The factories in Shaji, China, have begun to shift their allegiance from Alibaba Group Holding Ltd BABA to rival e-commerce platforms, citing a decline in Alibaba’s ability to guarantee sales.
What Happened: The factories in Shaji, a town in eastern China, have started to list their products on competing online stores, including Pinduoduo Inc. PDD, JD.com Inc. JD, and ByteDance Ltd.‘s Douyin, the Financial Times reported. This move comes as a result of a shift in Chinese consumers’ buying behavior, with cross-platform shopping becoming the new norm.
Merchants in Shaji, who previously relied solely on Alibaba’s platforms, have been forced to diversify their online sales. This shift highlights the challenges faced by Alibaba as it undergoes a significant restructuring while attempting to revive its core e-commerce business.
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Despite Alibaba’s efforts to support the factories, Pinduoduo, known for its low prices, has gained momentum, particularly as China’s economy slows down. This shift in the market dynamics has led to a decline in Alibaba’s rural market, with shoppers and sellers in small cities and rural areas no longer limited to Alibaba’s platforms as they were a decade ago.
Why It Matters: The shift in allegiance from Alibaba to its rivals comes at a time when the e-commerce landscape in China is undergoing significant changes. The market dynamics of China’s e-commerce landscape are shifting, with Pinduoduo surpassing Alibaba in market capitalization, signaling a noteworthy change in perceptions and market dynamics.
Despite these challenges, Alibaba’s international arm, Alibaba International, has been recording solid growth, with a 44% increase in revenue in the final three months of last year. The strong performance of Alibaba International, led by its AliExpress B2C platform, has been a significant contributor to Alibaba’s overall growth.
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