Online Shopping Squeezed in China

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Online shopping in China is increasingly taking on the appearance of an oligopoly. This is a market structure where a cluster of large firms seizes control between them and dominates (although many small firms may carve out niches). The chief dangers that internet consumers face in oligarchic industries are collusion and a narrow band of prices.

China’s Online Shopping Tritons

Online ShoppingTriton is the messenger of the sea in Greek mythology. China’s three cyber shopping messengers are Alibaba, Baidu and Tencent. These have seized control over China’s internet shopping through mergers and acquisitions, and there are no signs of slacking off.

Baidu, the largest of the three announced on June 30, 2015 that it will pour a further US$3.2 billion into its Nuomi group online shopping platform.

Baidu’s Nuomi Discriminator

Companies involved in oligopolic trading must appear different from each other so as not to present themselves as a de facto monopoly squeezing customers. Baidu is rebranding Nuomu as delivering business opportunities. It calls its ‘O2O’ online-to-offline business strategy ‘Membership Plus’. Time will tell whether this relates to more members, or better deals for online shopping consumers.

The Baidu Offline Online Shopping Deal

In Baidu’s ecommerce model, the internet company plans to promote Membership Plus businesses by incorporating an app into their points of sale. This app will link to prepaid consumer debit cards. This represents a mind shift from providing people with information, to connecting them directly to services.

Tencent Already Snapping at Baidu’s Heels

Nuomi’s archrival Tencent spent US$736 million earlier last month buying just short of a 20% stake in online shopping spin-off 58.Com. Alibaba is also on the acquisition trail having invested US$695 million in the bricks-and-mortar InTime retail firm.

The divide between online and offline shopping is blurring, following moves into physical retail space by three tritons previously dedicated to online shopping.

About Author

Social Brand Watch (SBW) is a collection of experts in digital, mobile and social media in China. SBW was created to complement Resonance's China Social Branding Report, a bi-weekly report focusing on modern marketing methods of the world's top brands in China.

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