Looking East for learning in e-commerce

The size, scale and dominance of Amazon make it the obvious role model for any Western retailer plotting a course in e-commerce. Obvious but wrong. Amazon's growth is impressive, and it continues to make exciting innovations, but for much greater insight and inspiration, retailers should look East, to China.

By the end of last year, China's e-commerce market was more than twice the size of its equivalent in the United States, analysts estimate, with sales of $1.1 trillion compared to $450 billion in the US. By September, Alibaba, China's biggest e-commerce platform, had a bigger market capitalization than Amazon, though it has ceded this position recently.

The success of Chinese e-commerce operators reflects the smart business model decisions pioneered by Alibaba and peers such as JD.com and Xiaohongshu. Alibaba operates multiple platform businesses, set up to connect buyers and sellers of goods, rather than to offer inventory of its own or to manage distribution. With no stock to manage, these platforms are light on capital assets, but can facilitate a remarkably wide range of product offerings.