According to the King of Rock it was ‘one for the money, two for the show and three to get ready’. Alibaba is certainly high kicking it over its rivals including online shopping mall JD.Com. This is also in terms of perceived consumer preferences per a small grab sample of mainland China residents, with commentators like Bidness expecting JD.Com’s share prices to bounce back.
Main Survey Findings
United States-based MKM Partners who conducted the survey punt themselves as an institutional equity research, sales and trading firm providing clients with timely and unbiased data. Their main finding is that a paltry 15% of the small sample tested prefer the JD.Com brand, with Alibaba’s Taobao and Tmail receiving a whopping 67% affirmation of approval.
Possible Impact of JD.Com Business Model
JD.Com bases its model on the eBay concept where consumers may buy and sell on a one-on-one basis. Alibaba on the other hand favours an Amazon-like approach of one vendor to many customers. The knives are out between the two ecommerce giants. Both of them are no doubt smacking their lips at the thought of more than 70% of Chinese consumers shopping on the internet in 2016.
Direct Online Versus Vendor Facilitation Model
Countless Chinese businesses are putting up websites in the hope of selling directly. To compete on search results pages and save commission they need to be as good with SEO as Alibaba and its junior rival. Alibaba at least appears to have unlimited access to cash to fund this. I suspect more than a few smaller Chinese businesses will accept the inevitable in the next few years and sign up with one or other etrading platform.
MKM Partner’s Overall Assessment
“We think Alibaba is one of the very best secular growth stories available to large cap investors today,” the MKM analysts concluded. They went on to say how impressed they are with the “underlying fundamentals, size of opportunity and spending intention for online retail in China”. My money is on Alibaba this time round at least, with JD.Com a distant second.