Alibaba Group may soon face a formidable rival in China's e-commerce industry, as JD.com announced on Wednesday a platform that will compete against Alibaba’s websites in enabling foreign brands and retailers to sell to Chinese online consumers without having to set up shop in the country.
JD's new venture, JD Worldwide, directly competes with Alibaba's Tmall Global site by offering a wide range of products such as designer handbags and perfumes. It currently hosts 450 online shops including those based in Australia, France, Germany and Japan, and has over 150,000 individual products from more than 1,200 brands in its catalog, the Beijing-based company said in a statement.
The new platform also includes a pilot program that featured products curated from eBay's website. eBay operates its own China site, although connects its foreign consumers to Chinese suppliers as well.
The JD.com pilot program would help serve Chinese consumers with products from U.S. sellers, eBay's Asia spokesman Daniel Feiler said.
Shen Haoyu, chief executive of the JD shopping site, said that the company started studying the business in the middle of 2014 but wanted to take a cautious approach.
"In the past, buying from overseas was mostly a cottage business . . . a C2C (consumer-to-consumer) kind of business. It's very hard for a platform like us to do this in scale," Shen said in an interview on Wednesday. "We wanted to make sure that if we do something . . . we do it right."
But JD has a lot of catching up to do. Tmall Global, which launched in February the previous year, lists more than 5,400 foreign brands selling their products on their website, according to an Alibaba spokesperson.
Smaller portals such as Ymatou.com and Metao.com also have similar sites which have been running for several months or longer, with some announcing plans to establish warehouses overseas.
E-commerce in China has become a sizable market and is expected to grow even more at a fast pace. According to a study published by the China e-Business Research Center, retail transactions amounted to 6.5 percent or 273 billion yuan ($44 billion) of China's total cross-border transactions in 2014. The proportion is expected to increase by 8.7 percent of total cross-border transactions this year, the study showed.
Online shopping started to pick up pace in China a decade ago, when agents with e-commerce stores offered consumers who buy products overseas to ship them to China in personal packages or by smuggling. Today, thanks to recently introduced government policies promoting e-commerce, countless websites have appeared offering overseas shopping services.