JD.com's Challenges in China and Beyond
Case Code: BSTR588
Case Length: 11 Pages
Pub Date: 2019
Teaching Note: Available
Organization: Jingdong.com Inc.
Industry: Technology & Communications
Themes: Corporate Governance, Corporate Strategy, Business Models
Abstract Case Intro 1 Case Intro 2 Excerpts
Jd.com vs Alibaba
JD.com's business model was inherently different from that of Alibaba's. It focused on customer experience, the authenticity of its goods, and speed of delivery. The company was a direct online retailer that bought and sold products with an in-house logistics network. Alibaba, on the other hand, offered an online platform for retailers and relied on third party sellers and third-party logistics partners for delivering the goods...
Having made a mark in the intensely competitive e-commerce market in China, JD.com planned to expand into international markets. In June 2015, it started its international expansion by partnering with Ulmart, Russia’s largest online retailer. Analysts believed that growing internet connectivity was helping to drive online sales in Russia, attracting global players such as Alibaba and eBay Inc., the California-based multinational e-commerce corporation. JD.com also aimed to tap the Russian market that had the largest number of internet users in Europe – 61.3 million in 2013, according to Internet analytics firm, comScore. Commenting on JD.com’s foray into the Russian market, Victor Xu, President of JD.com’s international business group, said,..
Tapping the Rural Markets in China
While JD.com had ambitious plans to expand into international markets such as the US and Europe, analysts felt that it should first tap the rural markets in China where there were a growing number of middle class consumers with disposable incomes. According to the China Office of the National Working Commission on Aging, at the end of 2017, the older demographic in China's rural areas (those aged 60 years or above) of around 241 million, accounted for 17.3% of China’s total population. This provided an immense untapped potential for e-commerce retailers in China...
Analysts opined that though JD.com had emerged as a successful player in the e-commerce market in China, it had to contend with global giants such as Alibaba as well as new e-commerce players such as Pinduoduo. For the year 2018, while the number of JD.com’s annual active users stood at 305 million, Alibaba had 636 million and Pinduoduo had 418.5 million for the same period. UBS reported that Pinduoduo’s customer retention rate was higher than any e-commerce platform in China as it targeted price-sensitive customers in China by offering steep discounts. According to a Pinduoduo user,...
Amidst several challenges, in October 2018, JD.com aimed to leverage on its reputation of delivering online orders faster in a bid to boost its income. Analysts opined that JD.com's expansion into retail stores and parcel delivery would bring the company into closer competition with Alibaba. According to Martin Bao, an analyst in Hong Kong with ICBC International, "JD is looking for new pastures that could sustain its growth for the next five years. It will take substantial effort for them to achieve further growth."..
Exhibit I: JD.com's Five Year Financial Summary (in millions RMB)
Exhibit II: Market Shares of Top 10 e-Commerce Players in China by Sales
Exhibit III: JD.com's Overseas Investments
Exhibit IV: Brandz Retail's Top 20 Fastest Growing Brands (2018)
Exhibit V: JD.com's Stock Chart (2018)
Exhibit VI: JD.com's Corporate Structure
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