Analyst Sky Canaves stated in our analysis of Chinese e-commerce companies in the US that “shopping apps and marketplaces that specialize in ultralow-cost goods from China are gaining a foothold among larger ramifications for the future of e-commerce from US consumers .”
Chinese E-commerce companies on US E-commerce (Photo: The World Economic Forum)
Chinese E-commerce Companies as US Competition
TikTok as one of the Chinese e-commerce companies is entering the fight for e-commerce users. The short-video platform intends to launch an online retail store in the US later this month, offering American consumers products created in China, according to news sources.
TikTok will purportedly handle marketing, sales, shipping, and post-sales services on behalf of Chinese merchants and sell a variety of goods, including toys and kitchenware. The new store will differ from TikTok’s current TikTok Shop function, which allows businesses to sell their goods on the app in exchange for a tiny commission as one of the Chinese e-commerce companies in the US.
If successful, the plan could move ByteDance as Chinese e-commerce companies closer to realizing its objective of tripling the size of its worldwide e-commerce operation from $4.4 billion to $20 billion by the end of 2023.
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Chinese E-commerce Companies’ low pricing could not surpass the US sales
The US retail market would generate $7.303 trillion in sales this year, compared to Chinese e-commerce companies with $6.380 trillion. Although the US’s e-commerce market was $1.137 trillion this year, China’s was $2.931 trillion. Due to this lower penetration, e-commerce sales are growing more quickly in the US than in China; according to our predictions, only 15.6% of US retail purchases are made online vs 45.9% in China. In the US, retail e-commerce revenues won’t surpass 20% until 2027.
Chinese E-commerce companies benefit from lower costs. The low pricing from e-commerce apps like Shein and Temu is a primary draw, with offers of significant savings over competitors, according to Canaves, as inflation stays front of mind for price-sensitive US consumers. Another aspect is production speed. In order to stave off competition from companies like Shein and Temu. Amazon is also considering delivery speed, especially with its Prime membership.
Consumers in the US may notice an increase in products with Chinese e-commerce companies, such as a rice cooker you can operate with your phone. Temu, a sister app to Pinduoduo, could change how items are purchased in the US by incorporating a group-buying idea. They actually learn a successful Shein-style formula for getting in touch with thousands of firms.
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