The competition in Southeast Asia's e-commerce market is proving far more brutal than anticipated. While Shopee and Lazada continue their fierce battle for users, JD.com's Indonesian operations have delivered sobering news: another round of layoffs.
Recent reports indicate that JD.ID, JD.com's Indonesian subsidiary, has cut approximately 200 jobs, representing about 30% of its workforce. This development raises questions about what went wrong with JD.com's once-ambitious Southeast Asian expansion strategy.
A Pattern of Contraction
JD.ID's official statement attributed the layoffs to "challenges brought by business changes," describing them as "part of management's personnel streamlining measures." The company pledged to provide affected employees with severance packages, insurance benefits, and career transition assistance in compliance with Indonesian labor laws.
This marks JD.ID's second round of layoffs this year, following unconfirmed reports of job cuts in June. The repeated workforce reductions suggest deeper troubles than initially apparent in JD.com's Indonesian operations.
Earlier market rumors hinted at JD.com's potential withdrawal from both Indonesia and Thailand, with speculation about seeking investors to take over its operations. While company spokespersons denied these claims, stating that "JD.com has not discussed exiting any markets," the persistent contraction rumors cast doubt on its Southeast Asian strategy.
From Promise to Struggle
JD.com entered Indonesia in 2015 through a joint venture with Singapore's Provident Capital, establishing JD.ID with grand ambitions in Southeast Asia's largest economy. Backed by JD.com's resources and technology, JD.ID initially showed rapid growth, even securing investment from Indonesian internet giant Go-Jek and achieving a valuation exceeding $1 billion.
However, the "burn cash for market share" approach that worked in China failed to gain traction in Indonesia. Recent performance metrics reveal the depth of JD.ID's challenges: iPrice data ranks it 10th in Indonesian e-commerce site traffic, while Similarweb places it at 13th with just 1.9 million monthly visits compared to Shopee's dominant 173 million.
The Competitive Squeeze
Analysts note that JD.ID lacks distinctive features compared to rivals—missing Shopee's aggressive subsidies, TikTok's social commerce innovations, or Lazada's expanding logistics network. Even JD.com's signature strength in supply chain management failed to translate into sustainable advantage in Indonesia's complex market.
The competitive landscape continues to intensify, with local players like Tokopedia and Bukalapak joining regional giants Shopee and Lazada in squeezing JD.ID's market position. Meanwhile, Southeast Asia's e-commerce growth shows signs of cooling as consumers return to physical stores and reduce discretionary spending.
Path Forward
Despite these challenges, opportunities may exist for JD.com to recalibrate its Southeast Asian strategy. Potential approaches include focusing on specific product categories, forging strategic local partnerships, or adapting successful models from competitors while leveraging JD.com's core competencies in logistics and supply chain technology.
The critical test for JD.com will be developing a sustainable business model that moves beyond cash-burning expansion. As Southeast Asia's e-commerce market enters a new phase of maturity, only those players who can combine localized execution with financial discipline will likely endure.