Alibaba (NYSE: BABA) will face the combined might of its rivals in this shopping season. Alibaba’s main e-commerce rival, JD.com (NASDAQ:JD), is joining hands with Tencent and Wal-Mart (NYSE:WMT) to gain an upper hand over Alibaba. JD.com and Tencent recently announced JD-Tencent Marketing Solution which will integrate the consumer behavior on Tencent’s social platform with the online and offline shopping data from JD. This partnership provides brands with a strong alternative to Alibaba due to higher engagement of Tencent and the last-mile logistic capability of JD.
Alibaba’s clout in different segments has been growing at a rapid pace in the last few quarters. This has brought Alibaba’s rivals closer and they are now putting forward a united front. Tencent has 21.25% stake in JD.com which is bigger than the 16.2% stake of CEO Liu Qiangdong. Wal-Mart has also increased its stake in JD in the last year. Wal-Mart had 5.9% stake in JD in Jun 2016, which increased to 10.8% in October 2016 and 12.1% in February 2017.
JD.com (NASDAQ:JD), China's second largest business-to-consumer e-commerce marketplace after Alibaba's (NYSE:BABA) Tmall, recently enlisted the help of Tencent (NASDAQOTH:TCEHY) and Wal-Mart (NYSE:WMT) as Singles Day (Nov. 11) -- China's equivalent of Black Friday -- rapidly approaches. JD will merge its customers' shopping history with data on Tencent's WeChat messaging platform, which has 963 million MAUs (monthly active users) worldwide. JD will use that data to make suggestions for customer purchases, while helping vendors promote their goods. JD will also grant customers online discounts at brick-and-mortar stores when they use Tencent's mobile payment app, WeChat Pay. Tencent is JD.com's largest shareholder with a 20% stake in the company.
JD.com, Tencent, and Wal-Mart Join Forces Against Alibaba
JD competes against Alibaba's Tmall, its B2C equivalent of Amazon, and not Taobao, its customer-to-customer (C2C) equivalent of eBay. JD controls about 33% of China's B2C industry, according to eMarketer, compared to Tmall's 51%. Much of JD's growth comes at the expense of smaller competitors like Vipshop and Suning. But JD also benefited from ongoing problems with counterfeit goods at Alibaba's marketplaces, as government studies found that JD sold a much lower percentage of knockoff products than Tmall and Taobao.
JD.com, Tencent, and Wal-Mart Join Forces Against Alibaba
JD also isn't shy about experimenting with new technologies, like autonomous trucks and drones, facial recognition technology for payments, and artificial intelligence. It's sharing some data with Baidu, the largest search engine provider in China, to refine its shopping recommendations, and it partnered with Toutiao -- one of the fastest growing news aggregator apps in China -- to add links to JD.com. JD has its own logistics subsidiary, JD Logistics, which directly competes against other leading logistics players like Alibaba-backed Best. It's expanding that business with other partnerships, including a refrigerated logistics chain partnership with Japan's Yamato Holdings and a plant manufacturing partnership with Mitsubishi Chemical Holdings.