Aug 24, 2022|
JD Executives: Confident in Macro Economy and Future Consumption
by Doris Liu
JD’s top executives believe that the retail industry has the power to weather different economic cycles, with confidence in the long-term trend of China’s macro economy as well as consumption, according to comments made by Lei Xu, CEO of JD.com, during a conference call to share the second quarter and interim result of 2022 released on August 23.
JD.com saw an increase of net revenues to RMB267.6 billion yuan (US$40.0 billion) in the second quarter, 5.4 percent up from the second quarter of 2021. Net service revenues went up 21.9 percent to RMB41.6 billion yuan (US$6.2 billion) year-over-year (YOY). Non-GAAP income from operations jumped from RMB2.5 billion yuan in the second quarter of 2021 to RMB5.8 billion yuan (US$0.9 billion).
Xu emphasized that as China’s consumer market is expected to become the world’s largest in scale, JD will always stick to focusing on user experience, supply chain capabilities, cost reduction and efficiency improvement, and investment in technology and innovation through a disciplined approach to capture growth opportunities with a long-term perspective.
Notably, driven by healthy user growth in the core retail business, a sequential net addition of over 10 million annual active users have joined JD.com compared with Q1; meanwhile the overall users showed a trend of higher shopping frequency, daily active user (DAU) and average revenue per user (ARPU). JD PLUS, the premium membership program of JD.com, set a record high in scale by surpassing 30 million members in July 2022. Moreover, the average annual spending of JD PLUS members reached eight times more than non-PLUS members by Q2, indicating the robust consumption power and stickiness of the members.
JD.com’s omni-channel remained a momentum driver, despite challenges brought by COVID-19 still existing in Q2. Intra-city retail business, seeing a triple-digit YOY GMV growth in Q2, will be regarded as a new model of business and services with design and integration of products, systems and categories, Xu said, sharing his views that only through a win-win-win for brand merchants, offline merchants and e-commerce companies in terms of profit can the new pattern be long-lasting and sustainable.
JD Logistics, demonstrating a strong practice to empower the industry in terms of supply chain capabilities, received external revenues accounting for nearly 60 percent of its total revenues in Q2. During Q2, JDL launched two new Asia No.1 smart industrial parks into operations in the cities of Yiwu and Wenzhou in Zhejiang province. In total, JDL operated over 1,400 warehouses as well as nearly 90 bonded, international direct mail and overseas warehouses as of Q2.
For the Group as a whole, the management has better control over and confidence in the bottom-line performance, said Sandy Xu, CFO of JD.com. “We will continue to gain market share in our core business and maintain our commitment to invest for the long term,” she added.
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)
Sep 7, 2024|
Moody’s Upgrades JD.com to A3 Rating, Citing Resilient E-commerce Business Model Operations and Supply Chain Capabilities
On September 4th, Moody’s Ratings updated JD.com’s issuer and senior unsecured ratings to A3 from Baa1 and revised the outlook to stable. This marks the third time Moody’s has upgraded the company’s rating since 2016.
“The ratings upgrade and stable outlook reflect JD.com’s leading market position in China’s e-commerce market with a unique and resilient business model, supported by deep supply-chain capability and economies of scale as well as its prudent financial policy that underpins low leverage and a solid net cash position,” Shawn Xiong, a Moody’s Ratings Vice President and Senior Analyst.
Moody’s anticipates that JD’s core retail business will experience steady to moderate revenue growth over the next 12-18 months, thanks to its expanding third-party marketplace business (3P) and an increase in the number of 3P merchants, along with a growing revenue share from JD Logistics.
Moreover, the ratings agency expects margins to remain stable during this period, driven by efficient cost control, improved operational efficiency, and ongoing product category optimization. JD’s second-quarter earnings report disclosed that its Non-GAAP net margin reached 5% for the first time, influenced by a gross margin expansion to a record level of 15.8% in the quarter, reflecting enhancements across nearly every category.
(vivian.yang@jd.com)
JD.com’s Omni-channel Business Gains Momentum
Aug 6, 2024
JD.com Ranks #47 on 2024 Fortune Global 500
