Will JD.com Steal The Show From Alibaba?

JD.com (NASDAQ:JD) is China’s second largest e-commerce site and one of Alibaba’s (NYSE:BABA) biggest competitors. The company recently released impressive Q4 2015 results that topped expectations and once again proved that worries about a slowing Chinese economy are overdone. JD reported fourth quarter revenue of $8.38B, good for 57.3% Y/Y growth and 420M above the consensus. Gross merchandise volume or GMV clocked in at $22.29B, a huge 69% Y/Y increase. Meanwhile, EPS of $(0.07) was in-line with expectations.

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The one thing that jumps at you when you look at JD.com’s results and compare them to Alibaba’s is just how much faster the company is growing. Alibaba reported December quarter revenue of $5.25B, or 31.9% Y/Y growth with EPS of $0.98, good for a robust 78% Y/Y growth. GMV clocked in at $146.57B, which was 23% better than the figure for last year’s comparable quarter.

While Alibaba still remains the king of China’s e-commerce space with 59% of the business-to-consumer marketplace compared to JD’s 23%, there is growing evidence that Alibaba could be in danger of losing market share to its smaller rival. First off JD.com sports much better top line and GMV growth than Alibaba. JD.com is very popular with younger buyers. To underscore the growing popularity of the site, consider that customer accounts grew 71% Y/Y to 155M. The company’s rapid growth can be pinned on its quest to expand into rural areas.

JD has been benefitting from its partnership with Tencent. JD now sells directly on Mobile QQ, a messaging platform owned by Tencent that boasts 490 million MAUs, mostly younger folks.

JD.com is beginning to encroach into Alibaba’s territory. The company has traditionally been a seller of electronics, with more than 85% of its revenue coming from selling consumer electronics. But JD is now selling clothes as well, a market that has been Alibaba’s bread and butter. In fact, JD.com has called apparel the most important growth driver for JD Mall. JD says that 25,000 of the 80,000 merchants on its platform sell apparel.