BEIJING Dec 23 JD.com, China's second-largest
e-commerce site, is set to exceed 100 billion yuan ($16.47
billion) in annual sales for the first time in a market that has
drawn investment from global retailing names such as Amazon
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 Ltd 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 percent 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
in a telephone interview 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 percent of the market, according to Chinese
Internet market research firm iResearch. JD.com has 17.5 percent
and Amazon China controls just 2.6 percent.
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 B2B
marketplace Taobao still depend on merchants and external
courier firms for their logistics.
"If they can continue to build their niche in the market
place, 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
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
The high-profile cash infusions from abroad have fuelled
speculation about a possible initial public offering.
JD.com was valued at $7.3 billion in late 2012 after a round
of financing. At the time it denied reports it was planning an
IPO before 2013.
In 2011, Thomson Reuters publication IFR reported that an
IPO valued at $4-$5 billion was imminent. The sale did not
On Monday, Shen said JD.com does not have specific plans for
"The company will pick the right time to IPO. We'll consider
the market situation, we'll consider the company's situation. At
this point we don't have specific plans," he said.
The e-tailer is not the only target of speculation. Alibaba
is also widely anticipated to kick off an IPO.
Shen said the timing of a possible Alibaba IPO is not a
factor for JD.com.