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E-commerce Platform Ecology and Platform Governance Policy
2017-12-15
By Li Guangqian
Research Report Vol.19 No.6, 2017
I. Platform Ecology Becomes a Main Feature of China’s E-commerce Development
1. China’s e-commerce has entered a new development stage
After 20 years of development, China’s e-commerce has gone through a historical process from imitation to key breakthroughs and to innovation-driven development. Now it has entered a new stage of development. In 2016, the e-commerce transaction volume in China reached RMB26.1 trillion, and online retail transactions totaled RMB5.16 trillion; online retail sales of physical goods reached RMB4.19 trillion, accounting for 12.6% of the national retail sales of consumer goods, compared to only 7.3% in the United States. In fact, China has become the world’s largest online retail market since 2013①. From the perspective of industrial innovation and development, e-commerce has driven the growth of many related service industries and given rise to a number of emerging industries. Revolving around e-commerce have emerged derivative services such as agency services, information technology services, marketing services, consulting services, training services, financial services and security services, and supportive services such as electronic payment services, logistics services and certification services. These derivative services and supportive services have been developing rapidly. In 2016, the size of the supportive services market reached RMB950 billion, and that of the derivative services market totaled RMB1.1 trillion②.
Therefore, e-commerce has become an important driving force for the transformation and upgrading of the service industry in China. More importantly, the express delivery industry and the electronic payment (third-party payment) industry deriving from e-commerce development have become the basic tools of the whole Internet economy, and also a revolutionary means of China’s economic transformation and upgrading. China’s express delivery business has ranked first in the world for three consecutive years, contributing 40% to the growth of the global express delivery industry③. By the end of 2016, the amount of third-party mobile payments had reached RMB58.8 trillion, much higher than that of the United States④. E-commerce has also created a large number of Internet companies over the years, such as Baidu, Alibaba, Tencent, and JD.com. Among them, Alibaba, Tencent, and JD.com were put on the Fortune 500 list in 2017. These companies have not only been leading the healthy development of e-commerce in China, but also played a dominant role in innovation and entrepreneurship, driving the innovation and development of numerous small and medium-sized enterprises. Therefore, China’s e-commerce industry has far surpassed the narrow sense of online transactions, but instead is construed as e-commerce economy. E-commerce economy is a new economic ecosystem that is based on e-commerce platforms and backed by the new-generation information technology, takes e-commerce application needs and e-commerce service industry as two prongs, and contains a multitude of information consumption contents. E-commerce economy is a manifestation of the relatively mature e-commerce in China, and the result of in-depth application of the new-generation information technology in China’s economic development. E-business economy has played a growing role in promoting IT-backed economic and social development⑤.
2. Platform ecology will be the core of the future e-commerce economy
People have different views on the development trends of China’s e-commerce economy, which can be divided into two categories. The first is industrial Internet. Early in 2014, some people noted that the e-commerce economy represented byBaidu, Alibaba and Tencent (BAT) is consumer Internet. After more than ten years of development, consumer Internet has become mature and reached the ceiling, and is advancing towards industrial Internet. They believe that industrial Internet, different from consumer Internet, refers to Internet applications which regard producers as users and production activities as application scenarios, reflected in the transformation of all links such as production, transaction, financing and circulation brought about by the Internet⑥. The other is new retail. In October 2016, some e-commerce companies, such as Xiaomi, Alibaba and JD.com, put forward their new retail development strategies taking new retail as the direction of their transformation and development. There is still no unified understanding of new retail⑦, but generally, the so-called new retail refers to the integration of online and offline retail through the comprehensive use of cloud computing, big data and other new-generation information technology. In brief, although the industrial Internet group do not want BAT to continue growing bigger, it is in essence still e-commerce, which does not just belong to BAT, while the new retail group focuses on the in-depth development of BAT, or “BAT2.0”. Therefore, the essence of industrial Internet and new retail is still e-business economy.
There are many problems as to both industrial Internet and new retail. In addition to inadequate understanding⑧, the two also lack effective business development models and are still making explorations. However, with the further development of Internet economy, the future e-commerce economy, whether it is industrial Internet or new retail, will show a prominent feature, that is, platform ecology.
Platform ecology includes two aspects: platformization, and ecologization of platforms. In the first stage of development of e-commerce, enterprises compete fiercely for monopoly or oligopoly in the market. In the process, enterprises take different competition strategies in different periods according to needs, and some finally establish a monopoly or oligopoly⑨ (as shown in Figure 1). However, after the market position has been established, platform-based enterprises will change their market strategy accordingly. They will bring into full play the monopoly or oligopoly status of the platforms, and urge other market players to build new platforms using their logistics, third-party payments and other tools, and integrate resources and develop new modes of business based on the new platforms. Relying on the enormous market size provided by large platforms, these emerging modes of business will soon give rise to a more professional industrial ecosystem. With the increase in new platforms, a number of small platform ecosystems revolving round the large platforms will appear, and these large platforms and small platforms will be interwoven into a tremendous and increasingly complicated ecosystem. As can be seen from above analysis, both industrial Internet and new retail are in fact driven by platform ecology.
Platform ecology has already had significant impacts on some industries, such as the impacts of car-hailing services on the traditional taxi industry, and bike sharing on the bicycle industry. Backed by BAT platforms, Didi and MoBike have rapidly gained a foothold across the country, leaving their rivals far behind. However, the role and influence of platform ecology in different sectors on traditional industries vary greatly, and their policy implications are also different, as can be seen from comparing the policy changes of the car-hailing and bike sharing industries. The following part, taking Mr. Koalac as an example, will shed light on the revolutionary impacts of platform ecology on the traditional convenience store industry.
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