Chinese e-commerce powerhouse JD.com has appointed its CEO as the new chief of the company’s main revenue driver JD Retail in a major executive reshuffle at its core business, as the firm comes under mounting competitive pressure amid a sluggish domestic economy.
The shake-up comes just days after the conclusion of China’s annual Singles’ Day shopping extravaganza, which saw JD.com and rivals including Alibaba Group Holding’s Taobao and Tmall platforms engaged in a brutal price war to draw consumers who have become more conservative with their spending.
The leadership changes at JD.com speaks to the growing challenges faced by traditional e-commerce platforms amid the rapid rise of newcomers in the live-streaming e-commerce sector, according to Zhang Yi, founder of Guangdong-based market consultancy iiMedia.
Live-streaming e-commerce generated 1.98 trillion yuan (US$273 billion) in sales in the first nine months of the year, growing 60 per cent from last year, according to a report released by the Chinese Ministry of Commerce last week. That compared with just under 12 per cent growth for the overall online sales market.
The increasing popularity of live-streaming e-commerce signals more difficulties ahead for traditional online retail players, as consumers tighten their purse strings amid an unstable economic recovery.
“The downhill road [for them] has just begun,” Zhang said, “Companies will need to change either their people or their business strategy.”
The CEO reappointment at JD Retail highlights “a change in the company’s business and operational strategies to becoming more aggressive” in order to wrest market share from competitors, according to Zhuang Shuai, founder and chief analyst at e-commerce market consultancy Bailian.
This year has seen a series of key leadership and strategic changes at JD.com and its competitors.
Alibaba, meanwhile, is undergoing a sweeping restructuring to break its sprawling business empire into six major units and several small businesses, in the internet behemoth’s most significant reorganisation since its founding in 1999.