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1.analyze The Strategies and Business Models of Alibaba and JD

Alibaba and JD both started in e-commerce but have diversified into other business areas. Alibaba pursued global expansion and built offline stores, services, logistics and investments in areas like cloud computing and finance. JD expanded product categories and attracted merchants while focusing on direct sales and using technology to improve logistics efficiency. Their financial statements show Alibaba's commerce revenues growing but declining as a proportion, while investments in new areas fluctuate. JD saw merchandise revenues increase as a proportion through expanding categories and third parties. JD logistics became profitable through technology investments.

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735 views2 pages

1.analyze The Strategies and Business Models of Alibaba and JD

Alibaba and JD both started in e-commerce but have diversified into other business areas. Alibaba pursued global expansion and built offline stores, services, logistics and investments in areas like cloud computing and finance. JD expanded product categories and attracted merchants while focusing on direct sales and using technology to improve logistics efficiency. Their financial statements show Alibaba's commerce revenues growing but declining as a proportion, while investments in new areas fluctuate. JD saw merchandise revenues increase as a proportion through expanding categories and third parties. JD logistics became profitable through technology investments.

Uploaded by

Zhen Wu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1.Analyze the strategies and business models of Alibaba and JD.

Although JD and Alibaba both started with e-commerce, they gradually developed into diverse
type of enterprise.

Besides further tapping into the domestic retail market, Alibaba devised a globalization strategy
to broaden their oversea market, trying to build their global e-commerce ecosystems. Alibaba
also had their offline commerce like Hema, and merged Koubei with Ele.me to form Alibaba Local
Services Company. What’s more, Alibaba had a vertical extension. They created Cainiao as a
logistics network platform. Futher more, Alibaba put effort in cloud computing, digital Media and
entertainment segments, finance and many other areas. Overall, Alibaba intended to build up an
empire that set foot in every hot area as well as their own system.

JD started as electronics and home appliance offerer. With years of accumulation of experience,
resources and reputations, JD began to expand product categories. Meanwhile, JD attracted
third-party merchants while reinforcing its foothold in direct sales. If we consider Cainiao as a
group of eager beavers but have no high-techs, then JD logistics is a “lazy” guy who let
technologies and robots work for him. The former relies on investments and partners, the latter
mainly depend on technologies to improve efficiency. This help JD attracted overseas markets.
Besides, JD proposed a concept called “JD-X Partnerships”. JD and their partners made joint
efforts in referral traffic, data and content e-commerce.

2.Analyze the impact of the different strategies and business models on their financial
statements.

Alibaba
1. Online Retail: By further tapping into the domestic retail market, the revenue of China
commerce increased every year, although the proportion declined. Alibaba’s revenue from its
international commerce retail business grew at a compound annual rate of 83.58% from fiscal
year 2015 to fiscal year 2019.
2. Online-to-Offline Commerce: After consolidating Koubei, Alibaba recorded a gain of ¥22 billion
(fair value) in fiscal year 2019. As Hema expanded its footprint to over 160 self-operated stores in
22 cities from 2016 to 2019, the revenue also increased.
3. Vertical Extension: Although recorded losses from fiscal year 2015 to fiscal year 2017, with the
accumulation of partners and resources, the revenue of Cainiao logistics services climbed up, and
could become a profit generator in the future. More paid uses brought more profit, but also
suffered increasing severe losses at the same time due to the large investments. The adjustments
in the Digital Media and entertainment segment caused losses in two fiscal years, 2016 and 2017,
increased shareholding in 2018 gain ¥5.8 billion. Ant Financial’s market value exceeds US$150
billion in 2018, a finch giant.

JD
1. E-Commerce: Expanded product categories help JD’s genial merchandise revenues comprised
15.36% of JD’s total revenue in fiscal year 2014; the ratio climbed to 29.45% after 4 fiscal years.
The third-party merchants let JD become a big competitor to Alibaba.
2. JD Logistics: With the investments and high-techs, JD logistics became a for-profit entity to
raise US$2.5 billion in fiscal year 2018.
3. JD-X Partnerships: By extensive investment, some partners did deliver solid profit, although
others reported considerate losses.

3.Analyze the investment highlights and risks of Alibaba and JD according to the above
analysis.

Alibaba is profitable than JD, and it covers more fields. The needs of online shopping will always
exist. Meanwhile, Ele.me and Hema provide the on-demand food delivery platform and fresh
food delivery. This is necessity in citizens daily life. The increasing of revenue may remain stable.
However, when it turns to Ant Finance or digital media, the revenue may have dramatic
fluctuation due to varied market performance. There fields are more fragile and not as stable as
retail commerce.

As for JD, though the gross profit margin for electronics is not that high, profit margin for clothes
can compensate. Meanwhile, JD has its own card, the JD Logistics. As long as logistic still exist in
the world, JD will not lose its market. But the problem is, once a new tech which is proved more
efficient and cost-saving appear and is applied by another company in advance, JD would lose the
preference quickly if they cannot catch up. On the other hand, JD-X partnerships could help build
up a more reliable structure.

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