Chinese e-commerce giant JD. com is betting on household products to keep growth humming, as it prepares for a secondary listing in Hong Kong—but margins may shrink
Analysts say sentiment toward the homecoming listing is getting stronger after this year’s initial set of strong results, but they also warn that JD.com’s already thin margins could be further suppressed. Selling more consumer staples is good for engaging users as food and other daily necessities involve repeat purchases. But delivering these goods is more complicated and costly than electronic appliances, which does not need strict temperature control or careful storage planning.
In the meantime, competition is heating up. Chinese e-commerce rival Alibaba, which does not have its own logistics unit and suffered more from delivery disruptions in the first quarter, will spare no effort to regain lost ground. “They have to match whatever Alibaba is offering,” Zhu says. “JD.com can’t be out of it. It isn’t that they want to do it, but they have to do it.”Tencent’s Ma Huateng Overtakes Jack Ma As China’s Richest Again Amid Coronavirus Lockdowns
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