Consumers will soon have more payment and delivery options on major Chinese e-commerce platforms like Taobao, as Alibaba and JD.com move towards greater cross-platform integration. On September 27, WeChat Pay was included as a payment option on Alibaba’s online marketplaces Taobao and Tmall, adding an alternative to Alipay, and credit and debit cards. Starting from mid-October, shoppers on Taobao and Tmall will also have the option of using JD Logistics for deliveries, in addition to Alibaba’s own Cainiao distribution service.
Conversely, JD.com will incorporate Alibaba’s payment service Alipay and Cainiao’s delivery services. This integration marks a significant shift from the previous model, where companies operated in isolation, creating “walled gardens” that restricted users to a single platform. The recent changes follow a regulation that came into effect on September 1, aiming to prevent and stop unfair competition, maintain market order, encourage innovation, and protect the rights of operators and consumers.
Before 2021, China’s e-commerce giants fiercely guarded their ecosystems. However, a regulatory crackdown by Beijing that year led to substantial changes. Alibaba was hit with a record 18 billion yuan (S$3.3 billion) antitrust fine for abusing its dominant market position, prompting companies to slowly start opening up their ecosystems.
Mr. Li Jianggan, Chief Executive of Singapore-based venture outfit Momentum Works, commented that Chinese tech companies have reached a point where collaborative competition is necessary. “Most tech companies have saturated their natural growth potential, so lowering the walls gives further growth opportunities to players on both sides,” he explained.
The integration allows Taobao to reach elderly consumers in less-developed regions of China who prefer WeChat Pay over Alipay, while WeChat Pay gains access to Taobao’s larger user base. Alibaba remains the leader in China’s e-commerce market, but its market share has been declining since 2019, as rivals JD.com and Pinduoduo offer lower prices. Recently, ByteDance’s Douyin, the Chinese version of TikTok, has also been aggressively expanding its e-commerce market presence.
cross-platform payment options expand
Analysts believe the gradual dismantling of these “walled gardens” is driven by both regulatory pressure and broader industry dynamics. Mr. Jacob Cooke, Chief Executive of WPIC Marketing and Technologies, stated that companies like Alibaba and ByteDance recognize the benefits of increased interoperability and a user-first approach.
The shift is strategic, aimed at gaining user loyalty and boosting sales through improved convenience and platform trust. However, some Taobao sellers have not yet observed significant changes. Ms. Sha Sha, a vendor on Taobao, mentioned that there hasn’t been a noticeable increase in orders since WeChat Pay was introduced.
Another seller, offering dog treats, was unaware of the new payment option. Ms. Cathy Lai, an analyst at S&P Global Ratings, noted that while more payment and delivery options add convenience, consumer behavior patterns are unlikely to shift dramatically.
However, price competition remains intense, especially amid weak consumer demand. Ultra-low pricing strategies will likely be a focus during high-volume shopping events like the annual November 11 Singles’ Day. WPIC’s Mr.
Cooke expects robust numbers for Singles’ Day, spurred by recent Chinese government stimulus measures and strong travel numbers during the Golden Week holiday. According to GlobalData, China’s e-commerce market is set to grow at an 11.6% compound annual growth rate from 2023 to 2027. Momentum Works’ Mr.
Li predicts that competition will continue, but with a more cautious approach considering the need for economic recovery. “The message is that players should compete on consumer value propositions on a more level playing field, benefiting the overall tech and consumer ecosystem,” he concluded.
