JD.com set to spark online price war

JD.com, the Chinese e-commerce giant, is reported to be readying a 10 billion yuan (US$1.5bn) subsidy campaign as it prepares to challenge rival Pinduoduo in the country’s lower-tier markets.

What’s happening

The campaign will launch next month, according to the South China Morning Post, and the subsidies will apply not only to the platform’s own online shops but also to storefronts set up by third parties. 

Context

“Low prices were the most important weapons responsible for our past success, and they will be essential in the future,” founder Richard Liu Qiangdong said late last year. Now JD.com is targeting the budget end of the market in a move that will bring it into fierce competition with Pinduoduo. The latter launched its own similar subsidy campaign in 2019 which helped it establish itself in China’s smaller towns, where consumers are more price sensitive.

Why it matters

While this development will be good for consumers, it’s less clear what the effect will be on the wider e-commerce sector. What’s unfolding is a battle to attract users at a time when pandemic controls and supply chain disruptions have slowed growth in the sector. At least 89 e-commerce platforms closed last year, the Post noted. 

Sourced from South China Morning Post