with strong growth in mobile.

According to Analysis International data, China B2C total B2C sales reached 240.1 billion yuan last year. Check out the fast growing B2C sites in China.

According to iResearch, the fastest growing B2C website in 2011 by total number of orders is womai.com (owned by China National Cereals, Oils and Foodstuffs Corporation; or, COFCO), followed by vjia.com (owned by VANCL) and yaodian100.com.