Competition in the Online Shopping Sector Heats Up

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china online shopping 2

It seems that for the past few years, Alibaba has always been in the lead when it comes to Chinese e-commerce. Alibaba has been able to get more foreign companies to invest into their platforms, to offer their products to the Chinese marketplace, and to be successful within China. However, it seems that other e-commerce big name companies are ready to take on Alibaba once and for all. With the biggest competition coming from JD.com, in what has been termed “the great cat and dog war”.

The Case of Uniqlo

Uniqlo, the parent company of Fast Retailing Company, started selling its high fashion clothing line on JD.com. The demand for the clothing was high and the company was seeing nice returns on their effort with JD.com. It seemed to be going great. However, Jack Ma, the founder of Alibaba, approached Tadashi Yanai, the head of Uniqlo offering more sales and more traffic to Uniqlo’s shop on Alibaba’s platform, if the company would be complete loyal to Alibaba.

In the case of Uniqlo, they took the offer. In July, Uniqlo declared that JD.com was not what they were looking for when it came to their e-commerce strategy. However, JD.com is stating this about their departure:

“[it must be]based on something other than performance…”

This was due to the demand on JD.com being so high for the brand.

Brand Loyalty

What all e-commerce platforms are wanting is brand loyalty. They do not want a company to have a store on both JD.com and Alibaba, as these are main competitors. Thus, Alibaba is proving that they are ready to go the extra mile for those luxury stores that they want to say only their platform offers online.

80% of online shopping happens via Alibaba

This figure shows that Alibaba is clearly dominating. But, new research is showing that Alibaba may be getting ready to have more competition in the terms of dominating the market. For the first quarter of 2015, their shares in the market was 58.6%, which is about the same as what they had last year. However, JD.com went from a market share of 19.2% last year, to 22.8% this first quarter. What this is saying is that the competition is going to intensify.

Even Alibaba sees this coming, as they have stated that competition is becoming more intense with the arrival of other online shopping platforms. For example, Jumei international holding Ltd, Vipshop Holdings Ltd and Yihaodian. The Vice Chairman of Alibaba, Joseph Tsai, stated:

“The market is so big and the potential private of winning is so attractive, you have a lot of entrepreneurs as well as capital backing them.”

Could Alibaba be failing?

New figures are coming out this week looking at the quarter earnings for Alibaba. They have earnings of $3.26 billion for the quarter, much lower than what they had expected. So is the company failing? Though their first quarter earnings may have been down, there are some signs that the company is going to grow:

  1. They invested into Suning Commerce Group Ltd. Learn more about this move here.
  2. They have signed agreements with over 160 labels to enter into the maker via their platform, without at least 20 being exclusive to Tmall

Chances are, Alibaba is going to be around for many years to come.

The Feud Continues

JD.com’s Chief Executive Haoyu Shen, stated:

“We are concerned. We don’t think it’s in the brand’s interest to do that [be exclusive to one shopping platform].”

Whereas, Alibaba has stated that brands close these types of deals with them, since they know that they can move the product.

The two e-commerce giants are constantly poking at one another. Alibaba has often commented on how JD.com is going to end in a tragedy. While JD.com often pokes at the issues Alibaba has with fake products being sold online, when they do not have such issues.

Read more about counterfeit products here

It is unclear just which online ecommerce competitor is going to win the battle, but either way customers who are using these outlets are finding that they are reaping the benefits with more retailers available online, better shipping policies and overall more selection.

About Author

Social Brand Watch (SBW) is a collection of experts in digital, mobile and social media in China. SBW was created to complement Resonance's China Social Branding Report, a bi-weekly report focusing on modern marketing methods of the world's top brands in China.

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