Nov 19, 2022| Executive Spotlights, Financial

JD.com: Highlights of Q3 2022 Earnings Call

Doris Liu

by Doris Liu

Facing complex dynamics, JD.com continued to maintain a steady and healthy business growth, helped build certainty for real economy in China and ensured best possible service to its customers, as demonstrated by the company’s earnings of the third quarter of 2022, released on November 18.

In the third quarter, JD.com saw net revenues increase by 11.4 percent from the third quarter of 2021, reaching RMB243.5 billion (US$34.2 billion) amid challenges brought by the macro economy, supply chain disruptions and more. Net service revenues were RMB46.5 billion (US$6.5 billion), an increase of 42.2 percent year-on-year. Net income attributable to ordinary shareholders for Q3 was RMB6.0 billion (US$0.8 billion), compared with a net loss of RMB2.8 billion YOY.

“We are delighted to see substantial improvement in our growth quality this year,” shared Lei Xu, CEO of JD.com, during a conference call to discuss Q3 2022 earnings. “Given the evolving economic and industry environment, JD made a pre-emptive decision to focus on our core businesses since the beginning of the year, while reinforcing quality operations and management, and attaching high importance to business health.”

Thanks to JD’s continuous emphasis on user experience with refined operation, the consumer mindshare, structure, as well as supply chain efficiency have dramatically improved. JD’s annual active user base in Q3 climbed 6.5 percent to 588.3 million, mainly driven by the net addition of over 10 million active users from the core retail business. In particular, the scale of JD Retail’s consumers who repurchase and Plus members were growing faster, accounting for a higher proportion in the total user base. The Plus members had kept a high degree of loyalty, engagement and purchasing power, with the average annual spending of each member eight times higher than a non-Plus consumer.

“JD.com’s relentless focus on user experience, cost and efficiency has allowed us to continuously expand our user base while delivering profitable growth,” said Sandy Xu, Chief Financial Officer of JD.com.

As a new type of real economy-based enterprise, JD.com continues to invest in the marketplace ecosystem construction, omni-channel business layout, and well-established supply chain infrastructure to invigorate and empower the real economy.

In Q3, the number of third-party merchants within JD Retail’s online marketplace ecosystem achieved an over 20 percent increase for the 7th consecutive quarter. In addition, with the launch of the FENDI flagship store, JD.com became the first company to partner with LVMH for nine top fashion brands. Besides the over 70 national pavilions, which bring consumers a variety of specialty products from around the world, JD.com newly opened pavilions from nearly 20 countries during the 2022 Singles’ Day Grand Promotion.

JD’s intra-city business also indicated momentum of rapid development, benefiting both brands and offline merchants. As the only on-demand retail platform selected for Apple’s pre-sale, JD Daojia (JDDJ) joined hands with Shop Now, JD.com’s one-hour delivery service, as well as Apple authorized resellers, to secure inventory of iPhone14 models, promptly open and process pre-sale orders, and provide instant delivery services to customers, boosting sales to RMB200 million within the first six hours of the opening day of this year’s Singles’ Day Grand Promotion.

“JD’s involvement in intra-city business is based on user demand, not purely business growth opportunities,” said Lei Xu, expressing that the company is willing to open up its capabilities of supply chain and services to drive the digitally intelligent transformation of up- and down-stream partners.

“We know very well the difficulty of offline business of SMEs, that’s why we never tried to carve up their profits but work together in synergy to reduce costs and gain reasonable profits from cooperation.”

By exploring in-depth with key clients in the fields of FMCG, home appliance, clothing among others, JD Logistics’ (JDL) capabilities are gaining more recognition, with the revenue from external clients growing to nearly 70 percent of its total revenue in Q3. By the end of Q3, JDL (incl. Deppon) operated more than 1,500 warehouses and managed logistics infrastructure that had exceeded 30 million square meters.

(liujun215@jd.com)

Apr 1, 2024| Executive Spotlights, JD Retail

JD Chief Economist: Tech-Driven Supply Chain Revolutionizes Gen-Z Consumer Engagement in China

Vivian Yang

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.

(vivian.yang@jd.com)

Mar 8, 2024| Executive Spotlights, JD Logistics, JD Property, JD Retail

JD.com’s Strategic Advancements in International Business: A Focus on Supply Chain and User Experience

Vivian Yang

During JD.com’s earnings call for Q4 and FY2023 on March 6th, Sandy Xu, CEO of JD.com and JD Retail, provided an update on the company’s strategy for international expansion. Xu emphasized the importance of a robust supply chain as the cornerstone of JD.com’s growth beyond domestic borders.

Xu noted that JD.com is always on the lookout for overseas opportunities and is taking measured steps to advance this process. Given JD’s business model and inherent strengths, the company’s approach to global expansion is uniquely tailored.

“JD’s business model is built on supply chain capabilities and centered around user experience. Based on the development of supply chain infrastructure overseas, JD’s business will continue to expand in areas with our unique competitive strengths in global markets,” Xu said. She also provided an overview of JD.com’s current international businesses:

JD Worldwide, the export and import facet of JD Retail, incorporates JD Global Sales, an emerging outbound e-commerce platform dedicated to helping Chinese companies and brands expand their overseas market. JD’s cross-border inbound business, JD Global Buy, has established three direct procurement centers worldwide to enhance cross-border supply chain efficiency. This allows consumers in China to access a wider range of imported products at lower costs while ensuring product safety.
JD Logistics has developed a robust global supply chain, beginning with warehousing and expanding to encompass comprehensive supply chain services. Currently overseeing nearly 90 bonded, overseas, and direct mail warehouses across almost 900,000 square meters, JD Logistics provides extensive support to a broad spectrum of clients, including international enterprises and Chinese brands expanding overseas.
JD Property is expanding its business in Southeast Asia and Europe, with a focus on markets in Vietnam, Indonesia, Singapore, the United Kingdom, and the Netherlands. Its clientele spans international logistics, FMCG (fast moving consumer goods) giants, as well as emerging Chinese companies venturing abroad.
Ochama is an omni-channel retail platform incubated by JD.com in Europe, which utilizes advanced automated logistics technologies and global supply chain capabilities to provide a superior shopping experience for consumers across 24 European countries.

With a focus on supply chain and enhancing the user experience, JD.com will continue to explore opportunities to expand its global footprint. Learn more about JD.com’s businesses with global reach here.

(vivian.yang@jd.com)