Due to the slow growth of China economy and Alibaba's revenue growth, JD.com is performing quite well to close down on the lead in the market.
Alibaba Group Holding is all set to post its quarterly earnings in the coming days. According to Reuters, this will be the weakest quarterly revenue growth in history for the Chinese e-commerce giant in a long time. Analysts predict that this decline or slowdown of the company in the market will further ignite the rivalry with its direct domestic competitor JD.com.
Currently, the Chinese online shopping market is very tough and the constant downfall in country’s economy is causing troubles for the likes of Alibaba and JD.com etc. According to a Smart Estimate survey of 28 analysts by Reuters, it is believed that the revenue of Alibaba Group for the quarter ending December is expected to grow by 26.6% only which is said to be the slowest growth rate in its history.
Furthermore, analysts believe that this is the most sluggish rate since the company began publishing such data. During the same time, its domestic rival JD.com is projected a revenue growth of almost 47% to 51% despite of the lag it faced. The released records showed that the figure was also JD.com’s slowest rate since its inception in the market.
For now, both parties have declined to comment on the revenue growth matter. The chief executive of consumer intelligence company Bomoda, Brian Buchwald, said, “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.” This is quite true that the real challenge for any firm to show it really is outstanding is to perform when the market is slowed down.
At this moment, China economy is growing at its slowest pace since 2009 and is expected to get worse as time passes, but Alibaba is confident to keep up with the market pace as well as its domestic and international rivals in the region. Sources suggest that JD.com is targeting more ‘affluent’ and wealthy online shoppers that belong from bigger cities of China. This strategy of a small rival could be the breakthrough in a tougher economy.
Reuters reported that Alibaba was losing its major chunk of market share to JD.com. In the past nine months ending September, the total value of goods sold, commonly referred as gross merchandize volume (GMV), of the Chinese company rose by 34% only whereas JD.com managed to increase its numbers by a massive 82%.
At the beginning of 2016, CEO of Alibaba Group announced that the focus of the business would be to expand in the ‘first tier’ cities such as Guangzhou, Shenzhen, Shanghai, and Beijing. This came after it announced to push into the rural areas of China as well as in the foreign markets in the coming times.
An employee at a tech startup based in Beijing, Zoe Li, stated that JD.com is currently performing better than Alibaba in the region. On comparing both online retailers, she added, “They [JD.com] have faster shipping speeds, and the quality is more trustworthy”
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