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E-commerce players in China are struggling to fight counterfeit goods, so JD.com shut down its C2C marketplace in November

China’s second largest e-commerce platform, JD.com, saw an impressive 78 per cent year-on-year sales growth in 2015 — raking in RMB462.7 billion (US$71.4 billion) over the year.

Those numbers helped contribute to a RMB 181.3 billion (US$28 billion) net revenue in 2015, a 58 per cent increase from 2014.

However, in Q4 2015, the company’s losses widened to RMB7.6 billion (US$1.15 billion) because JD.com made the decision to close C2C trading platform PaiPai.com over concerns of rampant swapping of fake goods.

Stocks listed on the NASDAQ exchanged jumped 3 per cent yesterday after the FY 2015 results were announced. Overall, the stocks have dropped 9 per cent as compared to last year.

The company fulfilled 417.8 million orders in 2015, more than doubling its 2014 fulfillment number of 208.7 million deliveries. Additionally, nearly two-thirds (61.4 per cent) of orders were fulfilled via mobile — providing some insight into the popularity of mobile e-commerce in China.

“In the quarters ahead, we will continue to invest in high-growth initiatives while improving the profitability of our core business. We look forward to another year of solid growth as the sustained expansion of the middle class in China brings many more consumers to JD.com,” said Sidney Huang, JD.com CFO in an official statement.

Also Read: Even if in China for a week, WeChat is absolutely crucial for business

The move into C2C with PaiPai was not an illogical decision for JD.com. In Hong Kong, the underground Facebook group ‘Swap It’ was wildly popular while in Singapore Carousell is one of the more visible startups in the ecosystem.

But in China, merchants who open C2C stores are not restricted by the same regulatory oversight as traditional retail outlets, making counterfeiting a rampant problem. JD.com rival Alibaba has been fighting concerns over counterfeiting on its Taobao platform for over a decade (in 2015 it narrowly missed being placed on the United States Trade Representative blacklist for selling fake goods).

In November, JD.com decided that the battle was not worth winning and shut down PaiPai — contributing to its jump in net loss for Q4 2015, thanks to a RMB 2.75 billion (US$420 million) write-down.

Also Read: Uniqlo out, Rakuten in: The e-commerce hub joins JD.com

In yet another development, JD.com hosted a runway show during New York’s fashion week and signed a partnership with shoemaker Li-Ning and Japanese e-commerce giant Rakuten. It also got into the grocery delivery game with an O2O partnership with Yonghui.

JD.com claimed RMB85.2 billion (US$13.1 billion) in total assets.

The post Fake goods bog down impressive JD.com revenue growth; losses grow appeared first on e27.

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