Alibaba growth slowing as competition with JD.com heats up

Dive Brief:

  • Alibaba Group will likely report that Q4 revenue grew 26.6%, the slowest rate since it began reporting more than three years ago, according to analysis by Thomson Reuters.
  • That growth is well behind the 47% to 51% revenue growth expected from JD.com for the same period, Reuters reports — the weakest growth since JD.com began reporting.
  • It’s not a straight comparison because the two Chinese retail giants report GMV differing. Still, JD.com’s 82% GMV growth in the first nine months of last year handily surpassed Alibaba’s 34%.

Dive Insight:

  • Alibaba appears to be facing increasingly stiff competition from rival JD.com, which like Alibaba has worked to boost sales from foreign retail companies in China. While Alibaba has talked in recent months of the potential of reaching consumers in rural China, JD.com has focused on reaching the more affluent shoppers in urban areas.
  • While it’s true that e-commerce is increasingly important in more remote areas of China, income there remains low, as does spending, and China’s recent economic turmoil is likely slowing down growth.
  • In addition to its focus in more rural areas, Alibaba continues to face problems over sales of counterfeit items, more so thanJD.com, an issue of increasing important not just to retailers abroad and the U.S. government, but also to wealthier Chinese shoppers.

And JD.com enjoys a positive, Amazon-like reputation for fulfillment.

“[JD] have faster shipping speeds, and the quality is more trustworthy,” Zoe Li, who works at a tech start-up in Beijing,told Reuters.

 

Source: Retaildive

http://www.retaildive.com/news/alibaba-growth-slowing-as-competition-with-jdcom-heats-up/412740/#.VqjzhBng460.facebook


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