When the epidemic rages, can Alibaba's Chinese counterparts seize the opportunity?

Investors are betting that China’s relatively small e-commerce companies are grabbing market share from market leader Alibaba Group Holding Limited. The question now is whether these e-commerce companies can also achieve profit growth.

Although overall consumer sentiment is still sluggish, the Chinese e-commerce market has achieved strong performance: China’s online retail sales in May increased by 22% year-on-year, compared with the year-on-year decline in overall national retail sales from 2020 to the present. The new crown epidemic has forced many customers to shop online, while e-commerce companies have provided discounts and shopping subsidies to stimulate consumption. Various e-commerce companies have adopted various promotional and preferential measures at the 618 shopping carnival that ended last week, and June is expected to be fruitful.

Investors have poured into Chinese e-commerce stocks, especially those of relatively small companies. Shares of JD.com have risen 70% so far this year, while Pinduoduo (PDD) shares have more than doubled during the same period. In comparison, Alibaba's stock price rose 8% during the year. JD.com and Pinduoduo are the second and third largest e-commerce companies in China. Their current market value is about US$100 billion, which is still far below Alibaba's market value of US$616 billion. Unlike Pinduoduo and Alibaba, JD.com has a self-operated logistics network, so it provides consumers with better services during the anti-epidemic blockade period, and Pinduoduo’s low-cost strategy has laid a good foundation for its development in small cities. basis.