JD.Com previously 360Buy launched its B2C platform in 2012. After that, it went on to become one of China’s largest ecommerce retailers by volume. On May 9, 2015 it went public on the fact that it was investing $350 million in online travel company Tuniu Corp. This is the leading edge of its $500 million investment outreach program.
JD.Com Taking on Alibaba’s Alitravel
By moving into packaged, organized and self-guided tours targeting leisure travellers, JD.Com is taking on Alibaba’s Alitravel in its own backyard. Tuniu has already carved out a
significant following of well-to-do Chinese tourists. I shall be interested to see what it does with the extra cash in the bank in the long run. However, no doubt JD.Com has already made its weight felt as largest shareholder.
Certainly, its own shareholders seemed quite content about the move, although the stock did fall back from a 2% jump to a 0.18% uptick in aftermarket trading. This was likely due to the market coming to terms with the fact that not much else is likely to change, in terms of the bigger picture in the short run.
JD.Com’s Tunui Move Part of Bigger Trend
JD.Com is not the only ecommerce China giant diversifying into a wider spread of markets. Other mega companies are involving themselves in food deliveries, taxi services, online movie ticket sales and niche children’s products. In so doing, they are becoming virtual department stores offering everything to all and sundry. I believe this phase of development of the internet will eventually lead to disinvestments, as they decide to get back to their own knitting.
Tuniu Has a Way to Go to Get There
Alibaba’s Alitravel already connects to more than 10,000 travel merchants representing airlines, hotels and package tours via smartphone apps. Following the JD.Com announcement, Tuniu stated its intention to establish 100 service centres in 1,000 departure cities. These will target the top international travel destinations as seen through the eyes of the Chinese tourist who is king of the business.