Daily Management Review

Fight with JD.com to Intensify as Alibaba Revenue Growth Seen Slowest on Record


01/25/2016




Fight with JD.com to Intensify as Alibaba Revenue Growth Seen Slowest on Record
Thomson Reuters data shows that the weakest quarterly revenue growth on record ever is expected to be posted by Chinese e-commerce giant Alibaba Group Holding Ltd. this, experts believe would heat up the battle with smaller rival JD.com Inc in a tougher economy.
  
According to a Thomson Reuters SmartEstimate survey of 28 analysts, Alibaba's revenue for the quarter ending December is projected to grow at 26.6 percent. This would be the slowest rate since the company started publishing such data 3-1/2 years ago.
 
This rate of revenue growth is also below the 47-51 percent revenue growth JD.com projected for the same period.  This is also the slowest expansion since the company started releasing records.
 
Citing the pre-earnings quiet period Alibaba and JD.com declined to comment.
 
"When the market starts to slow you start to have real winners and real losers. I think that they need to pay attention to their immediate competition," said Brian Buchwald, chief executive of consumer intelligence company Bomoda.
 
Following a strategy that may be paying off in an economy that last year grew at its weakest pace in a quarter of a century, JD.com has focused on more affluent shoppers in China's biggest cities.
 
JD.com's GMV grew 82 percent in the nine-months to September while Alibaba's rose 34 percent, suggesting China's biggest e-tailer was losing market share. However this despite the fact that the two companies calculate the total value of goods sold - known as gross merchandise volume (GMV) – differently.
 
The company will pivot towards these "first-tier" cities like Beijing, Shanghai, Shenzhen and Guangzhou, after having trumpeted a push into China's countryside, as well as abroad, Alibaba Chief Executive Daniel Zhang said earlier this month.
  
Zhang also said the company was seeking to retain and win over more customers by "enhancing reputation and optimizing user experience", in an article on Alibaba's blog page.
  
As JD.com has already carved out its own space in these cities by offering speedy delivery and quality assurances, this may be a tough ask, as quality concerns still dog Alibaba.
 
"They have faster shipping speeds, and the quality is more trustworthy," said Zoe Li, who works at a tech start-up in Beijing, referring to JD.com compared to Alibaba.
  
Last month, the Chinese e-commerce giant appointed a new head of anti-counterfeiting as it avoided being named on a U.S. blacklist for sites hosting the sale of fake goods.
 
(Source:www.reuters.com) 






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