Chinese e-commerce site and Alibaba rival JD.com is putting its money into fresh fruit and vegetables after it led a $70 million Series C round in FruitDay, a company that sells fresh produce across China.
The investment in six-year-old FruitDay, which claims to be China’s largest online produce firm, also included participation from previous backers Susquehanna International Group (SIG) and ClearVue.
FruitDay imports over 80 percent of its produce from overseas, and it claimed to be on course to hit 10 million customers before the end of the year — up fourfold from last year.
The company said in a statement that it will use the new capital to develop its infrastructure and logistics, hire new management and for general business development. It stands to benefit from more than just JD.com’s money through this alliance, however, since the duo have agreed to “a strategic cooperation” which will allow FruitDay to tap into JD.com’s own logistics and fulfilment network across China to help widen its service in the country.
JD.com is commonly thought of as a lesser rival to Alibaba. That’s a pretty hard comparison to shake when you consider that Alibaba was responsible for the largest IPO in U.S. history last year — its current market cap exceeds $230 billion — but JD.com is different in key areas. The company, which is listed on the Nasdaq, and has attracted investment from Alibaba’s fierce rival Tencent, is building out an Amazon-like delivery model which includes its own warehouses — something that Alibaba does not — as this recent New York Times piece points out.
JD.com has invested more than $1.5 billion on that network and, as this deal with FruitDay shows, it has the potential to handle some e-commerce verticals in a more efficient way than Alibaba can at this point. (Alibaba is, of course, not standing still and it has an affiliate that is investing in its own logistics network to enable 24-hour delivery across China.)
“By combining JD.com’s online e-commerce platform and nationwide logistics infrastructure with FruitDay’s vertical leadership, more and more Chinese consumers nationwide will have the ability to purchase safe and healthy fresh produce online with confidence,” said Haoyu Shen, head of JD’s Mall business, in a statement.
“As we build China’s premier online e-commerce platform, JD.com will continue to explore long-term partnerships with leaders in key vertical markets,” Shen added.
Things start to get even more interesting if you pair JD.com’s infrastructure efforts with WeChat, the dominant messaging app in China which is owned by JD.com investor Tencent. JD.com already has a store on WeChat were customers can make purchases without leaving the app, and it could be an interesting medium for fresh fruit and vegetable orders — that’s something Line, another chat app, is pioneering in Southeast Asia right now.