Alibaba Group is the undisputed king of the Chinese e-commerce market with approximately 80% market share. But the e-commerce space in the country is changing fast. JD.com, which has long played a second fiddle, is emerging as a serious threat to Alibaba’s dominance. The two companies are locked in a fierce (and sometimes dirty) war.
JD.com narrowing the gap with Alibaba’s Tmall
They are both trying to woo international brands with exclusive deals. And neither of them lets go an opportunity to attack the other. Earlier this year, fashion clothing brand Uniqlo had tied up with JD.com, and sales of its products were humongous. In April, Alibaba founder Jack Ma reached out to Uniqlo’s parent company Fast Retailing and urged them to switch to Alibaba, citing the large user base. Last month, Uniqlo ditched JD.com despite strong demand on the platform.
According to The Wall Street Journal, JD.com is rapidly narrowing the gap with Alibaba’s Tmall. At the end of Q1, 2015, Tmall had 58.6% market share, almost similar to the last year. However, JD.com’s market share jumped from 19.2% to 22.8% in the same period, points out iResearch. The competition has become tougher as the Chinese economy cools. Alibaba’s June quarter revenues missed the Wall Street estimates as its revenue growth slowed.
Last week, Alibaba intensified the war by targeting JD.com’s stronghold: consumer electronics. The Hangzhou-based company announced to invest $4.6 billion in Suning, the largest brick-and-mortar electronics retailer in the country. Alibaba also inked exclusive deals with over 20 Western brands to become the sole third-party platform for online sales of brands like Zara, Timberland and others in China.
How JD.com ensures genuine merchandise
The battle took an ugly turn last year when Alibaba founder Jack Ma said JD.com would “eventually be a tragedy.” Ma later apologized for his remarks. JD.com has also tried to capitalize on Alibaba’s weaknesses. It has highlighted the rampant sales of fake goods on Alibaba’s platforms, and positioned itself as a platform that values “authenticity and quality.” In May, French luxury group Kering had sued Alibaba for aiding the sales of counterfeit goods on its sites.
JD.com ensures genuine merchandise because, unlike Alibaba, it manages its own inventory. The company buys goods directly from suppliers and sell them to consumers.
