Chinese e-commerce giant JD.com pursues budget-minded consumers in slow economy

China's e-commerce giant JD.com is said to be doubling down on its budget shopping platform Jingxi in its latest move to win consumers in the "sink" market, made up mostly of small towns where shoppers have limited spending power, amid fierce competition with rivals such as PDD Holdings.

Borrowing a page from PDD's playbook, JD.com is taking full control over Jingxi's operation, logistics and after-sales services in what is known as a "whole custodian" model, hoping to better serve price-sensitive consumers, according to a report from Chinese media outlet 36kr.

After the restructuring, the head of Jingxi would report directly to JD.com CEO Xu Ran, the report said.

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JD.com did not immediately reply to a request for comment on Tuesday.

Major Chinese e-commerce platforms are engaged in an intense price war amid an economic slowdown and sluggish domestic consumer spending.

PDD's Pinduoduo platform, in particular, has found success with cut-to-the-bone pricing, prompting others such as Alibaba Group Holding's online marketplace Taobao to focus more on grass-roots consumers. Alibaba owns the South China Morning Post.

JD.com, which is popular among affluent shoppers in top-tier cities, launched the Jingxi business unit in 2020 to tap lower-end markets by focusing on extremely budget-conscious consumers, but response has been lukewarm.

Jingxi, which has signed up suppliers of tissue paper, underwear and fruit, plans to expand its partnerships to cover more than 10,000 factories by the end of this year, according to 36Kr.

Under JD.com's renewed focus, Jingxi received more than 1 million orders in the first four hours of the recent 618 midyear shopping festival, more than triple those from the day before the event began, according to the company.

As of March, more than half of China's online shoppers, or 647 million people, came from sink markets, according to a report from QuestMobile, a Chinese business research firm.

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