not vested
JD.com
If Alibaba is the eBay of China, JD.com Inc. JD, is its Amazon, because JD.com takes on inventory and warehouses goods.
This “asset heavy” model weighs on margins, relative to Alibaba. But JD.com has some advantages.
Unlike merchants who sell on Alibaba, JD.com is huge. And this heft gives it buying power.
“JD.com is the largest retailer in China, so it gets the economies of scale. JD.com can go to Samsung and say, ‘Give me a good price,’ ” says Goei. This means it often has better prices than the merchants on Alibaba.
Next, JD.com handles home delivery. It’s like a mix of United Parcel Service Inc. UPS, and Amazon.com. This gives it greater control over the customer experience, which matters to buyers.
The big challenge for JD.com is that it has to move out of its core consumer electronics space into other areas like apparel, which has higher profit margins.
“But apparel is where Alibaba is really strong. So we will have to see if JD.com can compete there,” says Goei. “We own both, but we own more of Alibaba.”
Source: Market Watch