Saturday, May 18, 2024

China’s JD.com to shut e-commerce sites in Indonesia, Thailand

JD.com (9618. HK) of China is closing its e-commerce services in Indonesia and Thailand, exiting Southeast Asia after a difficult year for China’s retail and technology industries.

According to its local websites, JD.com will cease operations in Thailand on March 3 and in Indonesia at the end of the same month. Both units will cease accepting orders on February 15. According to a JD.com representative, the firm will continue to serve worldwide markets, including Southeast Asia, through its supply chain infrastructure.

The firm, which did not provide a cause for the shutdown, began its e-commerce operation in Indonesia in 2015 as a joint venture with Provident Capital, while the Thai site was established two years later with the country’s largest retailer, Central Group.

Nevertheless, JD.com has struggled to compete with larger companies like Alibaba Group’s (9988. HK) Lazada, Sea Ltd’s (SE.N) Shopee, and GoTo Group’s (GOTO.JK) Tokopedia.

The company, which also runs the omnichannel retail brand Ochama in Europe, said in November that “new businesses” – including units abroad as well as other ventures such as JD property – accounted for just 2% of total revenue in the third quarter. In China, the company, like many of its tech peers such as Alibaba, has been battling a slowing economy and the impact of strict COVID curbs, which have prompted cost-cutting and worker layoffs.

While JD.com has performed better than its peers, posting an 11.4% rise in third-quarter revenue, its chief executive has described the second quarter as the most difficult one since listing in 2014.

Nattabhorn Buamahakul, a Bangkok-based partner at Asia Group Advisors, said JD’s exits reflected the highly competitive e-commerce landscape in Southeast Asia, especially Thailand.

“Online platforms don’t only compete with each other but also local operators, a small business which has risen as payments become simpler, using social media like TikTok and Instagram as customer touchpoints,” she said.

But Jeffrey Towson, a Beijing-based partner at TechMoat Consulting said JD.com had behaved more prudently than its competitors in Southeast Asia when it came to spending on marketing and subsidies, and he believed they were exiting without losing too much money.

“JD is now exiting the consumer side and focusing on Southeast Asian merchants, brands, and logistics infrastructure that connect with Chinese consumers. That plays to their strengths,” he said.

 

 

 

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