Why JD Is Investing in Wanda Commercial Properties

JD.com (JD) is implementing initiatives that suggest that it isn’t willing to leave its rival Alibaba (BABA) any breathing space in China’s (MCHI) fiercely contested e-commerce industry. 

In November 2017, JD and Alibaba sparred over which company posted the highest sales on Singles’ Day. Singles’ Day was pioneered by Alibaba and is China’s largest annual shopping event. JD took issue with how Alibaba calculated its Singles’ Day sales.

Adding to its already intense competition for Chinese consumers’ spending, JD recently teamed up with several investors to acquire a stake in Wanda Commercial Properties, which is the leading mall developer in China.

Joining JD in its investment in Wanda Commercial Properties was its backer, Tencent (TCEHY), which developed the WeChat app. Through WeChat Pay, Tencent is squaring off with Alibaba’s Alipay in the mobile payments market not just in China but also in other parts of Asia and beyond. 

Alipay is a PayPal-like (PYPL) digital payment service operated by Ant Financial. Ant Financial is the Alibaba affiliate that unsuccessfully tried to acquire US-based MoneyGram (MGI) for $1.2 billion.

JD, Tencent, and other investors injected 34 billion yuan (~$5.4 billion) into Wanda Commercial Properties for a 14% stake. JD invested 5.0 billion yuan in Wanda Commercial Properties.

JD’s investment in Wanda Commercial Properties is significant because it underscores the company’s strategy to blur the line between online and offline shoppers. JP’s goal for this strategy JD is to offer a seamless shopping experience for its customers. Alibaba is also pursuing an omnichannel strategy.

Major e-commerce companies such as Amazon (AMZN) are seeking to expand their physical store presence to increase customer touch points. These companies also seek a way to speed up deliveries when customers are able to pick up orders at nearby stores.

JD’s revenues grew 39.2% year-over-year to $83.7 billion yuan (or $12.6 billion) in 3Q17.