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.