The online giant, which is second to its larger e-commerce competitor Alibaba, sent a letter to the regulatory body in China on Tuesday that oversees consumer protection. The letter to the State Administration for Industry & Commerce charges that Alibaba is inappropriately pressuring merchants who participate in Alibaba’s Singles Day promotions to not participate in similar promotions on other e-commerce platforms, such as JD.com.
A new regulation from the SAIC in September, which went into effect Oct. 1, contained a clause that bars online retail platforms from restricting merchants from partaking in promotions on other platforms.
Singles Day is Nov. 11 in China, and has become the largest online sales day in the world. Michael Zakkour, vice president, China/APAC at Tompkins International, expects “Singles Day sales to smash last year’s record of $9.3 billion. I’m projecting $12 billion in sales online for three key reasons: More Chinese are online and buying online than at the same time last year; Alibaba has more brands participating in its platforms than last year, and JD.com has grown exponentially this year and will add to the total.”
The numerical significance of Singles Day, or 11-11, is that all ones comprise it, representing single people, with the double-11 day now the first native born e-commerce holiday in China, Zakkour said. The marketing of 11-11 has become an important spending day for retail in general since “there is a knock-on effect of increased spending in bricks-and-mortar, as well as at bars and restaurants,” he said.
As for seeking an investigation by the SAIC, a company spokesman from JD.com said, “After receiving reports from dozens of apparel retailers that Alibaba is inappropriately pressuring them to pull out of JD.com’s Singles Day promotions, we have formally requested an SAIC investigation. Pressuring brands not to participate in our promotions limits choices for both consumers and brands, and would represent an obvious violation of China’s laws. Our success in apparel and footwear — among our fastest-growing categories — challenges our competitor’s market position, but brands should be able to choose which platforms and on what terms they operate, without undue interference.”
Jim Wilkinson, senior vice president of international corporate affairs for Alibaba Group, said, “JD is panicking because they’re losing. They simply can’t match our customer and merchant experience and logistical scale because Alibaba wins with customers and merchants, as we provide a superior experience for users on our platforms.”
Both firms completed a public listing of shares last year, with JD.com trading on the Nasdaq and Alibaba listing on the New York Stock Exchange.
It’s too soon to tell how SAIC will respond to JD’s complaint. But if the regulatory body elects to open an investigation, it won’t be the first time Alibaba has tangled with the SAIC. Earlier this year, SAIC in a white paper charged that Alibaba sold fakes on its platform, but then the white paper was pulled from SAIC’s Web site.