No results found. Please try again.


E-commerce Extension

We published an introduction piece on the e-commerce industry called 'The spending tap – A look at China's booming e-commerce sector' earlier this year, where we focused on Alibaba, which is a dominant industry leader in China. Now, we would like to walk through the business models and competitiveness of second-tier companies, namely (JD), Pingduoduo (PDD), and VIPShop (VIPS), as these players appear to have been gaining market shares this year.

JD is the second largest e-commerce player in China, with a fairly stable 20% market share in the past few years. The company started its business as Business to Consumer (B2C) or 1P (first-party) model, compared to Alibaba's market place or 3P (third-party) model. JD controls its logistics that have been meaningfully benefited during COVID-19. Most of its competitors relied on third-party logistic companies and faced a supply-side issue as many delivery workers were not able to come back to work after the Chinese New Year holiday due to nationwide lockdown. Brand awareness of JD is lower than Alibaba/Taobao, particularly in lower-tier cities, and JD also has a brand perception of selling products that are more expensive than Taobao. But COVID-19 made many consumers download the JD app and experience its high-quality service. JD has higher sales contributions from consumer electronics and home appliances, which accounted for over 40% of its GMV (Gross merchandise value) in '19, and it is thus skewed towards more male customers than its peers. It will be interesting to see whether it can gain more female users with the fast-growing grocery segment, which has become the key focus of the e-commerce industry since the COVID-19 outbreak.

PDD is a dark horse in this industry, reaching $100bn GMV in four years, which JD took 13 years to achieve. PDD currently takes up over 10% of the e-commerce market share by GMV. It has 628mn customer base and is currently the second-largest e-commerce player in terms of annual active customers just after Alibaba. The company operates 3P platform similar to Taobao. PDD's success comes from its unique business model combining bargains and social/entertainment. It pioneered a bulk purchase strategy whereby groups of friends, families, or colleagues get greater discounts by the formation of larger purchasing sizes through Wechat. Tencent is currently the second-largest shareholder of the company, with a 16.5% stake. The company sources products directly from manufacturers to get products at the lowest possible prices, and also it offers massive discounts on a few stock keeping units as traffic drivers to its platform. It is somewhat similar to a discount retailer Costco in the US but with no membership fee. PDD is also the first company to launch "RMB10bn subsidy" marketing campaign in the industry, which has been very successful in attracting new customers.

Having said that, the company is still loss-making due to its high spending on sales and marketing, including subsidies. PDD started with a brand perception of selling cheap and low-quality products but has been trying to transform its brand image by attracting more brand owners to sell on its platform and pushing more customers to buy branded goods on PDD. It will be interesting to see whether customers will buy branded goods without subsidies on the PDD platform and, more importantly, whether the company can become profitable and grow sustainably going forward.

VIPS is a niche e-commerce player compared to JD and PDD with a single-digit market share. Yet, it is currently by far the largest e-commerce discounter in China. The company mainly focuses on off-season apparel and related categories and is an online version of TJX in the US. VIPS once tried to expand into in-season apparel and also beyond apparel but realized that it did not have enough resources such as scale, traffic, capital, etc. to compete with Alibaba and other bigger players and thus turned their focus back to their key strength two years ago. VIPS is a beneficiary of COVID-19 due to the high levels of inventories of apparel in China. The management shared that off-season inventory tends to be in the range of 20-50%, and the current clearance business is expected to be at the high-end of the 40-50% range of annual apparel consumption in China. We are less concerned about the competition with bigger players as it focuses on its core strength, which is merchandising expertise. More importantly, all major e-commerce players prefer to be a platform for in-season products, and brand owners usually do not want to sell their in-season and off-season products together on the same screen as this may confuse consumers about brand perception and is detrimental to brand value. Thus, VIPS may be one of the preferable options that brand owners can use for inventory clearance and other major e-commerce platforms for their in-season products. The company has turned its focus to top-line growth and lowered the free shipping threshold from Rmb 288 to Rmb 88 with free returns since December '19. It will be interesting to see how the company leverages the current situation to gain growth momentum going forward.

Until PDD emerged, China's e-commerce market seemed to remain as a firm duopoly market because not many could imagine any new entrant that was able to gain scale to compete with Alibaba and JD. Now with PDD gaining more than 10% of market shares in such a short period, we are expecting to see more prominent companies like Bytedance, Tencent, and Kuaishou joining meaningfully into this competition through social commerce in the coming years. This will further accelerate offline to online shift and will likely see fast-changing competitive dynamics in the e-commerce industry.

Staying Ahead with Mirae Asset’s Latest Insights

Mirae Asset Global Investments adheres to a strictPrivacy Policygoverning the handling of your information and subscribers can opt-out per their preference.

Disclaimer & Information for Investors

No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only.  It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.

The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements.  Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.

Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.

Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.

Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.

Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.

The Company’s Prospectus and the KIIDs can be obtained from . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.

A summary of investor rights is available in English from

The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.

Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.

Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.


  • Unit 1101, 11/F, Lee Garden Three, 1 Sunning Road, Hong Kong


  • 2295 1500

This website is intended for Hong Kong investors only. Your use of this website means you agree to our Terms of use. This website is strictly for information purposes only and does not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances. Further, this website should not be regarded by investors as a substitute for independent professional advice or the exercise of their own judgement. The contents of this website is prepared and maintained by Mirae Asset Global Investments (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.