E-commerce giants competing fiercely during June
Tmall launches major discounts to rival JD sale
China’s leading online retailer tmall.com launched Wednesday a sales promotion for consumer electronics and home appliances, a move analysts said heats up the battle with its major rival JD.com Inc (JD) which regards the day as a special shopping festival due to it being the anniversary of the company’s founding date.
Tmall.com, backed by the country’s e-commerce giant Alibaba, offered discounts between 60 and 70 percent for home appliances and lowered smartphones’ prices by 100 yuan ($16) to 1,000 yuan.
Meanwhile, JD, which has been building up a shopping spree atmosphere since June 1, rolled out its strongest sales promotion to date for Tuesday to Friday, cutting prices of consumer electronics by up to 2,000 yuan and providing 90 percent discounts for some home appliances.
The four-day event is a part of JD’s 20-day promotion for its 11th anniversary this year on Wednesday, involving consumer electronics, cosmetics, food and books. The promotion has triggered the price war between the e-commerce players.
Tmall.com also launched a four-day sales promotion from Monday, which analysts said mainly focus on consumer electronics and home appliances in response to JD’s strongest discounted sales. JD’s smaller rival yhd.com (YHD) even claimed on its official website that all consumer electronics it sold would be 50 yuan cheaper than those on JD from Monday to Wednesday. Gome.com and suning.com, the home appliance online shopping platforms of major local retail chains, also joined the price competition almost during the same period.
“JD is under siege,” said Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting.
He explained to the Global Times Wednesday that all e-commerce platforms intend to tap the profitable consumer electronic retailing sector where JD has further consolidated its leadership after combining with yixun.com, a consumer electronics online shopping platform developed by Tencent early this year.
Despite the ambitious efforts of YHD and Gome, Lu said that they can hardly pose big threats to JD.
Tmall is JD’s strongest rival and is likely to win the battle this time due to its large user base, said Li Yi, secretary-general of the China Mobile Internet Industry Alliance.
A report issued in May by Analysys International shows that Tmall is the most preferred online shopping platform with its active users reaching 112.06 million in the first quarter of 2014. The active users on JD hit 44.2 million, ranking in second place.
Tmall’s strong cooperation with the three State-owned telecom carriers and domestic home appliance makers also give it more competitive advantages over JD, said Lu.
During this sales promotion, Li Xiao, a Beijing-based white-collar worker, went to Tmall and bought a trendy smartphone Wednesday.
“The reason to choose Tmall instead of JD is simple. The three telecom carriers all opened online flagship shops on Tmall and offer discounted phones on the platform that cannot be found on JD or other platforms,” she told the Global Times Wednesday.
A total of 500,000 handsets have been sold in the first 10 hours, accounting for half of the average daily sales of smartphone in China, according to a press release e-mailed to the Global Times Wednesday by Tmall.
A PR representative from JD told the Global Times Wednesday that the average sales of handsets and related accessories reached more than five per second on Wednesday morning.
Both Lu and Li Yi believe that the price war is still the major promotion method in China where many consumers are sensitive to price, but they said e-commerce platforms this time are also trying other ways of marketing to attract people.
Between May 30 and June 14, JD sent cash gifts – which can be applied to online purchases – worth 1 billion yuan to users of its mobile application to draw attention to its sales promotion.
Tmall is also giving away cash gifts worth 50 million yuan to shoppers during its current promotion.
Although consumers can benefit from the heated competition and price war [during this period], Li Yi suggested that they consume reasonably and buy things that are really needed.
“Some goods may be even more expensive than before. People need to carefully compare the price tags of goods before placing an order,” he noted, calling for more supervision from the authorities during the sales.
Lu noted that these retailers are all focusing on consumer electronics and home appliances, which is a wise decision given that June usually sees many purchases of such goods.
Big sales will challenge e-commerce platforms’ logistics and post-sales services, which need to be further improved, he remarked.