Aug 17, 2020|
Highlights: JD Executives on Q2 2020 Earnings
by Ella Kidron and Yuchuan Wang
On August 17th, JD.com reported second quarter 2020 earnings results. Net revenues grew by 33.8% in the second quarter. Annual active customers for the twelve months ended June 30, 2020 reached 417.4 million, up 29.9% compared with the twelve months ended June 30, 2019. On the earnings call to discuss the results, JD’s management team emphasized the company’s commitment to its partners, the integral role of supply chain across its businesses, as its unrelenting effort to provide the best possible experience for customers and clients alike.
On JD’s Q2 performance, CFO Sandy Xu said, “We are proud that JD played an important role to help our suppliers and users in this extraordinary time and contribute to society. As domestic consumption is still recovering from the disruptions brought by the pandemic, both the release of pent-up demand and a structural shift of consumers’ purchasing behavior from offline to online have added to our strong performance in the quarter.”
Among the highlights, general merchandise grew by 45% year over year, led by key categories such as supermarket and healthcare, demonstrating JD’s position as the leading reliable, full-category platform for consumers in China. Ms. Xu said, “Our supermarket category, including FMCG and Fresh Produce, became the single largest product category by revenue in first half of 2020, surpassing mobile phones, home appliances, and computers, our former champion categories… this steady shift demonstrates our strengthened brand recognition and consumer perception as an everything-store with increasingly broader selections.”
JD Retail CEO Xu Lei emphasized: JD Super has already become China’s largest supermarket online or offline. Going forward, we will further strengthen the establishment of our middle platform supply chain capabilities to satisfy consumers in different scenarios and provide more competitive prices. In addition, we (JD Super) will collaborate with JD Logistics on warehousing, including investments in cold chain logistics, to improve fulfillment efficiency and lower fulfillment costs. Lastly, we will keep promoting our omnichannel (strategy) to provide our supply chain capabilities to create more values not only for JD’s first-party businesses but also hundreds of thousands of offline stores.
In terms of key strategic priorities for JD Retail, Xu added that: First, we will keep opening up our supply chain. Second, we will further develop in lower-tier city markets and industrial belts. Third, we will keep promoting the building up of omnichannel capabilities. Fourth, we, including the whole JD.com group, have been strengthening our investment in technology and services and we will continue collaborating with enterprises on the business side.
JD Logistics was also a strong driver of profitability improvement from new businesses. CFO Ms. Xu mentioned on the earnings call that JD Logistics turned profitable on a non-GAAP basis in the quarter, driven by high order volume during the peak season and technology-driven productivity gains thanks to JD’s “best-in-class” fulfillment capacity. CEO of JD Logistics, Zhenhui Wang said: JD Logistics has attached great importance to the FMCG category this year. We will place more warehouses in the lower-tier markets, enabling more goods to reach customers and more customers to experience better JD Logistics services. In addition to our same- and next-day delivery program, we will provide one-hour delivery service for different categories and cities, letting our customers to choose for themselves.
For JD Health, on top of online pharmacy sales, which saw strong top line growth in Q2, JD’s online medical consultation service volume delivered 400% growth YOY as more users are aware of and get accustomed to the new service. User engagement was a key growth driver, especially lower-tier city users. In Q2, over 80% of new customers came from lower-tier cities, an improvement from previous quarters.
In terms of investments at the group level, CSO Jon Liao reiterated the company’s commitment to investing in companies which are complementary in terms of scale, scope, capability and long-term business value to build long-term strategic value. He also mentioned the company’s strong continued investment in lower-tier cities, supply chain and infrastructure.
*Note that all statements above are based on JD’s Q2 earnings call, and are under the Safe Harbor statement in the press release, available here: https://ir.jd.com/news-releases/news-release-details/jdcom-announces-2020-second-quarter-and-interim-financial
Sep 27, 2024|
Leveraging AI to Drive Innovation, Reduce Costs, and Create Jobs: Insights from JD.com’s Chief Economist
At the 2024 FORTUNE Global 500 Summit in Guangzhou on September 26th, Dr. Shen Jianguang, Chief Economist of JD.com, shared how the company utilizes AI to transform its operations across retail, logistics, and more, while driving significant workforce expansion. “By integrating advanced technologies throughout our business, JD.com has more than tripled its workforce in the past six years from 180,000 to 620,000, all while increasing salaries,” Dr. Shen explained during the panel discussion titled “‘Changes and Opportunities’—Chief Economists’ Perspectives.”
AI tools have enabled JD.com to boost efficiency and elevate the customer experience. For example, JD’s AI-driven digital human livestream hosts have helped over 5,000 brands increase off-peak hours’ sales conversion rates by 30%. Additionally, AI-powered customer service representatives offer more personalized support, and logistics couriers use AI to deliver packages faster and with greater sustainability.
JD.com’s customer service representatives
“The competition in China is so fierce, and that’s what drives innovation—you have to innovate to survive,” said Dr. Shen, underscoring the role of innovation in reducing costs and increasing productivity. This is especially crucial in China’s e-commerce landscape, where consumers are becoming more price-conscious. “Consumers are looking for the ‘extreme quality-to-price ratio,’ meaning they want high-quality products at lower prices,” he added. At the same time, Dr. Shen noted a growing trend in rural and lower-tier markets, where significant growth opportunities are emerging.
Dr. Shen also discussed China’s recent economic stimulus packages. “Policy initiatives are important. When people perceive a shift in policy, the market responds,” he said, referring to the government’s subsidies for home appliance trade-ins introduced earlier this year. This program has stimulated demand for affordable, high-quality products, as reflected in the increased sales of subsidized items.
Guangzhou, the host city for the summit, launched a new round of consumer goods trade-in subsidies on September 1st, positioning online platforms like JD.com as essential providers of seamless trade-in services. Over 800 home appliance brands have partnered with JD.com in Guangzhou, offering more than 8,500 products. Additionally, JD.com is working with its brand partners on a Customer-to-Manufacturer (C2M) model, leveraging consumer insights to drive innovation for more tailored products.
JD.com provides one-stop trade-in services for home appliances and home goods
The panel discussion featured Dr. Shen alongside Minggao Shen, Global Chief Economist at GF Securities, and Robin Xing, Chief China Economist at Morgan Stanley, with FORTUNE Editor-in-Chief Alyson Shontell moderating. The panelists agreed that while AI is still in its early stages, its potential is vast. With China’s stimulus policies and a functioning capital market, the private sector is well-positioned to unlock considerable industrial and social value.
JD.com ranked #47 on the 2024 Fortune Global 500, moving up five spots from the previous year. Guided by its mission to “Make Lives Better through Technology,” the company remains committed to cost management, operational efficiency, and enhancing user experiences, while continuing to invest in employee development and upskilling to foster both business growth and workforce advancement.
(vivian.yang@jd.com)
Apr 1, 2024|
JD Chief Economist: Tech-Driven Supply Chain Revolutionizes Gen-Z Consumer Engagement in China
At the inaugural FORTUNE Innovation Forum in Hong Kong on March 28th, Dr. Jianguang Shen, chief economist of JD.com, highlighted the transformative impact of tech-driven supply chain solutions in meeting the dynamic needs of Gen-Z consumers in China.
“Gen-Z consumers are very discerning and pragmatic,” said Dr. Shen. “They don’t care if the brand is local or global.” Dr. Shen began by discussing the increasing sophistication of younger Chinese consumers. “The rising popularity of local products can be attributed to China’s supply-side reform, which has enabled brands to provide lower-cost products with higher quality,” he said. Shen also emphasized the strategic advantage that brands can achieve by leveraging advanced digital supply chains, which offer deep insights into consumer behavior, thereby tapping into substantial market opportunities.
Joining Dr. Shen were industry leaders including Angela Wei Dong, Global Vice President China at Nike; Pontus Erntell, President and Chief Sustainability Officer at IKEA China; and Doreen Wang, CEO of Kantar China and Global Head of BrandZ. Together, they shed light on the shifting preferences of China’s youth towards quality, sustainability, and enhanced social engagement in their retail experiences, especially amid economic headwinds, prompting brands to adapt swiftly.
Drawing examples from JD.com’s platform, Dr. Shen discussed the rising popularity of eco-friendly mini refrigerators among Gen-Z consumers. These products, aligning with Gen Z’s penchant for tech-savvy and environmentally conscious offerings, underscore the necessity for brands to evolve and align with consumer preferences.
Furthermore, Dr. Shen discussed the positive impact of a new government policy encouraging trade-in of consumer goods, which is expected to boost consumption. Leveraging JD.com’s robust supply chain capabilities, customers not only can easily trade in old appliances for more modern and eco-friendly goods but also benefit from a suite of JD’s attentive services such as doorstep pickup, installation, and recycling.
The conversation also touched upon the strategic collaborations under the Consumer-to-Manufacturer (C2M) model between JD.com and numerous brands, aiming to streamline the journey from product ideation to distribution. This collaboration has welcomed over 4,000 brands to JD.com’s C2M platform, drastically reducing product research and market introduction times by 80% and 70%, respectively, thereby fostering a mutually beneficial ecosystem for brands, retailers, and consumers.
Dr. Shen concluded by emphasizing JD.com’s commitment to technological innovation, with its deployment of AI-driven chatbot customer service, highly automated warehouses, autonomous delivery vehicles, and integrated retail solutions that bridge both online and offline domains. These innovations are designed to meet the dynamic preferences of consumers, enhancing the overall shopping experience and setting a new standard in consumer engagement.
JD Logistics Releases Digital Twin Supply Chain White Paper
