The powerful pack of rivals challenging Alibaba Holding Ltd. for e-commerce supremacy in China is turning to social media to get a bigger bite of online sales as the Year of the Dog begins with the Chinese New Year, Feb. 16.
Online retailer JD.com, which is 10% owned by Wal-Mart Stores Inc., is teaming up with social e-commerce company Meili Inc. to create a new online shopping mall for the 1 billion users of China’s ubiquitous messaging app and social network WeChat.
Tencent Holdings Ltd., China’s leading online social media and gaming company, owns WeChat, as well as a 20% stake in JD.com and an interest in Meili. The interlocking ownerships have turned Wal-Mart, JD.com and Tencent into an informal alliance against Alibaba, which still accounts for a big majority of online retail sales in China, the world’s biggest e-commerce market.
JD.com and Meili will operate a new shopping channel within WeChat called WeiXuan. Participating stores will be charged no commission or listing fees, and consumers accessing the shopping portal will be able to access information about sellers through those retailers’ WeChat accounts and stores.
JD says it has recruited e-retailers that have had success on other e-commerce sites for Weixuan.
The platform will expand on the selection of products available through JD’s own WeChat store, particularly in categories like apparel, where Meili excels, JD.com says.
Meili Inc. says its online store on WeChat has attracted 80 million visitors. JD.com says the new WeiXuan shopping portal will open before the beginning of the Chinese New Year on Feb. 16.
While JD.com is China’s No. 2 online retail company, and the largest seller of its own merchandise as Alibaba only acts as a platform where other merchants sell, it has to keep pace with shifts in Chinese consumers’ buying habits, analysts say.
“As Alibaba’s nearest competitor in China, JD.com can’t only rely on its direct-to-consumers business,” says Zhang Zhouping, a senior analyst at the China e-commerce research center. “Weixuan can recruit more e-retailers and increases the total traffic for JD’s business.”
China’s booming online retailing arena is becoming a battleground for some of the world’s biggest companies by stock market value. Tencent’s market cap is $552 billion, while Alibaba is at nearly $526 billion and Wal-Mart $320 billion. Amazon, with a market cap of $705 billion, also is a player in China, operating e-commerce site Amazon.cn, which is No. 4 in Internet Retailer’s China 500 ranking, according to Top500Guide.com.
Wal-Mart is No. 3 in the Internet Retailer Top 1000 ranking of North America’s top retailers by online sales. JD.com is No. 1 in the Internet Retailer China 500. Although Alibaba accounts for a majority of online retail purchases in China, it is not ranked because it does not own any of the merchandise sold on its shopping sites. Instead, it operates, like eBay Inc., as a marketplace where other merchants sell their products.