May 18, 2022| Financial
JD Executives: Supply Chain Capability Drives Growth amid COVID Uncertainties
by Doris Liu
JD’s supply chain capabilities and resilient business model had helped the company achieve healthy and high-quality earning results amid external challenges, with an 18 percent year-on-year (YOY) rise in net revenue to RMB239.7 billion (US$ 37.8 billion) yuan in the first quarter, announced Lei Xu, CEO of JD.com, on a conference call to discuss the results of the Q1 2022 earnings released on May 17.
As a supply chain-based technology and service provider, JD’s supply chain capabilities are not limited to the physical forms of warehousing, delivery, fulfilment network, Xu said, but also the algorithm capability that has been accumulated for 19 years, the industry know-how, and the supply chain collaboration with some major brands, he emphasized.
“Facing the more transmissible Omicron variant, JD once again fully leveraged our supply chain and mobilized all of the group’s forces to fight the epidemic and ensure supply of daily necessities across China,” said Xu. “Our efforts and commitment to social responsibility enabled us to win society’s trust and resulted in stronger reputation and appreciation among our users and business partners. This is highly significant for our long-term development.”
JD.com generated RMB35.2 billion yuan (US$5.6 billion) in net service revenue, an increase of 26.3 percent from the first quarter of 2021. Income from operations went up to RMB2.4 billion yuan (US$0.4 billion), compared to RMB1.7 billion for the same period last year. Non-GAAP income from operations in Q1 increased by 32.8 perce to RMB4.7 billion yuan (US$0.7 billion) from RMB3.5 billion yuan for the first quarter of 2021.
Confronted with COVID resurgence and soft consumer sentiment, JD.com has further expanded its annual active users to 580.5 million in the twelve months ended March 31, 2022, up 16.2 percent YOY, with record-high accelerating growth in purchasing frequency and Average Revenue Per User (ARPU).
“We are encouraged to see user engagement metrics continue to improve, demonstrating our strengthened brand image and expanded consumer mindshare,” said Sandy Xu, CFO of JD.com.
JD’s retail business, its largest division by revenue, brought in revenue of RMB217.5 billion yuan in the first quarter with a 17 percent YOY increase. As the mid-year shopping festival JD 618 Grand Promotion approaches, merchant registration and engagement are seen to reach a higher level than previous years as brands and merchants are eagerly looking for sales growth in the complex epidemic situation and macro economy.
Revenue of JD Logistics reached RMB27.3 billion yuan, up 22 percent YOY. The growth of JD Logistics’ revenues from external customers accounted for a record high of nearly 60 percent of total revenues in Q1. Meanwhile, the strengthening of logistics infrastructure is also progressing, with approximately 1,400 warehouses being operated by JD Logistics.
JD Worldwide Launches Fresh Supermarket for Imported Merchandises
by Doris Liu
JD Worldwide, JD’s cross-border e-commerce business, recently launched its Fresh Supermarket, offering customers fresh products from overseas including the United Kingdom, Germany, France, the United States and more.
A significant portion of those brands are sold for the first time through China’s online channels, such as American ice cream brands Ben & Jerry’s and Klondike, as well as Iceland, a British supermarket chain with an emphasis on frozen foods.
JD Worldwide has reached cooperation with Iceland Foods Ltd to jointly explore a more efficient and innovative cross-border e-commerce cooperation model, so as to enhance the overall richness of fresh products on JD Worldwide. The goal is to offer customers the quality consumption experience of “shopping around overseas well-known supermarkets without leaving home and buying all imported fresh food in one stop”, said a spokesperson of JD Worldwide.
Relying on JD’s advanced capabilities, JD Worldwide shares efficient and comprehensive integrated supply chain solutions with global fresh food brands. Cross-border fresh products have stricter requirements for supply chain and logistics technology due to their short shelf life and high loss rate. With JD’s nearly 80 bonded and overseas warehouses across the world and logistics services reaching over 220 countries and regions, the Fresh Supermarket on JD Worldwide is able to achieve direct sourcing from places of origin to guarantee product quality, and deliver the products from other countries to China’s bonded warehouses, then to consumers with full cold chain delivery.
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