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Mobile marketplaces - new competition from the Far East

By Naomi Botting

It is increasingly common for shoppers to use a mobile device such as a smartphone or tablet when making online purchases. Tamebay calculates that mobile accounted for 60% of global ecommerce in 2018.

According to a study commissioned by Mastercard (2018), 80% of British shoppers have made a mobile purchase from the comfort of their sofa, and as many as 6% have made a purchase while in the bath. These are impressive figures, and with mobile sales being the key growth driver for ecommerce, these statistics are set to increase in the coming years.

97% of teenagers own a smartphone, compared with 75% of laptop ownership. Generation Z is therefore naturally more inclined to make mobile purchases. Google calculates 53% of teens in the US mostly use smartphones to make online purchases, making for a generation of mobile shoppers. Worldwide revenue from mobile commerce totalled 96.34 billion US dollars in 2015 and is set to surpass 693 billion US dollars in 2019 (Statista).

Mobile shopping - a few insights

If you take a look at the App or Play Store, four distinct groups of shopping apps can be identified. First of all, there are the classic apps from merchants, like those of H&M, Zara or, Nike. Then there are discount apps, such as Groupon, Wowcher, or Payback. You’ll also find so-called ‘C2C’ marketplace apps for used goods. This category includes apps like Depop, Vinted and Letgo.

Last, but surely not least (perhaps even being the most important category), there are mobile marketplaces, which account for the most downloads. Here, it’s important to differentiate between classic marketplaces adapted for smartphones (Amazon, eBay, Zalando, ...) and original apps (Wish, lyst, Joom). From this last group, these original apps are particularly interesting, at the forefront of exciting changes to the m-commerce industry.

If you would like to learn more about mobile marketplaces and shopping apps, you can download an interesting guide here.

Phones

European consumers are big fans of mobile shopping, as we saw earlier. This is because it provides numerous advantages: increased speed, one-click purchases, easier navigation and enhanced security. Mobile marketplaces are among the leaders in terms of app navigation and visibility, both important aspects for consumers. These marketplaces allow consumers to simultaneously browse a multitude of brands. This saves storage on smartphones, freeing consumers from installing multiple apps from individual merchants.

Equally, there are numerous reasons for retailers and brands to sell on mobile marketplaces. First of all, no app development is necessary, saving untold time and money for retailers. Marketplaces provide a simpler customer experience while enabling retailers to reach more consumers — only further strengthened by the wide range of marketplaces on offer. Mobile marketplaces can also capture new types of data in larger quantities, improving dealer recommendations and operational efficiency.

Classic marketplaces such as Amazon and eBay have long dominated this category, but competition from the Far East has been increasing for some time now, threatening to replace the old leaders.

The ‘Big Three’: Joom, Wish, AliExpress

Brands, retailers and other mobile shopping apps should focus on the ‘Big Three’: Joom, Wish and AliExpress. The following is a small but informative overview of the three apps, coming from the East to shake up the market.

Top 10 shopping apps

JOOM

Launched in 2016, Joom is one of the fastest growing eCommerce platforms in the world. Within just two years, the international marketplace reached over 100 million users across the globe.

Joom ranks highly in European countries such as France. This is no coincidence because the mobile marketplace, which offers products from China at very reasonable prices and without shipping costs, is very active in the country. Joom recruits French brands and retailers to strengthen its dealer base in a market the company sees as the key to open Europe and take on Amazon.

The Russian platform currently offers around 10 million products, mostly Chinese, ranging from smartphones to sneakers to cables. Joom already offers 10,000 French products and sees the home of haute couture fashion as a testing ground for the development of sales of higher-quality items from abroad, with French consumers among the most active in Europe.

Daily, around 40,000 new users install the Joom app in France (Reuters). After two and a half years of existence, the app has a total of 200 million downloads (iOS and Android), 25 million active users per month and 20 million active buyers.  In Europe, 60 million downloads, 15% sales growth per month, 5 orders per month per active user and an average of 17 minutes daily usage time have been counted so far for the app. Remarkably, at the beginning of 2019, Europe accounted for 50% of Joom's sales, compared to 45% in the Russian market.

People on phones

Wish

In 2018, Wish was the number one app based on the number of downloads, with 501,564 downloads onto British devices (Statista). The app, founded in 2011, works in the same way as Joom, enabling consumers from Europe to order cheap products from China.

According to Wish, more than two million orders are placed every day, with shoppers spending on average 20 minutes a day on the app. In 2017, Wish achieved a turnover of one billion dollars for the first time. Wish quickly achieved a high level of awareness thanks to an aggressive advertising campaign on almost all social networks with well-known advertising media (Neymar, Pogba, ...).

The annual advertising budget for Facebook alone is estimated to be around 500 million dollars, making Wish one of the company’s largest customers in terms of advertising. Both Amazon and Alibaba are said to have panicked to such an extent about this Eastern marketplace that they each planned to take over the company in previous years (Business Insider). Find out how to sell on Wish with this guide.

Phone celebration

AliExpress

AliExpress is a cross-border online marketplace operated by Alibaba, where Chinese companies can sell their products internationally. AliExpress is best compared to eBay. Sellers operate independently and AliExpress serves only as a platform for the companies.

Most products are shipped from China, but some also come from other European countries. The giant logistics centre planned in Europe underlines the ambitions Alibaba/AliExpress has in Europe and is a step further towards a Europe-wide logistics network. AliExpress's 60 million active customers come from 220 countries. Allegedly, 92% of orders on Alibaba are placed via mobile devices (BPI France, 2:00).

What are the consequences of this new competition?

The Eastern trio of Joom, Wish and AliExpress are shaking up mobile commerce. They pose a new challenge for established marketplaces, but also for the apps of individual retailers and brands.

However, they pursue different strategies — while Wish and AliExpress immediately attack the European market across the board, Joom is entering the market via France, where it tries to create a place for itself on the continent. Why France? Because Amazon is traditionally weaker there than in other European countries, and it seems more plausible to "dethrone" the US ecommerce giant there.

The apps are currently opening up to European sellers. European brands and retailers are therefore recommended to try to sell their own products on these Eastern marketplaces.

Naomi Botting, Commuications Project Manager - UK/Nordics, Lengow

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