A new survey from research firm MKM Partners shows that 67% of Chinese consumers prefer Alibaba sites Taobao and Tmall, while only 15% prefer JD. The survey included responses from 1,000 online shoppers in mainland China.
While JD and Alibaba operate on fairly different business models -- JD is more like a Chinese Amazon (AMZN) - Get Report and Alibaba is more like a Chinese eBay (EBAY) - Get Report -- both are fighting for attention of online shoppers in China. That makes sense, considering consumers there are incredibly valuable. According to MKM's survey, more than 70% of Chinese consumers intend to spend more money online over the next year.
The question is whether that money will be spent at an online marketplace or through direct online sellers. Almost 61% of the survey respondents said they prefer to shop at an online marketplace, while 23% prefer direct sellers, and 16% are indifferent. Both Alibaba and JD offer a marketplace of third-party sellers, but Alibaba has yet to enter the direct-sales business.
But while JD operates the largest online direct seller sites in China, Alibaba's growth from Tmall specifically (its business-to-consumer site) is pretty much on par with JD direct sales. In the last quarter JD's direct sales rose by 63% to 50 billion yuan (about $8.1 billion). In the same period, Tmall grew by 62% to 219 billion yuan (about $35.3 billion). Overall, though, JD's business-to-consumer GMV grew 99% during the quarter while Alibaba's business-to-consumer GMV grew 40%.
"We think Alibaba is one of the very best secular growth stories available to large cap investors today," the MKM analysts concluded. "We continue to be impressed with underlying fundamentals, size of opportunity and spending intention for online retail in China. We believe there are tremendous scale advantages and BABA's position is as dominant as any player in any consumer market."