THE brainchild of Alibaba, Singles Day turned the anti-Valentine’s Day on Nov. 11 into the biggest frenzy of consumption on the retail calendar.

The commercial holiday is one of the biggest engines in China’s economy. Shoppers spent US$750 billion online last year, roughly equivalent to the annual economic output of the Netherlands. Goldman Sachs reckons that will double to US$1.7 trillion by 2020. Chinese consumers are responsible for almost half of the world’s online shopping, according to research consultancy eMarketer.

JD.com has sought to counter rival Alibaba’s superior clout — with more than 500 million shoppers it has roughly double JD.com’s 258 million — by stitching up data-sharing deals with some of China’s biggest tech groups.

These include Tencent, the social media group with almost 1 billion users on its WeChat service; Baidu, which runs China’s dominant search engine; news aggregator Toutiao; Tencent-backed search engine Sogou, and NetEase.

JD.com has some 50 such deals, enabling it to target individual customers with precision. For example, someone reading news about young children on Toutiao would be targeted with nappies.

Both companies are also offering subsidies to merchants and couriers. Alibaba’s logistics arm Cainiao is spending 1.5 billion yuan (US$226 million) on subsidies, while JD.com is reportedly shelling out 2.1 billion yuan.

“The scale of the face-off with JD.com needs watching,” writes Bhavtosh Vajpayee, analyst at Bernstein Research in a report. “Small discounts across Alibaba’s 500-million-plus customer base can start adding up quickly if the competitive jostling gets out of hand.”

An earlier battle over hairy crabs demonstrated the lengths to which the rivals go. JD.com set up warehouses to shorten the supply chain, while one of Cainiao’s partners kitted themselves out with 40 refrigerated trucks to ensure multiple deliveries. Both promised to reimburse customers if the crustaceans were dead on arrival.

Similarly, the two companies are pushing into the luxury sector, with JD.com setting up a standalone “white gloves” service and buying into cultish ecommerce site Farfetch. “Mass-market categories such as consumer products are already saturated on these sites, so they are branching out into other sectors such as luxury,” says Liz Flora, who heads up Asia Pacific Research at digital agency L2.

Platforms are also making a play for top-performing merchants, wooing them with incentives such as site placements and discounts. This year 40-odd brands have reportedly ditched JD.com to sell exclusively on Alibaba’s platforms.

(SD-Agencies)