China’s e-commerce sector has experienced significant shifts over recent years. These changes have been driven by emerging platforms, evolving consumer behaviors, and strategic adaptations by established players. We expect the market to remain fragmented, with intensified price competition on the horizon. As a result, it is imperative for brands to adopt a more integrated approach to their commercial and customer operations.

Four key lessons for brands operating within the Chinese market

1. Leveraging emerging platforms to drive sustained growth

Traditional e-commerce platforms like Tmall and JD.com have seen slower growth compared to emerging platforms such as Pinduoduo and Douyin (the Chinese version of TikTok, both owned by ByteDance). According to our estimate, emerging e-commerce platforms all experienced a growth rate of more than 30% in gross merchandise value (GMV) in 2023, while the traditional platforms only saw single-digit growth or even a decline. 

These new players are rapidly gaining market share by innovating in such areas as social commerce and short-video integrations. Douyin has aggressively pushed into e-commerce through content-driven strategies, setting a new standard for how shoppable content can directly drive sales. By treating the media as a storefront, Douyin reinforces the dual role of content in simultaneously driving both awareness and transactions.

The lesson here is clear: sales follow eyeballs. The platform that controls demand has the power over the consumer journey and first refusal to directly empower brands to engage direct to consumer. To achieve sustained growth, adaptability and leveraging these new platforms are crucial. Brands should explore and embrace emerging platforms to stay competitive and reach new audiences.

2. Synergizing content and commerce to boost sales and visibility

The concept of media as storefront is gaining momentum, as content plays an increasingly pivotal role in e-commerce. Brands are now strategically leveraging influencers and content creators to create compelling narratives, including livestreams, that engage audiences and convert them into customers. This synergy between content and commerce is proving to be a powerful driver of sales and brand visibility. To stay competitive, retailers should develop robust strategies that not only entertain and inform but also drive transactions through integrated shopping features.

For example, L’Oréal China achieved over ¥2 billion (more than €100 million) of GMV in 2023 by confidently investing in the channel and leveraging its expertise in direct-to-consumer commerce. By launching influencer-led campaigns and using a data-driven approach to tailor offerings, L’Oréal has made Douyin a key platform in China’s beauty market, highlighting the impact of integrated content and commerce.

3. Strategically balancing value and quality of products and services

Value for money is more critical than ever, but the key is to choose the right battles in delivering value rather than constantly competing on price alone. With intensified price competition, particularly from local brands positioned as affordable alternatives to premium global brands, companies must justify their price premiums effectively. This involves highlighting superior product features, leveraging upstream advantages, and ensuring transparent and rational promotion strategies. Brands should focus on enhancing their upstream capabilities, such as securing high-quality raw materials and leveraging technological advancements, to create products that justify their pricing through superior quality and innovation. By strategically balancing value and quality, brands can stand out in a crowded market.

4. Doubling down on high-value consumers for repeat purchases

We estimate that customer acquisition costs soared by three to five times over the past five years across China’s e-commerce platforms. That creates a greater necessity for companies to focus on driving customer engagement through quality rather than quantity. Fortunately, advancements in data analytics enable brands and retailers to enhance their capabilities to capture multidimensional consumer data, including purchasing behaviors and occasions, from both offline and online channels, as well as different online platforms. This valuable data helps brands target high-value customers.

This strategic focus is essential for building loyalty and driving sustained growth. Traditional platforms in China are pivoting back to their core businesses, emphasizing user experience by simplifying promotional mechanics and diversifying member benefits. This approach ensures that high-value consumers feel valued and engaged. Retailers should leverage cross-platform data to deepen their understanding of these consumers and tailor strategies to their needs and preferences, ensuring loyalty and driving repeat purchases and long-term engagement. 

Linking lessons from the local market to global e-commerce

China’s e-commerce evolution also offers valuable lessons for international brands looking to understand and capitalize on global trends. We recommend these key strategies for success: 

Adopt an integrated content commerce approach

Leading multinational brands in China are eagerly adapting to this unique ecosystem by embracing a more integrated approach and are beginning to export this knowledge to international markets to gain a competitive advantage. Building the “content commerce” muscle will be a critical success factor for brands operating online. 

Take strategic control of marketing operations

Marketing operations, including content creation and campaign orchestration, are often outsourced to media partners and agencies. With the shift towards integrated content commerce, taking strategic control of these outsourced capabilities is essential and could be an early “no-regret move” for brands. 

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