/JD’s CEO Richard Liu: The cash burning race with Alibaba’s Tmall shall continue

JD’s CEO Richard Liu: The cash burning race with Alibaba’s Tmall shall continue

Chinese e-commerce giants JD.com and Alibaba published on Wednesday and Thursday respectively their financial reports of 2016 Q2. Despite of a steady growth of both parties, Alibaba enjoyed a Gross Merchandise Volume (GMV) over five times that of JD.com.

“The battle of cash burning is inevitable between JD.com and Alibaba,” said CEO of JD.com, Richard Liu. He addressed it under a background when the frequency and scale of cash-burning have been gradually faded among Chinese internet giants since the beginning of 2016.

Yihaodian, an online sales platform that JD.com bought from Walmart in June, announced last Monday that it would invest RMB one billion in three months to subsidize users. To many onlookers, the statement carried undertones of plans to win customers from Alibaba’s Tmall.

JD.com has been doing well. According to the 2016 Q2 report, JD.com enjoyed anet revenues of RMB 65.2 billion (USD 9.81 billion), a YoY growth of 42%; meanwhile, its net loss was RMB 132.1 million, a YoY decrease of 74%. Its GMV was RMB 160.4 billion.

Alibaba on the other hand, had from April to June a net income of RMB 32.15 billion , showing a YoY growth of 59%, and its GMV of RMB 837 billion, showing a YoY growth of 24%. Among this RMB 837 billion figure, Tmall has contributed RMB 329 billion.

Although Tmall’s GMV is twice the size that of JD.com, JD.com has been bridging the gap with help from Tencent’s QQ and WeChat, China’s most popular messaging apps. These apps helped increase JD.com’s active users to 188 million.

According to JD.com CFO Huang Xuande, 79.3% of JD.com’s orders now come from smartphones and tablets, a YoY growth of 130%. But links to Taobao and Tmall cannot be opened directly on WeChat or QQ.

Nevertheless, Alibaba has its own way out. By enhancing the social elements of Taobao apps, such as adding live-streaming, Taobao has increased its monthly active user base to 427 million.

How further could JD.com speed up its pursuit of Alibaba with a cash-burn battle?

(Top photo from Baidu Images)

Ke graduated from the University of Edinburgh with a Master's Degree in English and has worked on projects with Ipsos MORI and SDI Media. She's particularly intrigued by China's thriving technology scene and is eager to write about this flourishing industry.