JD.com, China's second-largest e-commerce site, is set to
exceed 100 billion yuan ($16.47billion) 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
will likely eclipse the company's target of 100 billion yuan compared
with 60 billion yuan in 2012, JD.com said in a press release on Monday.
The smaller rival of China's Alibaba Group Holding said it has broken
even for the first three quarters of the year and may turn profitable at
any time, declining to be more specific. China's business-to-consumer
e-commerce sales may surpass $180 billion this year due to a rising
Internet penetration rate, expanding middle-class incomes and a steadily
improving distribution network, according to New York-based market
research firm eMarketer.
The country's
e-commerce prospects have attracted investment from Wal-Mart, which now
owns roughly 51% of Chinese 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 told Reuters on Monday. "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 $2.23 billion from
investors, including the Ontario Teachers' Pension Plan and Saudi
billionaire Prince Alwaleed bin Talal's Kingdom Holding Co, 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 its main B2C competitor, Alibaba's Tmall, which dominates 51.1% of
the market, according to Chinese Internet market research firm
iResearch. JD.com has 17.5% and Amazon China controls just 2.6%.
JD.com
has tried to differentiate itself by operating its own network of
couriers and warehouses, a factor it says ensures timely and efficient
delivery. Tmall and Alibaba's online B2Bmarketplace Taobao still depend
on merchants and external courier firms for their logistics. "If they
can continue to build their niche in the marketplace, because of their
reputation for good service, their reputation for good products... they
have firm ground to stand on," said Ben Cavender, principal analyst at
China Market Research Group. But the gap between the two competitors is
still large. During a 12-day sale centred around China's equivalent of
Cyber Monday, JD.com's turnover reached $1.6 billion, far less than
Tmall and Taobao, which had one-day turnover of $5.7 billion combined.
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