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Alibaba Denies Accusation Regarding Singles Day Strategy

|Includes: Alibaba Group Holding Limited (BABA)

Alibaba denies the accusations that JD.com made last week about using power and influence to drift merchants away from other platforms for the profitable Singles Day event.

Alibaba was accused on Tuesday by its rival, JD.com, of using its power and influence over the merchants, scaring them away from the market for the profitable Singles Day event. This day in China has previously proved to be highly profitable for the company because it receives numerous orders and shopping is at its peak. JD.com filed a complaint to the Chinese regulatory authority against its unbeatable competition.

Alibaba Group Holdings Ltd. Has denied the accusations that China's second largest e-commerce organizations had made against it. A spokesman, Rob Ngai, said, "We strongly deny the accusations, and the company welcomes competition as it benefits consumers, merchants and service providers."

Singles Day provides large amounts of sales being the world's largest event. China's online shopping organizations have made this event to be a headline before it has even happened. The complaint was filed on Monday by JD.com at the State Administration of Industry and Commerce (NYSE:SAIC), where Alibaba was accused of pressurizing the merchants to run away from JD.com and come to them instead on Singles Day.

The SAIC consists of a rule that mentioned online platforms are forbidden from stopping merchants by any means from going to other sources and platforms for their products. This SAIC has already submitted a white paper to Alibaba for the selling of fake products on its online service this years, which leads it to be stricter with the company because it is not the first time the online shopping platform is being accused of wrongdoings.

The two companies have been battling for a long time now to attract merchants to their platforms. This fight has gotten serious between them recently and a claim was made that Mulinsen, a shoe brand, had left JD.com. It later explained that it did not leave because of Alibaba wholesales influence but because it had a better option at Tmall that attracted it more.

All the companies in China are impatiently waiting for Singles Day because of China's economy, where they achieve amazingly huge sales. Last year, the e-commerce company earned revenue of $9.34 billion on the event. This recent controversy will affect its sales and the hopes it has for the event this year.

Customers take such controversies and claims seriously, and are quite sensitive about them when it comes to online trading businesses that are using wrong strategies to gain a bigger market share. Alibaba has to make clarifications before Singles Day so that its sales have no influence whatsoever on the event.

Alibaba stock is running at $85.37 on real-time currently (November 5).