The Chinese e-commerce market is becoming extremely competitive, as more digital companies rush to integrate an e-commerce component alongside their other consumer services.
Most recently comes the announcement that Chinese consumer Internet giant Tencent has paid $215 million for a 15% stake in JD.com (formerly known as 360Buy), China's second-largest e-commerce company by transaction volume. After JD.com finalizes its initial public offering, it will issue an additional 5% stake in the company to Tencent.
Tencent announced in a press release that it plans to integrate JD.com with its popular messaging app WeChat. More than 300 million users are active on WeChat each month, and the app already has its own built-in payments system. With the new partnership, WeChat users will soon be able to purchase almost anything from within the app.
JD.com logged roughly $16 billion in sales in 2013, a 67% increase over the previous year. More than 15% of orders were placed via mobile apps, which is significantly higher than the market average in China. We expect mobile transactions to increase further after JD's integration with WeChat.
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E-commerce sales in China topped $300 billion in 2013, according to some analyst estimates, and approximately 8% of those sales occurred via mobile devices, according to data from Credit Suisse. This is about seven percentage points below the share of mobile transactions on JD.com's platform. By 2015, mobile commerce overall could account for as much as 15% of China's e-commerce market.
By leveraging its mobile messaging app, which is already extremely popular for payments, Tencent appears to be carving out its share of the crowded e-commerce market by investing heavily in the mobile commerce future.
Here's a look at how mobile commerce is expected to grow as a percent of total e-commerce in China:
