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Published
Nov 4, 2015
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Singles’ Day spat shows Alibaba’s jealous side

By
Reuters
Published
Nov 4, 2015

Brands are discovering a possessive side to Alibaba. The Chinese e-commerce giant’s annual “Singles’ Day” event has become a national shopping festival. Now smaller JD.com has accused its $210 billion rival of bullying merchants into using only its platform. Market power may be good for driving sales, but not if it prompts regulators to intervene.

Alibaba.com


Six years ago, Alibaba and less than three dozen brands launched an online shopping promotion offering discounts on Singles’ Day, a Nov. 11 Chinese response to Valentine’s Day. Today, the “11.11” Shopping Festival is the world’s largest e-commerce event. Last year, Chinese shoppers spent a whopping $9.3 billion on Alibaba’s platforms that day, accounting for just over 2 percent of the value of goods sold via the company’s websites in that fiscal year.

Rival sites have followed suit to cash in on the bonanza. The $40 billion JD unveiled its own version of Singles’ Day this year with a splashy campaign featuring celebrities and big name brands. As a result, analysts at Barclays expect the company’s marketing spend for the quarter to jump 47 percent year on year to 2.2 billion yuan ($341 million) – over 4 percent of JD’s quarterly net revenues.

In this context, JD’s squabble looks petty. It has accused Alibaba of breaking a new rule which explicitly bars e-commerce sites from stopping merchants from participating in promotions on other sites. Some three dozen sellers have said they are being pressured, according to a person familiar with the situation. That’s a tiny proportion of the 27,000 merchants which participated in Alibaba’s event last year. The company denies the accusations, and accuses JD of “panicking”.

Yet the risk is that Alibaba’s tactics will catch the attention of the country’s watchdogs. With over 80 percent of China’s e-commerce market, the web giant is vulnerable to scrutiny. In January, a government “white paper” criticising Alibaba for not doing enough about counterfeits was enough to knock 8 percent off its share price. Alibaba’s clout is good for boosting revenue, but it may have to get used to sharing some of the attention.


 

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