JD.Com Inc (ADR) (NASDAQ:JD) Giving Tough Competition To Alibaba (BABA) In Chinese E-Commerce Market
Control of a larger share of the Chinese e-commerce market is the ultimate goal for JD.Com Inc (ADR) (NASDAQ:JD), Alibaba Group Holding Ltd (NYSE:BABA) and host of other operators in the space. However, the competition is intense and even larger operators like Alibaba are beginning to feel the heat. In the December quarter, JD managed to score against Alibaba, boosting its share of the third-party e-commerce market while Alibaba lost on that front.
China, with a population of nearly 1.4 billion people and nearly 620 million Internet users, is a prized market for online retailers. It is no wonder that retailers are jostling for a slice of the Chinese market.
JD.Com Inc (ADR) (NASDAQ:JD) has a third-party business-to-customer marketplace that serves both domestic and international retailers looking to bolster their online presence in China. The platform has attracted international retailers such as Skechers USA Inc (NYSE:SKX) and Gap Inc (NYSE:GPS). JD gets commission or charges a fee on those who use its third-party marketplace.
Alibaba also operates a third-party marketplace platform known as Tmall, which is growing rapidly. Tmall is also larger than JD’s equivalent, which is still in its early days of development.
JD scores against larger rival Alibaba
However, JD.Com Inc (ADR) (NASDAQ:JD) is gaining market share faster in the Chinese business-to-consumer space than rival Alibaba. JD gained 5% of the business-to-consumer market share in 4Q compared to Alibaba whose Tmall declined 2%. Nevertheless, maintains the largest share of the market at 61.4% compared to 18.6% of JD.
JD.Com Inc (ADR) (NASDAQ:JD) is witnessing faster growth of its market share because of the broadening assortment and investment in deliveries. The company boasts the largest fulfillment system in China where it operates 123 warehouses in 40 Chinese cities. The company also has about 3,210 pickup and delivery stations located in 1,862 countries and districts.
Faster delivery and customer trust are some of the factors fueling the growth of JD.Com Inc (ADR) (NASDAQ:JD).
Mobile is also driving growth at JD. About 36% of all the orders fulfilled by the online retailer in 4Q came through mobile devices, up from 30% noted in the prior quarter. The company recently announced hiring Chen Zhang from Yahoo! Inc. (NASDAQ:YHOO) to help boost its mobile campaign among other technology developments.
The analysts polled by Thomson Reuters expect JD.Com Inc (ADR) (NASDAQ:JD) to post operating earnings of $0.08 a share this year, going up to $0.38 in the next year. JD’s operating earnings last year were $0.05 per share.
JD.Com Inc (ADR) (NASDAQ:JD) is also expanding in rural China, where opportunities are not only huge but remain largely untapped.
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