Tomahawk, WI 09/08/2014 (Basicsmedia) – Alibaba may have reached its peak in terms of market share that is currently at 80%, compared to JD.Com Inc. (ADR) (NASDAQ:JD)’s 20%. In an interview on CNBC, Jeff Dorr an analyst at J. Capital Research argued that JD.com looks set to grow as compared to Alibaba as it looks to bolster its 20% market share.
“In our view at least we prefer the business model of JD.com we just feel that with an 80% market share for Alibaba at this stage you really can only grow in line with the market and with JD.com having 20% share. We feel that overtime there is room for JD.Com Inc. (ADR) (NASDAQ:JD) to take share and may be capture growth,” said Mr. Dorr.
JD.com is currently competing against Amazon.com, Inc. (NASDAQ:AMZN), which is an established’ brand in the space with a big customer base. JD.com business model has not been performing to Amazon’s levels, despite the latter’s profit margins being suppressed by increased spending on Research and development.
Amazon has a sustainable business model according to Mr. Dorr, which he expects to be profitable in the long run, despite the ongoing headwinds in terms of profit margins. Alibaba is not the only Chinese online retailing company; JD.Com Inc.(ADR)(NASDAQ:JD) is’ expected to give it a much-needed competition especially in China as the battle for market share continues to heat up.
Stealing market share from Alibaba is set to be a tall-order for JD.com considering Alibaba is about to carry out its IPO. Competition is also expected to affect Alibaba on its push to tap into other markets outside China according to Mr. Dorr.
“Focusing more on the U.S markets I think that competition there is a bit stiffer than it is in other emerging markets with Amazon and eBay Inc (NASDAQ:EBAY) heavily entrenched, and I do expect that Alibaba will probably have more difficult time getting into the U.S market,” said Mr. Dorr.