Dive Brief:
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Alibaba enjoys some roughly 80% of Chinese e-commerce. But Alibaba’s share of 58.6% in Q1 this year is about the same year over year, while Chinese marketplace competitor JD.com has risen to 22.8% from 19.2% year over year, according to iResearch.
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According to the Wall Street Journal, China’s cooling economy is a further challenge to Alibaba’s ambitions.
Dive Insight:
In its 15 years of growth, The Alibaba Group and its founder, Jack Ma, have demonstrated over and over again a certain audacity and cleverness, introducing China to e-commerce and investing in a variety of ventures, from telecommunications to entertainment.
Indeed, Alibaba is more than a retailer than an e-commerce venture. It’s a conglomerate and a multi-faceted e-commerce company that seemed poised to shake things up in American retail at the time of its IPO, where filings show rapid growth far outpacing Amazon and eBay combined.
But since its September IPO here, the Chinese retail giant is facing headwinds abroad and, perhaps most suprisingly, at home, in the form of a slowing economy and intensifying competition. Indeed, its major competition in China, JD.com, may have an advantage in that its member brands sell goods directly, paying commission. Alibaba’s approach of connecting buyers and sellers through its marketplace, rather than directly sell products, has left it vulnerable to featuring a host of counterfeit goods, something it continues to battle, seemingly without making much headway.
Alibaba took a big step in recent days by taking a significant stake in electronics realties Suning, giving it muscle in JD.com’s stronghold in electronics and increasing its logistics network.
But in the end, Alibaba may need to take a fresh look at its marketplace approach.