Enmity between Alibaba and JD.com: Hate each other like cats and dogs, openly ‘coffee’, blatantly robbing each other’s customers

Tram Ho

Alibaba and JD.com are the two dominant e-commerce giants in China. To describe the fierce competition between JD.com and Alibaba, perhaps “hating each other like cats and dogs” is the most appropriate. Interestingly, Tmall’s mascot is a cat while JD.com’s mascot is a dog.

Business model

JD.com is a B2C (business-to-consumer) retailer, owning its own warehouse and delivery service. The company buys products directly from big brands and then distributes them to customers. Therefore, they control 100% of the input products.

Alibaba currently has 3 main business segments: business-to-business e-commerce platform – Alibaba.com, business-to-consumer platform – Tmall and consumer-to-consumer platform – Taobao .com. The Taobao and Tmall platforms generate most of their revenue from commodity listing fees and commissions.

Thâm thù giữa Alibaba và JD.com: Ghét nhau như chó với mèo, công khai ‘cà khịa’, cướp khách của nhau một cách trắng trợn - Ảnh 1.

In the fiscal year 2021 ending in March, Alibaba generated 87% of its revenue and all profits from its core commerce unit, which includes Taobao, Tmall, brick-and-mortar stores, international markets and corporate logistics company Cainiao.

While it makes most of its money from third-party sellers, Alibaba is increasing its reliance on brick-and-mortar stores, a lower-margin international market to boost sales. Alibaba’s China retail divisions serve 891 million Chinese consumers while the company’s global ecosystem serves more than 1 billion customers.

The rest of the revenue comes from three unprofitable segments: Alibaba Cloud – China’s largest cloud infrastructure platform; Lingxi digital media and entertainment and mobile gaming division.

For its part, JD.com generated 94% of revenue and all profits from retail in the fiscal year 2020 ending in December 2020. The company ended the first quarter of 2021 with 500 million annual active customers.

JD.com’s unprofitable businesses include JD Cloud and logistics services for external customers. JD.com’s operating loss equates to just 0.3% of its full-year revenue.

Which company grows faster?

Thâm thù giữa Alibaba và JD.com: Ghét nhau như chó với mèo, công khai ‘cà khịa’, cướp khách của nhau một cách trắng trợn - Ảnh 2.

Alibaba and JD.com both grew strongly during the pandemic in China and benefited from strong expansion into smaller cities.

Alibaba’s revenue grew 41% to 717.3 billion yuan ($109.5 billion) in fiscal 2021. Operating income fell 2%, mainly due to antitrust fines in China.

JD.com’s revenue grew 29% to 745.8 billion yuan ($114.3 billion) in fiscal 2020, while adjusted earnings grew 57%. Unlike Alibaba, so far, JD.com has not faced much pressure from antitrust regulators in China.

As a result, some experts say that JD.com will continue to outperform Alibaba in both e-commerce and the cloud in the near future.

The “coffee” phase and blatant robbery

To attract sellers, Alibaba has done many ways to convince big brands to sign exclusive contracts with great deals. In early 2015, Alibaba succeeded in convincing Swedish sports company Fjallraven to sell exclusively on Tmall. In return is the promise of increased traffic to the store. Before that, Fjallraven was available on JD.com and several other websites.

In April 2015, Jack Ma sent a personal introduction to Tadashi Yanai – leader of Fast Retailing. This is the parent company of Uniqlo and also the largest clothing manufacturer in Asia.

Previously, Fast Retailing sold Uniqlo’s products on JD.com, bringing in significant revenue. However, to “pull”, Jack Ma told Yanai that if a long-term cooperation with Alibaba, Uniqlo’s traffic and sales will be even higher.

As a result, just 3 months later, Uniqlo “retired” with JD.com citing “strategic mismatch”. JD.com’s side said that the reason was not so simple, but Uniqlo only responded with silence.

Thâm thù giữa Alibaba và JD.com: Ghét nhau như chó với mèo, công khai ‘cà khịa’, cướp khách của nhau một cách trắng trợn - Ảnh 3.

In just a few months of 2015, Alibaba has accelerated the process of signing contracts with hundreds of brands, including big names such as sportswear chain Decathlon, clothing manufacturer Timberland.

Jack Ma once said that “JD.com will eventually fall into tragedy” and later had to apologize for his statement. After that, Alibaba’s retail market president added: “When Alibaba does something, JD.com will immediately imitate it.” He alluded to the fact that Alibaba’s initiatives such as entering rural and foreign markets, cloud computing and online payments were all “learned” by JD.com.

In response, JD.com’s Beijing office was soon decorated with red banners with the slogan: “Fighting, fighting to the end, determined to take the first place”.

Counterfeiting is a problem that makes Alibaba and many other e-commerce platforms a headache, but perhaps except JD.com. They claim to be able to ensure that the goods listed on the platform are genuine and have escaped penalties for selling counterfeit goods.

The founder of JD.com once said: “JD.com is an online shopping site for those who value quality and authenticity”. Although he did not mention Alibaba, everyone knows that this statement is intended to “spin” Alibaba.

Not long after, JD.com reported that an Italian luxury brand had chosen JD.com to open its stores over Tmall because JD.com had a written promise to ban all counterfeit products.

Source: WSJ, Investopedia

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Source : Genk