JD.com exits Australia

Date : 09 May 2019

The Chinese ecommerce giant confirmed this week that it has closed its office in Australia less than 15 months after opening in February last year.

A measure to mitigate losses

JD.com’s Australian office in Melbourne, where Alibaba also has an office, was a step for the company to work closely with Australian suppliers and sell Australian goods, including food, wine, health supplements, vitamins and cosmetics, to customers in China via its platform. It also had ambitions expansion plans and wanted to invest in a distribution network in Australia.

However, the company was facing a challenging time in that market and in response to widening losses, JD.com are integrating the Australian office into the business in China. The head of its Australian operations, Patrick Nestrel, has departed.

A business model less profitable than Alibaba

JD.com’s business model handles the end-to-end experience from warehousing to delivery. Whereas Alibaba’s business model requires brands to pay for the warehousing and delivery of products. As a result, Alibaba has higher margin than JD.com in markets like Australia. Alibaba has no plans to withdraw from Australia, which is Alibaba’s fourth top country selling products to China.

JD.com, which has partnerships with Austrade, Australia Post, a2 Milk and Treasury Wine Estates, has had a tough year and was also criticised in China after lowering the salaries of its couriers, which were considered the backbone of the company.

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