JD.com restructures amid rising competition, slower growth and investor concerns

China’s second largest e-commerce player, JD.com, has announced a restructuring of its main shopping site and the creation of an office of the chief executive to better serve its customer-centric strategy and allay investor concerns amid rapid changes in the country’s online shopping industry.

The overhaul will divide JD Mall, the company’s main revenue driver, into three segments, according to an internal document distributed by JD.com’s human resources department on Friday.

Following that initiative, JD.com announced on Wednesday a share repurchase programme that will see the company buy up to US$1 billion of its shares over the next 12 months. The firm said that scheme will be funded from its existing cash balance.

On its restructuring, the new JD Mall segments include a unit responsible for understanding customer behaviour and market changes, another to provide services to satisfy customer demands, and a third to handle infrastructure-building, service support and risk management, according to the documents, which were provided to media upon request on Wednesday.

The new business segments will report directly to Xu Lei, who took on the role of rotating chief executive for JD Mall last year, in a move considered unusual in a company tightly controlled by founder Richard Liu Qiangdong. The internal document also reveals the establishment of a new Chief Executive’s Office to coordinate the company’s major reorganisation and business reforms, without naming members of the office.

“The aim of JD Mall’s business restructuring is to signal that JD is diversifying its management team and to comfort investors that the key-man risk is reducing within the company,” said Li Yi, chief fellow at the Shanghai Academy of Social Sciences. “However, JD is tightly controlled by its founder Liu and that reality will not change under any kind of business restructuring.”