JD.com Betting Big On Fruit, But How Will It Differentiate From Alibaba?
Chinese e-commerce retailer JD.com Inc (NASDAQ: JD) is betting big on online Chinese produce company FruitDay. JD.com was one of several big-name investors that participated in FruitDay’s recent $70 million fundraising effort.
FruitDay claims to be China’s largest online produce firm, targeting 10 million customers by the end of 2015. FruitDay imports 80 percent of its fruit from overseas and plans to use the $70 million in proceeds to invest in infrastructure, logistics, management and general business development.
JD.com joined global investment firm Susquehanna International Group and ClearVue to come up with the $70 million.
Differentiating From Alibaba
JD.com is often compared to larger Chinese e-commerce rival Alibaba Group Holding Limited (NYSE: BABA), but JD.com has made strides to differentiate itself from its rival. JD.com has invested $1.5 billion on the construction of an Amazon-like network of distribution warehouses, a delivery model that distinguishes JD from Alibaba.
Plans For FruitDay
According to Haoyu Shen, head of JD’s Mall business, the partnership between JD and FruitDay will make fresh fruit available to Chinese consumers across the country.
“By combining JD.com’s online e-commerce platform and nationwide logistics infrastructure with FruitDay’s vertical leadership, more and more Chinese consumers nationwide will have the ability to purchase safe and healthy fresh produce online with confidence,” Shen wrote in a statement.
Surging Share Price
A slumping Chinese economy has certainly not hurt JD.com’s share price in 2015. JD’s stock is up more than 50.7 percent year-to-date, while Alibaba’s stock is down 10.3 percent.
With a market cap of only $48.3 billion, JD.com is still less than one fourth the size of Alibaba.
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