Tencent acquired a 15% stake of JD.com for $214M. What does it mean to Chinese B2C e-commerce?
Chinese e-commerce market consolidation
China accounts for more than 50% of global online retail. There are two major players in the Chinese B2C e-commerce market, and one of them made an important move. China’s Tencent Holding, the owner of QQ and WeChat messengers, bought a 15% stake in JD.com for $215 m.
JD.com is one of the most popular B2C e-commerce platforms. JD.com (previously 360buy.com) is convenient, reliable, and very popular among customers, who can purchase high-premium products at reasonable prices. In major cities, the goods are delivered within 24 hours. The online marketplace was launched in 2004. In 2012, JD.com had a 15.5% market share, through the years, it has grown to 24%. JD focuses on high-premium:
- 3C (computer, communication, and consumer electronics)
- consumer durable products.
The main competitor of JD.com is Taobao, owned by Alibaba Group. Taobao has been the leading C2C platform for a long time and is also developing its own division Tmall.com, which offers B2C interactions, facilitating the sale of foreign brand products. Taobao’s main strength is Alipay escrow-based payment system, which secures transactions between buyers and sellers.
Alibaba and JD.com are the largest B2C e-Commerce market players in China, with a joint market share of more than 60%.
Tencent gets most of its revenue from computer and mobile games. The fast development of Chinese e-commerce may radically change its income structure.