TMall, Yihaodian heat up e-commerce, Jingdong complains
New initiatives by Alibaba and Yihaodian reflect continuing hyper competition in the e-commerce sector, with no easing likely for at least the next two years
A new flurry of e-commerce news bits shows that competition in the sector continues unabated, with no signs of easing anytime soon. Sector leader Alibaba tops the headlines with word that it's rolling out same-day delivery service for customers of its industry-leading TMall B2C site. Meantime, Yihaodian is drawing on its connections with global retailing giant Walmart (NYSE: WMT) to boost its imported food business amid China's nonstop series of food-safety scandals. These and similarly aggressive moves are also leading to signs of growing stress, with Jingdong, the second largest operator, making a strange anti-competitive complaint about rival Suning's (Shenzhen: 002024) recent unified pricing policy.
All this news comes as we fast approach the November 11 Single's Day holiday, which has become a retailing extravaganza in China over the last two years. TV news is already filled with reports of what different retailers are planning for the holiday, and the pressure to perform well on this important shopping day will undoubtedly only add more stress to the overheated industry.
Next let's look at the new initiative from Yihaodian, which is drawing on its Walmart ties to prepare to beef up its offerings of imported foods for Chinese wary of the safety of domestic products. The latest reports say Yihaodian has formed strategic partnerships with government and trade groups in six major foreign markets, with an aim of buying more food products from those countries. Yihaodian, which is controlled by Walmart, disclosed that sales of its imported food products rose almost 5-fold in 2012, fueled by demand from Chinese consumers wary of the country's never-ending series of food safety scandals.
Jingdong's comments reflect the stress that many companies are feeling in the e-commerce space due to the stiff competition. There's no sign the competition will easy anytime soon, since most of the main players are backed by companies with plenty of money. Accordingly, look for more of these new initiatives and more signs of stress, with the current state of hyper-competition likely to continue for at least the next two years.
Bottom line: New initiatives by Alibaba and Yihaodian reflect continuing hyper competition in the e-commerce sector, with no easing likely for at least the next two years.