Is Alibaba’s eCommerce Edge At Risk?

Alibaba’s latest quarterly earnings showed that its growth is slowing — and slowing in a way that has some analysts concerned — but that doesn’t mean the eCommerce giant hasn’t come up with ways to keep its edge ahead of its smaller rivals.

Those newer players in the crowded Chinese eCommerce space have kept Alibaba on its toes recently, and that topic was the subject of a recent Wall Street Journal piece that dug into the rivalry referred to as “the great cat and dog war,” between Alibaba and JD.com. But no matter how hard JD tries to keep up with Alibaba, it’s like the physical retailers trying to keep up with Amazon.

Alibaba just has the edge, even during times of slowed growth.

But that hasn’t stopped the small fights between the two eCommerce companies, or even with Tencent, which has only been escalated by the media’s coverage of the companies and their special promotions, deep discounts with vendors, etc.

This has included Alibaba’s plants to grow its global retail presence, which is being done through recent exclusive deals that it’s tied up with more than 20 apparel brands. This deal helps propel Alibaba’s mission of driving retail sales from its site outside of China and across the globe. These newfound partnerships will enable Alibaba to use its most popular marketplace, Tmall.com, as its landing ground for selling the third-party brands on its platform.

WSJ points to another point of contention between Alibaba and its smaller counterparts, which was shown through the battle to secure the business of Fast Retailing Co. (Uniqlo), which is Asia’s largest apparel maker. While the company started selling on JD.com, Alibaba’s Jack Ma snuck in to offer them a better deal, saying that Alibaba could offer more traffic and sales, sources told The Journal. It wasn’t long after that Uniqlo left JD.com and went to Alibaba.

But it makes sense why a retailer might make that switch.

Alibaba accounts for about 80 percent of all Chinese eCommerce sales, a majority of which go through its Taobao site that has about 8 million sellers. JD.com doesn’t release specific figures, but its marketplaces are smaller and don’t get the press that Alibaba does. But at the same time, JD is seeing more rapid sales rate on its marketplace than Alibaba, which has seen around the same growth between this year’s and last year’s first quarter.

Alibaba has also had to take larger stakes in other companies, like its recent massive $4.6 billion stake to take 20 percent of the electronics retailer Suning Commerce.

And the eCommerce competition to get a piece of the growing Chinese Internet pie is only growing, Alibaba Executive Vice Chairman Joseph Tsai told WSJ. Even Walmart has joined the Chinese eCommerce space by acquiring Yihaodian, a Chinese Internet grocery store.

“[Competition] is just the nature of the business, especially in China,” Tsai said. “The market is so big and the potential prize of winning is so attractive, you have a lot of entrepreneurs as well as capital backing them.”

[vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_separator color=”grey” align=”align_center” style=”” border_width=”” el_width=””][vc_single_image image=”148412″ alignment=”center” style=”vc_box_shadow_3d” border_color=”grey” img_link_large=”” img_link_target=”_blank” css_animation=”left-to-right” img_size=”full” link=”http://www.pymnts.com/whats-hot-today/”][vc_column_text css_animation=””]

To check out what else is HOT in the world of payments, click here.

[/vc_column_text][vc_separator color=”grey” align=”align_center” style=”” border_width=”” el_width=””][/vc_column][/vc_row]