It comes after Jingxi Pinpin withdrew from several other provinces including Sichuan and Hebei in March. The company cut around 15% of its workforce that month, a source at JD.com said.
Jingxi Pinpin launched in the form of a WeChat-embedded mini programme on Jan 1, 2021 and peaked in March that year, when its services were available in as many as 17 provincial-level regions. It now only operates in Beijing and Zhengzhou, capital of Henan Province.
The business trades under Jingxi Business Group (JBG), which is said to be conducting an organisational reshuffle.
But Jingxi Pinpin’s early success turned out to be a flash in the pan, as it ended services in seven provinces — including Fujian, Jilin and Shanxi — between May and August 2021, according to a report by Kaiyuan Securities.
Since then, JD.com has started pouring more resources into its intracity, instant-delivery retail business that targets “high-end consumers in top-tier cities” and better reflects the company’s brand image and advantages, a source with knowledge of the matter told Caixin. By contrast, community group-buying is more like a supplementary business model that targets people who prefer to buy groceries and other daily essentials in bulk at cheaper prices, the source said.
JD.com has been testing the waters with community group-buying but found the business to be unsustainable, according to two sources at the company. JD.com has pared back the business over the past year given that it was losing money in the affected regions, they said.
In May, JD.com CEO Xu Lei said in an earnings call that the company would continue to streamline new businesses, including those under JBG, to improve operating efficiency and boost cash flow.
However, Xu talked up the high performance of Jingxi Pinpin, saying that the platform’s gross merchandise value and the number of new users had nearly doubled as Beijing was combating the latest wave of COVID-19, which began in late April.
Apart from Jingxi Pinpin, JBG also operates a Pinduoduo-like social e-commerce app called Jingxi, where budget goods are sold, and Jingxitong, which mainly provides JD.com’s physical stores with supply chain services.
A merchant doing business on Jingxi told Caixin that the platform is firing workers as it becomes uncompetitive in both prices and logistics services.
A JBG source added that the Jingxi app might take a long time to catch up with rivals like Pinduoduo and Meituan in attracting traffic.
The speculation comes amid news reports that JD.com will integrate JBG into its retail business division, JD Retail. The company is undergoing a major restructuring after the first quarter of 2022, when it recorded its slowest quarterly revenue growth since going public in 2014.
In the three months through March, JD.com generated 217.5 billion yuan (US$34.3 billion) of revenue from its retail business, accounting for 90% of total revenue, which jumped 18% year on year to 239.7 billion yuan, according to the company’s financial report released in May. The quarterly net loss attributable to shareholders was 3 billion yuan, compared with a net profit of 3.6 billion yuan in the same period of 2021.