ALIBABA’S dominance of online retail in China faces its biggest-ever challenge as the firm founded by Jack Ma 15 years ago lines up a U.S. initial public offering (IPO) that could value the firm at around US$140 billion.

    In a rare blip, Alibaba Group Holdings lost market share last year while its nearest rivals all grew, according to Euromonitor. The market research firm sees China’s Internet retail market tripling from 2012 to more than US$300 billion in 2018 as the country’s smartphone-savvy shoppers buy everything from plane tickets to sneakers online.

    China’s biggest social media company, Tencent Holdings Ltd., is leading the revolt, linking the country’s most popular messaging app, WeChat, with No. 2 e-commerce player, JD.com.

    An array of smaller rivals is also clawing away at Alibaba’s lead, while household retail names like Nike Inc. and Gap Inc. are increasingly striking out away from the giant’s Tmall electronic platform to set up more distinctive online stores of their own.

    “In China, shopping is a social activity. You want to tell friends about it, recommend it — it’s a smartphone activity, and whoever owns that organizational ability also has a hold over how a person shops,” said Frank Lavin, Hong Kong-based chief executive of Export Now. Lavin’s company helps global firms set up shop in China through Alibaba’s Tmall.

    Alibaba’s e-commerce prospects at home loom large after Ma’s firm said Sunday it was starting plans for a listing in the United States — potentially the biggest-ever IPO by an Internet company — which could surpass the US$16 billion raised by social media giant Facebook Inc. in 2012.

    Alibaba still held a sturdy 45.1 percent of China’s e-commerce market last year, down from 46.1 percent a year earlier, according to Euromonitor, and remains bullish in the face of Tencent, JD.com and others. It is beefing up its mobile services to keep up with China’s legions of smartphone users.

    Alibaba is now battling rivals on multiple fronts. Alongside JD.com, heading for a US$1.5 billion U.S. IPO of its own, are well-funded vehicles like household appliance retailer Suning Commerce Group Co. and Wal-Mart Stores Inc.’s grocery retailer Yihaodian.

    Smaller niche players like cosmetics specialist Vipshop Holdings Ltd. are also growing in stature. And with global and local brands peeling away from Tmall, the trend is likely to see Alibaba’s market share extend its fall, said Bryan Wang, Beijing-based vice president for Forrester Research.

    “We have definitely seen a lot more customers asking us in the last year about how to get away from Tmall,” said Wang.

    Internet clothing retailer HSTYLE has partly flown the nest. Competing with brands like H&M and Uniqlo, it has branched out from just having a Tmall outlet and now books half its sales through its own site and on JD.com and Tencent.

    “As a mature Internet brand, we’re looking to provide more individual service to our shoppers,” Zhao Yingguang, founder and chairman of HSTYLE, said, describing his brand as one of the leading women’s apparel retailers on Alibaba’s platforms. “We go and sell our products where the consumers are.”

    Alibaba’s vast resources have helped it see off weaker players so far such as Otto Group, 139shop.com, Mecox Lane, Newegg.com and others, but the remaining contenders are more seasoned in competition with Alibaba — and ambitious.

    JD.com still lags some way behind Alibaba in second place with a 14 percent market share last year, up fractionally from a year earlier. But its IPO plans and the deal with Tencent — a less well-known name outside China than Alibaba — will give it new financial and operational resources. (SD-Agencies)