NetEase - China's top import retail e-commerce platform

05 Sep '18

3 min read

NetEase Kaola has earner the number one position as cross-border import retail e-commerce platform in China, followed by Tmall Global and JD Worldwide. According to iiMedia Research Group's independent August 2018 report, Netease Kaola has held its number one ranking for six consecutive times, with 26.2 per cent market share in the first half of 2018.

In the report, analysts from iiMedia stated that NetEase Kaola's continuous success was generated from its high reputation and large user base, which were built on cost-effective, high-quality and trustworthy products.

"We are proud to see that NetEase Kaola is leading the market and is benefitting from the growing trend of consumption upgrades in China," said Zhang Lei, CEO of NetEase Kaola. "We have been committed to providing Chinese consumers with high-quality products from established international brands at competitive prices since the very first day. And we will continue that successful momentum by upgrading our supply chain, warehousing and logistics, as well as further improving the online shopping experience for our customers through the application of new technologies."

NetEase Kaola's competitive edge lies in its unique model. It establishes strong relationships with international brands and directly purchases most of its inventory from brands overseas, bypassing intermediaries and local distributors to lower costs, the benefit of which is passed down to consumers. In addition, NetEase Kaola provides a one-stop solution for foreign manufacturers to enter the China's complex market. By handling cross-border logistics, warehousing, online operations and after-sales services, NetEase Kaola enables foreign manufacturers to reach Chinese consumers on a broader and faster scale.

NetEase Kaola currently cooperates with more than 5,000 brands from 80 countries covering apparel, maternity and infant care, household appliances, personal care, health care and other major categories of products.

While enhancing its dominant position in the cross-border e-commerce market, NetEase Kaola is targeting the entire high-quality e-commerce market. With the growing trend of consumption upgrades among the rising middle class in China, high-quality e-commerce is in growing demand. However, the incumbent business model in China has not yet effectively capitalised on this opportunity. NetEase Kaola is designed to fill this gap in the market.

According to a research report recently released by the Boston Consulting Group, about 27 per cent of the world's total consumption growth by 2021 will occur in major economies, bolstered by the rising income level, the growing upper-middle-class and affluent families. Among these economies, China's consumption level will see an increase of nearly US$2 trillion by 2021, driven by the growth of upper-middle-class' consumption capacity.

The promising growth prospects for China's high-quality e-commerce market presents huge opportunities for NetEase Kaola, especially in the case that the platform continues to focus on providing the right product with the right price and high quality along with excellent shopping experience, to maintain its market leading position.

NetEase Kaola, alongside with NetEase Yanxuan, constitutes NetEase's e-commerce business which has already transformed into a core part of NetEase's business. In the second quarter of 2018, NetEase's e-commerce business generated US$659.7 million in revenues. For fiscal year 2017, net revenues of e-commerce were US$1.8 billion, an increase of 157 per cent compared with 2016. (SV)

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