WeChat and TikTok Onslaught... Alibaba's Market Share Plummets 27%

Intensified Competition and Changes in Online Shopping Trends

[Asia Economy Reporter Yujin Cho] Alibaba, which is going through its biggest crisis since its founding due to Chinese government regulations, is facing a new threat of a sharp decline in market share, the Wall Street Journal (WSJ) reported on the 17th (local time).

According to the report, Alibaba's share of China's e-commerce retail market has plummeted by 27% over six years, from 78% in 2015 to 51% this year.

The sharp decline in Alibaba's market share, which had held an impregnable e-commerce throne for 15 years, is the result of intensified competition due to the activation of non-face-to-face markets and changes in online shopping trends.

As the online shopping market matures, consumer tendencies to shop across various platforms instead of relying on a single platform have increased.

Alibaba's competitors have been agile in responding to this trend shift from 'search to browsing,' thereby increasing their market shares.

Tencent quickly expanded its presence by introducing shopping services on WeChat, a messenger with a user base of over one billion people.

E-commerce company Pinduoduo incorporated gamification elements into the shopping features of its app, and TikTok has been aggressively boosting sales using short videos and live commerce as weapons.

In response, Alibaba is investing more in content creation, live commerce, and events such as price reductions.

Alibaba set a policy last May to reinvest all profit increases from the previous year into regaining lost market share.

Daniel Zhang, Alibaba's CEO, said, "In the past, the core market base was Taobao and Tmall, but now we are focusing on all businesses."

Meanwhile, the battleground is expanding beyond major cities to small and medium-sized cities. As the growth point of the e-commerce industry shifts to these smaller cities, Pinduoduo launched aggressive price competition to capture this market, and thanks to its price competitiveness, the number of users in small and medium-sized cities surpassed Alibaba last year.

Alibaba is countering by launching 'Taobao Deals,' a 'C2M' (consumer-to-manufacturer) platform where manufacturers sell directly to consumers.