Alibaba Goes Head-to-Head With Tencent
Alibaba Group Holding Ltd. and Tencent Holdings Ltd., tech giants in China, are on a retail investment spree, making merchants select which side to choose from amid a battle for consumers’ digital wallets.
The two companies have spent more than $10 billion on retail-focused deals since 2017, which boosted their grasp in brick-and-mortar stores and online.
The forceful drive, supported by a large pile of money and a soaring share prices, is part of a battle to win over consumers and store operators to the both firms’ conflicting payment, logistics, social media, and big data services.
This resulted into a fewer retailers left without allegiance to either Alibaba or Tencent.
“All of the retailers in the brick-and-mortar world are very worried. They have to take a side,” Jason Yu, a general manager at a market research firm, stated.
“Otherwise they are afraid they will be eaten alive in the future.”
Alibaba is the top e-commerce player in China and its partner, Ant Financial, is leading in mobile payments. Meanwhile, the strengths of Tencent lie on social media, digital payment, and gaming. Tencent has a major stake with JD.com, the second-largest online retailer.
Moreover, both Tencent and JD.com have an increasing range of associates, such as French grocer Carrefour SA, which has stated a possibility on investment from Tencent, and Walmart, the U.S. retail giant, which has a stake in JD.com.
Tencent has also purchased a share in Yonghui Superstores Co. Ltd., Vipshop Holdings Ltd., and Heilan Home. This month, the tech giant caught a strategic tie-up with Bubugao.
Alibaba, on the other hand, has invested more heavily in Suning.com, Intime Retail, Sanjiang Shopping Club, Lianhua Supermarket, Wanda Film, and Easyhome.
The key to the battle is the nearly $13 trillion mobile payment market of China, where both tech giants are going head-to-head.
“I think for payment (the retail push) is a very critical part because it's almost a gateway,” stated Yu.
“That's the pot that Alibaba, JD.com and even Tencent want a slice of,” added Yu. “That's the majority of the business where they can actually look for future growth.”
This month, Alibaba has invested $486 million in a retail-focused big data frim.
The tech giant stated that the agreement with the big data firm means it could “help brick-and-mortar retailers succeed in the digital age.”
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Allison W. Bennett | February 19, 2018