You must be aware that there are two major players in the Chinese e-commerce market at the moment and they are the Alibaba Group and the JD Group of companies. Now, we also know that the e-commerce market is so competitive that the players need to spend a whole lot of cash to acquire customers even after making a huge name for themselves and that is what we are seeing right now as well. JD, China’s biggest e-commerce player, is looking to spend close to $1.4 Billion to provide discounts for its customers and acquire new ones in a bid to gain market share.
We already know that these e-commerce giants work on a burn model where they need to spend money to gain new customers, and that is totally normally for them. This is also the reason why newer e-commerce players without tons of cash are unable to make a mark on the markets. Talking about the discounts, it is worth noting that JD.com will start offering discounts from Monday in order to acquire new customers and even take market share from Alibaba.
It is worth noting that there are concerns that the price cut from JD.com will prompt players like Alibaba and others to have price cuts of their own and have a price war in the market which is a win for the consumers in the end. Alibaba released a statement saying that they would not indulge in a price war with JD as they did earlier because it is not beneficial for either players. The Chinese Government launched a crackdown on e-commerce players in 2020 due to what they called the “reckless expansion of capital”. However, the government has now decided to lift these restrictions, so these players are again looking to expand their market share.
JD.com expects an economic recovery in the Chinese market this year and that is also the reason why they are spending so much money in the next few days. With all that said and done, it is definitely going to be an interesting next week for Chinese users who are looking to buy new products.