BusinessChina Business

JD.com on track to top sales target

E-commerce site is set to exceed 100b yuan in annual sales for the first time but it has a lot of catching-up to do to beat bigger rival Alibaba

PUBLISHED : Tuesday, 24 December, 2013, 1:55am
UPDATED : Tuesday, 21 April, 2015, 11:26am

JD.com the mainland's second-largest e-commerce site, is set to exceed 100 billion yuan (HK$126.7 billion) in annual sales for the first time in a market that has drawn investment from global retailing names such as Amazon and Wal-Mart.

Sales volumes would likely eclipse the company's target of 100 billion yuan, compared with 60 billion yuan in 2012, JD.com said yesterday. The smaller rival of Alibaba said it had broken even for the first three quarters of the year and might turn profitable at any time.

The mainland's business-to-consumer e-commerce sales might surpass US$180 billion this year due to a rising internet penetration rate, expanding middle-class incomes and an improving distribution network, said market research firm eMarketer.

The country's e-commerce prospects have attracted investment from Wal-Mart, which now owns roughly 51 per cent of e-tailer Yihaodian. Amazon bought e-tailer Joyo.com in 2004, which eventually became Amazon China.

"The market itself is growing, we're also growing our market share," JD.com's chief operating officer Shen Haoyu said. "People are getting more comfortable with buying online."

As a private company, JD.com does not release revenue figures, and would not say if it broke even in previous years.

"We're not making crazy money, but we're not losing crazy money," Shen said.

JD.com previously known as 360Buy, has done well enough to attract foreign investors. Over the past six years, it has secured US$2.23 billion from investors including the Ontario Teachers' Pension Plan and Saudi billionaire Prince Alwaleed bin Talal's Kingdom Holding, using these funds to expand its logistics network and employ aggressive pricing tactics.

But despite its fast growth, JD.com still stands in the shadow of Alibaba's Tmall, which dominates 51.1 per cent of the business-to-consumer market, said iResearch. JD.com has 17.5 per cent and Amazon China controls just 2.6 per cent.

JD.com has tried to differentiate itself by operating its own network of couriers and warehouses. Tmall and Alibaba's online business-to-business platform Taobao still depend on merchants and external courier firms.

"If they can continue to build their niche, because of their reputation for good service [and] products … they have firm ground to stand on," said Ben Cavender, principal analyst at China Market Research.

But the gap between the two competitors is still large. During a 12-day sale centred around the mainland's equivalent of Cyber Monday, JD.com's turnover reached US$1.6 billion, far less than Tmall and Taobao, which had one-day turnover of US$5.7 billion combined.