China's Forgotten E-Commerce Giant Is Looking To Make Its Mark

Alibaba Group Holding LtdBABA

According to Gadfly's Tim Culpan, Alibaba's chief rival JD.Com Inc(ADR) JD is looking to make its mark on the global stage — perhaps in a bid to duplicate Alibaba's strategy of seeking out investments across the world.

Investors May Need To Be Patient

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Culpan noted that JD.com is looking to invest in Indonesia's PT Tokopedia, one of the country's biggest e-commerce operators to the tune of hundreds of millions of dollars. Perhaps more ironic is the fact that Tokopedia follows Alibaba's business model of connecting third parties to buyers rather than JD.com's direct-sales approach.

In fact, JD.com's business model generated nearly $40 billion in revenue throughout 2016 while Alibaba's model generated slightly more than $15 billion. But on the other hand, JD.com reported a net loss in 2016 while Alibaba took home $3.7 billion in net income last year.

Perhaps JD.com realized its business model isn't working and needs to make changes.

Culpan noted a stake in the Indonesian company will give it ways to integrate operations and cut overlap in logistics and customer service. The problem is if JD.com brings its Chinese game-plan outside of the country, then investors could expect more years of slim margins and continued losses before any economies of scale can kick in.

But many of JD.com's investors have held on to their holdings for years so being told to wait even longer for signs of success "may come as a blow."