Electronic commerce

Electronic commerce refers to conducting business activities, especially buying and selling goods, by means of information network technology. In accordance with different transaction objects, e-commerce can generally be categorized into five types: business-to-business (B2B), business-to-consumer (B2C), business-to-government (B2G), consumer-to-government (C2G) and consumer-to-consumer (C2C).

China’s e-commerce has undergone three periods: the incubation stage from 1999 to 2005, the innovation stage from 2005 to 2015 and the lead stage from 2015 till now. Specific ecology and representative enterprises emerged in each phase on the basis of the then current technical conditions, and were soon replaced by others brought about by new technology.

1999-2005 - Survival of the fittest

In this phase, the core technologies are broadband networks, websites and search engines. A large number of e-commerce enterprises popped up and followed diversified operation philosophies and modes. Some long-established retail enterprises like Walmart engaged in e-commerce when setting up websites, portal websites such as Yahoo and NetEase expanded their business scope to e-commerce, and Amazon and eBay made attempts with direct-sale or platform-based e-commerce modes. Due to a lack of online payment systems, the competing e-commerce enterprises grew wildly and many platforms could only support offline transactions.

In China, the earliest e-commerce retailer was 8848, established in 1999; not Alibaba Group. It was 8848 that initiated the concept of online and offline integration. According to statistics from the China Internet Network Information Center, 8848 was the most visited business website in China in 2000 and was once rated by Timemagazine as the most popular e-commerce website in China. However, 8848 disappeared from the scene before long because of a succession of strategy mistakes.

2005-2015 - The winner takes it all

This period was greatly promoted by the development of online payment technology and logistics information technology. A batch of innovative enterprises offering comprehensive e-commerce service sprang up, including Taobao, JDcom and Suning, the commonly known e-commerce giants today. Taobao rose rapidly because of its Alipay and an online credit system. JDcom transformed from an offline enterprise to an online one soon and grew into an e-commerce retail giant after developing a highly efficient logistics system. Suning was also an offline electronics retailer and it successfully transformed to e-commerce in 2010 relying on its well-developed offline logistics system. These enterprises attribute their success to the boom of netizens during the decade.

2015-2019 - Latecomers surpass the formers

The industry situation has witnessed some notable changes today – some dominant and well-known e-commerce enterprises are encountering severe challenges from new formats of the industry. During this period, people got easier access to the Internet due to a new round of technological innovations and promotion, represented by smart phones, mobile internet, mobile payments, QR codes and all kinds of practical apps.

With the development of algorithm push technology, the new generation of netizens prefers to receive pushed contents rather than search for what they need on the e-commerce platforms. In this context, content e-commerce and social e-commerce are becoming more prevalent. Products such as the online news portal Toutiao, the short video platform Douyin and the popular instant messaging app WeChat began to combine their entertainment and social contact function with shopping and business affairs.

According to statistics from the Internet Society of China, the volume of China’s social e-commerce (WeChat business only) in 2018 exceeded 1.1 trillion yuan ($160 billion). Inspired by the idea of social group purchases, Huang Zheng founded the e-commerce platform Pinduoduo in 2015 and the company posted a gross merchandise volume (GMV) of 471.6 billion yuan in 2018, while it took the traditional e-commerce nearly a decade to make such an achievement.

As an outstanding representative of digital economy, e-commerce has demonstrated unprecedented potential in promoting consumption, maintaining growth, adjusting economic structure and expediting economic transformation. It also provides broad development space for mass entrepreneurship and innovation and serves as a major driver of China’s innovative social and economic development.

In 2018, the overall transaction scale of China’s e-commerce reached 28.4 trillion yuan, up 17.8 percent year-on-year. With the gradual improvement of the e-commerce industry, the transaction scale is estimated to surpass 30 trillion yuan in 2019, a yearly increase of 16.2 percent.