Why Online Auction Marketplaces Could Become Key to Chinese E-Commerce

Source: Adobe Stock

What Are Online Auction Marketplaces?

Auctions are public sales in which assets or services are sold to the highest bidder, and what makes them popular is the perception amongst both buyers and sellers that they will get a good deal. Online auction marketplaces are the 21st century variant in which digital buyers and sellers are connected on a singular listing and payment online platform. They boast some of the most successful businesses since the advent of the internet, with eBay and Overstock as two of such well known examples in the US.

What’s Driving Adoption for China’s Online Auction Segment?

A Rising Tide Lifts All Boats

China’s e-commerce retail sales are estimated to reach more than 50% in 2021 in a historic milestone for the nation’s digital economy. This trend is only set to pick up pace in the future, with online transactions in China projected to reach 58% in 2024. Given that China’s e-commerce sales are estimated at US$1.5 trillion, this figure would be substantial enough to rival the gross economic value of many small countries.

E-Commerce as a Percentage of Total Sales

Sources: Emarketer, The China Guys

Chinese Internet Users Continue to Grow

Sources: Statista, The China Guys

Demographics of Online Auction Bidders

Chinese e-commerce companies originally set out to make auction sales appealing to the general public; however, current demographics of online auction users skew towards the wealthier segment of China’s population.

What Are Users Bidding On?


It is well known that Mao Zedong’s grandson, Chen Dongsheng, acquired a 13.5% share in the fine art auction house Sotheby’s through Taikang Life Insurance. By 2020, Asian buyers accounted for 30% of Sotheby’s online art auctions. Much of this upsurge has been attributed to younger Chinese buyers who are more risk tolerant, have diverse tastes that diverge from previous generations, and look beyond what is considered mainstream art.


Loans are another popular example of goods auctioned on Taobao’s platform. Specifically, Ali Auction has helped Chinese financial institutions return value from nonperforming loans (NPLs) by selling them on e-commerce auction sites. While an odd good to find snapped up by young wealthy consumers, according to MacroPolo, in the fourth quarter of 2017, Taobao auctioned off US$5 million worth of bad loans. It exceeded China’s most active exchange for NPLs, the Tianjin Financial Assets Exchange.

Alibaba vs. eBay: How Taobao Came to Dominate Chinese Online Auctions

Much of China’s success in e-commerce began with the 2003 launch of Alibaba’s online shopping platform, Taobao. With an initial investment of CN¥450 million from Alibaba, Taobao quickly became a dominant competitor and sought to become the biggest C2C auction platform in China. In the years that followed, Taobao fought a bitter war with eBay’s China-based arm, Eachnet, which entered the Chinese market in 2002. Within its first year alone, Taobao saw subscriber growth of nearly 800% to reach 3 million registered users.

Looking Forward: A Stake in China’s Debt

China’s online auction market is still maturing and does not yet generate the same level of sales as the broader e-commerce market. Nevertheless, it has picked up steam due to the pandemic and has filled an interesting — if not unexpected — niche demand. In 2015, Taobao released a nonperforming loan marketplace and has been auctioning off bad debt transparently ever since.



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