The battle between China’s second-ranked e-commerce provider JD.com and fast-rising rival PinDuoDuo is allowing Taobao-parent Alibaba (NYSE:BABA) to strengthen its grip on the top spot, according to a report in the Nikkei Asia Review.
In the fiscal year through December, JD.com suffered a net loss of 2.4 billion RMB ($350 million U.S.), as Pinduoduo eroded its market share and as user account growth slowed. Pinduoduo also posted a net loss, of 10.2 billion RMB, due to a heavy investment load and merchandise discounts.
That leaves Alibaba as China’s lone e-commerce company operating in the black. In the fiscal year through March, Alibaba booked a record net profit of 87.6 billion RMB, helped by the intensifying price war between the Nos. 2 and 3 e-tailers.
JD.com’s earnings outlook remains clouded, and the company still reels from a sex scandal that last year engulfed its top official.
In June, JD.com’s second-hand goods trading platform PaiPai underwent a strategic merger with electronic product recycling platform AiHuiShou. This is part of a $500 million U.S. funding round in AiHuiShou, led by JD.com.
Estimates say the new round of funding will bring the valuation of AiHuiShou to more than $2.5 billion U.S. After the merger, JD.com will become AuHuiShou’s largest strategic shareholder.
Initial indications that JD.com was looking to offload PaiPai came at the end of May when c-to-c marketplace Zhuan Zhuan disclosed that its own talks to acquire the brand had fallen through. In April, JD.com announced that PaiPai would no longer offer general c-to-c listings services. According to a company representative, PaiPai is now characterizing itself as a sales platform for “premium ‘pre-loved,’ branded and refurbished goods.”