Tencent and JD.com team up to take on Alibaba, invest $863m in e-commerce player

Tencent and JD.com invest in online retailer Vipshop

Tencent has partnered with e-commerce giant JD.com to invest $863m in online retailer Vipshop, in a bid to take on Alibaba.

The deal strengthens the existing relationship between Tencent and JD.com and brings together China’s largest social media company with its largest retailer and second largest e-commerce company, and Vipshop, a leading online discount retailer for brands.

Tencent and JD.com will purchase Class A shares of Vipshop worth approximately $604m and $259m, respectively. Once completed, the deal will see Tencent own 7% of Vipshop, while JD will own 5.5%.

The deal will provide Vipshop with access to Tencent’s marketing solutions as well as access to Tencent’s payment platform through the Wallet function on Weixin, the Chinese version of WeChat. Vipshop will also receive prominent presence on the Weixin Discovery shopping page, as well as the main page of JD.com’s mobile app.

Vipshop will also look to establish strategic collaborations with brands and leverage its access to WeChat and JD.com’s large customer base.

Vipshop’s strengths in fashion and branded apparel will add further weight to JD.com’s push into fashion, which remains a major strategy for the e-commerce retailer, JD also launched a strategic partnership with fashion site Farfetch earlier this year.

Richard Liu, chairman and CEO of JD.com, said, “The strength of Vipshop’s flash sale and apparel businesses, as well as its outstanding management team, create clear and strong synergies with us.

“This partnership will further extend the strong inroads that we have made with female shoppers, and will expand the breadth and reach of our fashion business.”

Eric Ya Shen, Vipshop co-founder, and CEO, said, “This undoubtedly is an important event for Vipshop as well as China's e-commerce and internet industries. We, together with Tencent and JD.com, will leverage our respective strengths to form a strategic cooperative alliance aiming to achieve a deep, win-win cooperation and to benefit internet users and consumers.

“We will continue to operate as an independent e-commerce platform and further deepen and enhance our leading e-commerce capabilities in fashion (including apparel, shoes, bags and accessories) and cosmetics categories as well as our strong female user base, thereby offering higher value and better user experience to our customers,” said Shen.

Martin Lau, president of Tencent Holdings, said, “We already see substantial demand from our users to discover, discuss and purchase branded apparel in our applications, and we believe that connecting our users more deeply to products on Vipshop’s platform will enrich their online experiences while benefiting Vipshop.”

Alibaba currently dominates the e-commerce landscape in China, where Tmall controls nearly half (48.5%) of the B2C ecommerce market while JD.com has 33.8% market share, according to figures from iResearch China.

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Danielle Long

Danielle Long is APAC Correspondent for The Drum with a remit to cover news from China, Australia and New Zealand. Danielle has 15 years experience as a marketing journalist and has worked on publications in the UK and Australia. She has interviewed some of the world’s leading marketing, advertising and creative brains and has written about almost every standout brand and marketing campaign from the last 15 years.

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