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JD.com to advertise apartments, should REA Group Limited worry?

JD.com is apparently the fourth largest internet company by revenue, it is a huge retailing website.

The business will start selling apartments on its website. This seems like a good fit for JD because property is also something that someone can sell to someone else, it’s just worth a lot more than a pair of socks.

JD.com is going to work with Juwai.com, which is an international property platform, to put Juwai’s properties onto its site. These properties will include Australian properties and properties in other places like Canada, the United Kingdom and the United States of America.

According to a quote in the AFR, the Juwai chief executive said that Juwai’s core mission is to help Chinese people become global residents and investors.

Foreign buyers are not a big part of the Australian property market and Chinese buyers are only a portion of the foreign buyer segment.

However, this could have long-term implications for REA Group Limited (ASX: REA) and Domain Holdings Australia Limited (ASX: DHG).

The biggest drawcard for Domain and REA Group is that they are the biggest portals for property buyers to find the biggest pool of properties for sale. If large e-commerce sites start muscling-in on the sector then they could see their dominance weakened.

At the moment it appears that JD.com is only focusing on Chinese buyers. But it’s not hard to imagine the giant trying to advertise property in other Asian countries that REA Group operates in. It’s also not hard to imagine JD.com advertising all property to all buyers in Australia.

Foolish takeaway

I wouldn’t be too worried if I were a REA Group shareholder right now, it will still be the number one player, Domain probably has more to worry about as the number two player in the market. It is definitely something to keep an eye on though, I wouldn’t be surprised to see other retailer websites consider property advertising too.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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