May 20, 2021|
JD Earnings: The Long-Term Jingxi Opportunity
by Ella Kidron
JD.com announced its first quarter 2021 earnings on May 19. On the call to discuss the results, JD.com CFO Sandy Xu spoke to the potential of JD’s social e-commerce business targeted at China’s lower-tier markets, Jingxi, and provided some indication on future growth strategies.
Xu explained that the social group purchase model is a long term initiative, emphasizing the structural opportunity for JD to further penetrate lower-tier markets and provide consumers with products and services, particularly in the lower price range. She mentioned there is a strong desire to explore the market opportunity, adding that while most other players focus on traffic, “we believe the way to win the game is supply chain infrastructure driven by tech… we see this as a business heavily relying on supply chain”. This involves taking advantage of core capabilities to provide users with a high quality experience and better pricing.
JD has an inherent supply chain advantage through its long-established first party model and logistics business. Xu said the company could leverage its existing supply chain network, B2C experience and relationship with brands to provide a wider selection of SKUs. In addition, the local supply chain, especially in fresh produce is important. Xu reiterated that in developing Jingxi, JD will not compete with other players on speed but will instead take a long-term approach through investment in infrastructure, focus on building out teams and more, enhancing collaboration within JD’s various business lines to satisfy various shopping demands, and taking advantage of existing technology and infrastructure as much as possible.
In the future, the Jingxi business will depend on building capabilities and on whether it can provide users with an adequate level of customer experience .Where the existing infrastructure does not allow to meet the minimum customer experience, the focus will be on improving product quality.
Xu shared that Jingxi’s footprint already extends to 17 provinces and that the company is satisfied with the ROI thus far. JD previously announced plans for Jingxi to cooperate with more industrial belts; it already works with over 200 industrial belts across China.