by Ella Kidron

JD.com reported first quarter 2021 earnings on May 19. During the call to discuss the results, JD Retail CEO Lei Xu announced that the company reached the 500 million active customer mark, achieving 29% growth in customers YOY. One of the driving factors for this growth is the JD’s focus on fostering high-quality active users. In the past 12 months, the company has gained 112 million active users overall, with 80% of users coming from lower-tier markets.

“The consumption mindset to buy high quality products and the better shopping experience we have been nurturing resonates strongly with our customers as we see they are becoming increasingly active on JD,” explained Lei Xu. JD has seen all-around improvements in terms of both existing and new user retention rates, shopping frequency, purchases across a wider range of categories, as well as average revenue per user (ARPU).

JD has adopted a “customer first” mindset since day one, continuously improving and providing new services. Through its day one commitment to authenticity, high quality and delivery speed, the company has gained customers’ trust, and this loyalty has been paid back. In addition to providing a superior online shopping experience, JD’s footprint has expanded offline with SEVEN FRESH, E-SPACE, JD Home Appliances stores and more. With the development of brick-and-mortar infrastructure has come the development of new omni-channel models, making it possible to shop anytime, anywhere. This ability to depend on JD is what keeps customers coming back.

Ms. Li, a middle-aged customer in Xi’an said: “Whenever I really care about the quality of a product or need it urgently, I will choose JD. I also find I’m turning to JD more and more for expanded categories such as fashion or beauty. They always make me feel like I’m in good hands, and my young kids rush to the door to greet ‘Brother or Sister JD’ every time without fail.”

During the Q&A of the earnings call, addressing JD’s strategy towards customers, Lei Xu explained that JD will take a more flexible approach to user growth this year, from two aspects: 1) diversifying the channels and approaches for new user acquisition and 2) managing costs of new user acquisition. Overall both the number of users and user operation efficiency continue to grow. User conversion this year is also better than in 2019 and 2020. He added that the quality of new users continues to improve in terms of repurchase, retention and average spending, while for existing users, there is also improvement in shopping frequency, variety, average spending and retention rate. In terms of category contribution to new user acquisition, food and FMCG are making the biggest contribution, followed by mobile and home appliances. Makeup and clothing which have traditionally had weaker appeal in the past are also attracting more new users.

Lei Xu revealed that this quarter new users coming from lower-tier markets reached 81% for the first time. The company will continue to expand touchpoints with consumers in lower-tier markets and provide a more tailored supply chain and product mix to offer more precise matching of products to users in these areas.

(ella@jd.com)