China's E-Commerce Growth Is Increasingly Driven By Smaller Cities
At its Sep. 2018 Investor Day, Alibaba disclosed that about 70% of the new registered users obtained by its giant Taobao marketplace from January to August came from "less developed areas" within China. Along similar lines, the report notes that of the estimated 202 million Chinese Internet users who haven't yet made an online purchase, only 74 million were in the country's giant "tier 1" and "tier 2" cities. E-commerce upstart Pinduoduo (PDD) , which gets only about 35% of its sales from tier 1 and tier 2 cities, has benefited considerably from growing e-commerce adoption in smaller Chinese cities.
Also noted in the report: As of Aug. 2018, Taobao was getting more traffic from its product
recommendation feed than from searches. With Alibaba taking a cautious approach to monetizing Taobao's recommendation feed in the near-term, feed ads represent a sizable untapped revenue opportunity.