As the largest players in their respective markets, Alibaba (NYSE: BABA) and Amazon.com (NASDAQ: AMZN) have garnered investor attention, both growing more than 100% over the past several years. In the wake of this gold rush, China’s highest quality direct-to-consumer company, JD.com, has lagged.
JD’s strategy has been simple; invest all earnings back into the company for growth, rather than turning short-term profits. Sacrificing in the short term to build a strong moat is an aggressive strategy, however the payoff potential is enormous. Other companies to successfully implement this approach include Salesforce.com (NYSE: CRM), and the above-mentioned Amazon.com.
JD is only 1/9th the size of Alibaba by market cap, but from an investment perspective, bigger is not always bigger. JD continues to fly under the radar by focusing exclusively on building and strengthening its distribution network. It has managed to grow revenues by nearly 40% annually, consolidating its positioning as the best direct-to-consumer retailer in China. While Alibaba manages its eBay-style marketplace and ancillary products/services, JD is silently positioning itself as the Amazon of China.
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