JD.com Climbs as Gap Deal Bolsters Shift in Sales Model

JD.com Inc. led Chinese e-commerce companies higher in New York after announcing that Gap Inc., the largest U.S. retail chain focused on apparel, opened a store on its sales platform.

JD.com, China’s second-largest e-commerce operator by orders processed, climbed 3.3 percent, extending to 28 percent its advance since a U.S. debut in May. Vipshop Holdings Ltd., an online fashion retailer, surged the most in seven months and beauty shopping site Jumei International Holding Ltd. jumped 12 percent. The Bloomberg China-US Equity Index rose 0.8 percent to a one-week high.

Gap’s online store is part of JD.com’s shift away from retailing and toward a marketplace model similar to that of sector leader Alibaba Group Holding Ltd. To boost its mobile presence, JD.com has partnered with Tencent Holdings Ltd., owner of China’s most popular instant message applications. Vipshop, which sells fashion brands at a discount, surged after a survey by The Economist Intelligence Unit showed that women are driving the “explosive growth” of e-commerce in Asia.

“The move shows that JD is moving from the model of buying products and selling them to consumers toward being more of a platform which directly connects buyers and sellers,” Praveen Menon, an analyst at Bloomberg Intelligence in New York, said by phone. “The significant thing that JD had done is combine their business with Tencent’s business, and through that they gained the big social media platform that Tencent has. That’s a significant transaction, and JD has a very powerful partner.”

Mobile Apps

JD.com rose to $24.27. After selling a 15 percent stake to Tencent in March, JD.com gained access to the Internet giant’s WeChat and Mobile QQ apps, which each have more than 450 million active users. The move helped JD.com boost mobile orders more than sixfold in the third quarter from a year earlier, billionaire founder and Chairman Richard Liu said in an interview last month.

Vipshop added 6.7 percent to $20.33, the biggest gain since May 15. Jumei surged to $15.42, extending its three-day gain to 21 percent.

The Economist Intelligence Unit’s report, the result of a survey of 5,500 women across Asia’s major urban areas, showed that 83 percent of women buy cosmetics online, while nearly 90 percent purchase clothing and accessories on the Internet.

Online Sales

“At Vipshop, over 80 percent of the accumulative 90 million members are females, who contribute to 90 percent of our sales,” Vipshop said.

Adjusted net income at the Guangzhou-based company will more than double to $56.1 million in the fourth quarter, the average of nine analyst estimates collected by Bloomberg shows.

The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF slipped 1 percent and the iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., added 0.5 percent.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE