With respect to market share, in the first quarter of 2018, Tmall's total sales increased by 41.2% over the same period of last year, accounting for 59.6% of the market share, ranking first. The total turnover of JD.com increased by 25.0% year on year. Its market share was 25.3%, ranking second. Suning maintained a stable development trend. Its market share increased to 5.0% in the first quarter of 2018, ranking third. The market share of Vipshop and Gome was 4.1% and 1.3%, respectively, ranking fourth and fifth, respectively.
Compared with the fourth quarter of the previous year, the promotion efforts of platform vendors and the participation of users to some extent decrease in the first quarter of each year. But in an environment in which the penetration rate of online shopping continues to rise, the market leaders expect to maintain or even expand their leading edge, and the chasers hope to gain more recognition and development opportunities. Therefore, no one is willing to give up even a little bit of time to improve their own strength. Besides, during the Spring Festival, especially during the period before that, in fact, a large part of Chinese families will conduct centralized purchasing. However, most of such procurement transactions are completed by offline stores, as a large part of the personnel in charge of online shop operation, logistics, express delivery and others have left their post. In view of the manufacturers' willingness and the consumers' demand, it is natural that online platforms strengthen operations during the Spring Festival. Therefore, it has been seen that in recent years, major platforms conducted corresponding activities during the Spring Festival. Especially this year, Tmall, JD.com, Suning, Vipshop and other platforms launched the "No Closure in the Spring Festival", "New Year's Shopping Festival" and other campaigns. Accordingly, the major courier companies maintained normal operations during the Spring Festival.
In order to ensure normal operations and smooth implementation of activities during the Spring Festival, some courier companies increased the service fees during the Spring Festival. Major e-commerce platforms also took measures to guarantee the key markets. For instance, Tmall didn't shut up the business of small appliances and household items in more than 400 core districts and counties of more than 200 cities across the country, and didn't shut up that of large appliances and household items in more than 360 districts and counties of more than 90 cities. Cainiao Logistics applied big data forecasts, intelligent warehousing, intelligent sorting of orders and other core technologies and experience to the "No Closure in the Spring Festival" event; JD.com extended its logistics to nearly 300 cities across the country and more than a thousand core districts and counties during this period; Suning chose to cope with the pressure of logistics with more automated intelligent logistics equipment; Pinjun Express, an affiliate of Vipshop, offered higher remuneration to encourage the in-the-post employees and ensure a high attendance rate of the couriers.
In the first quarter, the Spring Festival activities were just a demonstration of competition between major e-commerce players in the current market. We may deem that as a short-term behavior. From a longer-term perspective, their strategic layout for the future retail market is more worthy of our attention.
After taking a stake in Gaoxin Retail in November last year, in January this year, Alibaba continued to invest in Gaoxin Retail, and achieved holding together with the concerted parties. Gaoxin Retail, the owner of the two store brands of Auchan and Darunfa, has more than 400 physical stores covering more than 200 cities in 29 provinces, municipalities directly under the central government and autonomous regions across the country, having a big influence in the retail market of China's hypermarket format. So far, Alibaba's shadow has appeared behind Intime, Sanjiang Shopping, Bealead, Lianhua, Yiguo, New Hua Du, Gaoxin Retail and other well-known retailers. Coupled with Freshhema, Lingshoutong, Taoxianda, Tianmaoxiaodian and other formats for which Alibaba has "done in person", the online entrances and offline entities of Tmall and Taobao, supply chain system, warehousing and distribution are being further integrated. In addition, the buyout and acquisition of Eleme were also a manifestation of continued consolidation of local living services. Based on the series of actions, it can be seen that the new retail model for Alibaba to open up the entire trading chain has taken shape.
Alibaba's continuous offline expansion, while bringing pressure to peers, also motivated online e-commerce companies to continue to go offline. In February this year, JD.com and Tencent officially took a stake in the key account of BBK. With the vision of jointly developing "smart retail" and "borderless retail", the three parties established a long-term strategic partnership. Then in March, an affiliate of JD.com, Jddj.com started to formally cooperate with BBK. The offline convenience stores of JD.com also expanded rapidly. According to the news released at the New Access Borderless Retail Industry Summit held by JD.com at the end of March, the convenience stores had scattered across all provinces of China and increased rapidly. JD.com's determination to expand offline is evident here.
While maintaining rapid growth on the Internet, Suning, which has the offline advantage of being at home, is still accelerating the layout of Internet stores based on the scenarios this year. In the first quarter, it vigorously promoted the "Smart Retail Development" strategy. The smart retail format groups, i.e. "One Big (Suning Plaza), Two Smalls (Suning Small Stores and Suning Stores in Counties and Towns), Multi-specialization (Suning Cloud Stores, Red Baby, Suxiansheng, Suning Sports, Suning Studios, Suningjiwu, and Suning Auto Stores)", are replicated more rapidly across the country. In the first quarter, Suning opened a total of nearly 600 new stores, including 190 new Suning Small Stores engaged in the sales of fast moving consumer goods and fresh products. The "Retail Cloud" that was officially launched at the beginning of the year is rooted in tiers 4, 5 and 6 markets, and, together with Suning Direct Sales Stores, constitutes the company's smart retail port sinking in the county and town markets. In addition, at the end of March, Suning officially launched Suningjiwu in Nanjing, which focuses on the sales of high-standard, personalized and stylish products. It can be said that Suning is constantly "intelligently creating" new species and reaching more consumers through the multi-point layout of shopping scenarios.
VIPshop's extension of offline business is slightly different from the players. As an offline project that Vipshop is working hard to promote, Pinjun Life is unlike its main online business of clothing and beauty products. The online storefronts mainly cover fresh fruits, seafood, snacks and other products. Although the categories of products are different, VIPshop still builds its retail ecosystem targeted at the female population. The majority of consumers of clothing, beauty, fresh food, fruits and snacks are women. From this perspective, the offline Pinjun Life is an extension of its online female consumer platform. For offline development areas, Pinjun Life also has its own way. It avoids the East China and North China markets that the players compete fiercely for and selects the South China market where the competition is relatively small. This unique layout will not only give greater space for the early development of Pinjun Life, but also seize opportunities and create influence in South China where the consumption power is strong. As of the end of the first quarter, Pinjun Life had already opened seven stores. Moreover, VIPshop has added its entrance to WeChat Wallet and the homepage of JD.com to achieve both online and offline multi-point collaboration.
Online e-commerce businesses successively take offline measures for strategic layout to grab the shares of the retail market in a multi-angle and multi-level way. What is the reason behind? We can analyze it from the following two aspects:
1. Gradually diminishing dividends from Internet and consumption networking: After the rapid spread of smart phones, the networking process in China has been suddenly accelerated. Today, there is not much room for Internet to permeate. Moreover, the rapid development mode relying on the Internet-based dividend has basically lost its driving force for continued growth in the e-commerce industry while the offline development opens a door for the future of the e-commerce industry. First, most of the current consumer behaviors are still completed offline and there are sufficient traffic resources offline. Compared with the crowded online space, the offline traffic cost is significantly low. Second, to contact with users online is subject to the factors such as equipment conditions, user habits, and information overlap and thus cannot be realized in a regular or timely manner. By contrast, if a full layout is made offline, the e-commerce businesses can make use of big data to accurately access to the users in multiple scenes every day. Third, after the offline layout for retail business, the e-commerce businesses can make offline layout for other business smoothly based on their prior experience on the one hand and on the other hand, obtain customer sources offline at a low cost so as to achieve the result of driving online business through offline business and then realize the synchronous development of online and offline business.
2. Common expectation and desire of e-commerce businesses for the future: Compared to the on-line "light mode," the offline retail involves more links and needs more investment, which enables its deep penetration into the commercial channels of the retail industry. However, the low efficiency and low growth make the traditional offline retail gradually be on a sticky wicket in the competition and need to be renovated in the transformation. By stepping into the offline business, the e-commerce businesses can export its capabilities of system docking, financial support, data matching, and intelligent analysis to the traditional retailers to achieve online and offline resources sharing, costs saving and efficiency improvement. The integration of the offline business into the online business and datamation involves industry rules and standards in supply chain, warehousing, distribution, product identification, user identification, payment and other digitized links. Whoever has more market share and greater influence in the industry will have the dominant position in the future standard setting process. Therefore, the e-commerce offline competition is in fact a competition for setting up industry standards and rules in the future.