some have speculated that the company failed to overcome its competitors, such as Lazada, Shopee and Tokopedia.  In China, JD.com has been facing a slow economy and strict Covid-19 curbs. It said in November that “new businesses” – including its overseas businesses as well as other ventures such as JD property – accounted for just two per cent of its total revenue during the third quarter. Cost-cutting and worker layoffs have become commonplace, and while the company posted an 11.4 per cent rise in third-quarter earnings, its CEO has been quoted as saying the second quarter was its most difficult one since listing in 2014. Time to pivot According to Raviteja Neralla, a retail analyst at GlobalData, the decision to pull out of Indonesia and Thailand is part of JD.com’s broader strategy to pivot its business to focus on logistics and supply chain services. “The company has been hit by the Chinese government’s crackdown on large internet firms, which has slowed down its growth significantly,” he told Inside Retail. The company also faced strong competition from other Southeast Asian e-commerce players, including Lazada, Shopee, and Tokopedia, and he noted that the number of monthly web visitors to JD.com’s Indonesian arm has declined dramatically in recent quarters. Although Indonesia has a huge population and growing internet penetration, the country lags behind many other Asian countries in terms of internet connectivity.  “According to GlobalData, only 61.1 per cent of the Indonesian population were internet users in 2021. In comparison, this proportion was 75.8 per cent in China and 93.8 per cent in Japan in 2021,” Neralla said. “In such a scenario, companies with larger market shares such as Shopee and Tokopedia, which has much deeper penetration in these markets, have a better competitive advantage over JD.com.”  Strict digital content regulations in these countries have also proven to be problematic for e-commerce companies.  “In May 2022, Lazada faced a boycott from the Thai army over a video posted on Lazada’s Facebook page. In 2022, there were reports of the Indonesian government introducing stricter curbs on online platforms including e-commerce platforms,” he said. Market realities Neralla believes that JD.com’s decision to shut down its e-commerce operations in Thailand and Indonesia is a prudent one, and will enable it to cut down on the cost of acquiring new customers in these countries. “In such a scenario, the retailer has decided to work on its supply chain and serve its consumers in its home market, China, better. It is investing in Southeast Asian brands and merchants that strike a chord with Chinese consumers,” he said. With the Chinese government easing its Covid-19 restrictions, domestic demand is rapidly recovering. And given China is a much larger market, he says it makes sense that JD.com would focus its efforts there.  “According to experts, the Chinese government’s crackdown on internet firms is nearing its end. China is also a better market to concentrate on compared to its Western counterparts owing to its brighter GDP growth outlook for 2023,” he said. So, what can other retailers learn from JD.com’s failed foray into Southeast Asia? For Neralla, it shows that retailers must study their competition thoroughly, and time their entry into any new markets.  “Given Indonesia’s relatively low internet penetration, an omnichannel strategy would have served JD.com better in the country,” he concluded.