Aug 26, 2021|
JD Q2 2021 Earnings Call Highlights
JD Q2 2021 Earnings Call Highlights
JD.com reported second quarter earnings on August 23.
During a call to discuss the results and a range of other topics, JD Retail CEO Lei Xu said that JD.com is a new type of enterprise based on the real economy with digital technologies and abilities, which inherently differentiates JD from the platform economy model.
JD creates value in multiple links along the industrial chain, from providing transaction technologies, delivery and more, he noted. For example, JD can help brands and merchants to grow healthily, and create more stable and high-quality jobs, forming a virtuous circle between business and social values, Xu noted.
This is aligned with JD’s long-term priorities: putting consumers’ needs at the core, treating employees with respect, and opening up the company’s technology and capabilities to partners for win-win cooperation—all key factors in JD’s continued growth.
Among the other achievements highlighted in the call were net revenues of RMB 253.8 billion, an increase of 26.2% from the second quarter of 2020; and net service revenues of RMB34.1 billion, an increase of 49.2% from the second quarter of 2020, due to the company’s ongoing strategy to open up its resources to merchants as well as parties beyond the JD ecosystem.
Further, in Q2 JD Retail sustained high-quality growth, with the company’s profit margin maintaining steady increases under comparable statistics, thanks to improvements in supply chain and operating efficiency. Despite facing fierce competition, JD saw a GMV growth of 27.7% YOY during its 618 Grand Promotion shopping festival, an achievement that can be interpreted as proof of the company’s rising recognition and mindshare among consumers, suppliers and brands, Xu said.
Additionally, the company maintained high-quality growth in active users. After passing the milestone of 500 million active users on April 1, 2021, JD saw an increase of 36 million active users during Q2, setting a new record of net increment in a single quarter. Among the new users, JD saw an uptick on the aspects of retention rate, shopping frequency and more, indicating that both JD’s user base and their lifetime value on JD have grown.
JD’s 3P marketplace business model has also increased, with growth in that area exceeding that of its 1P direct sales business during this year’s 618 Grand Promotion, a development that played a key role in Q2 business growth, Xu revealed. While many analysts and customers assume that JD’s strength in the electronics category hinges on its 1P business, the cellphone growth rate of 3P models hit 100% on JD during 618 this year. “This shows that JD Retail’s platform ecosystem ability has been promoted,” Xu said.
During Q2, JD expanded innovative partnerships with brands under luxury giant LVMH, including BVLGARI, Guerlain, Givenchy Beauty and more.
These partnerships are also prime examples of JD’s increasing focus on omni-channel, a strategy that Xu believes will help “break the glass ceiling for JD’s long-term growth,” he said.
“I’d like to reiterate that only JD’s business model has the ability to truly land the omni-channel plan. This is because the strategy is founded on JD’s supply chain capabilities, which we have built and honed over the past 18 years,” he said.
“With our supply chain, digital operation and integrated marketing capabilities in various shopping scenarios, both online and offline, we can synergize with suppliers and partners to effectively meet the customers’ needs that cannot be met by a pure online platform or B2C model,” Xu said.
Strong supply chain also ensures that JD can meet its goals of placing customers first, said Chief Financial Officer of JD.com Sandy Xu. “I want to emphasize that we believe that cost efficiency and customer experience are always the key to the long-term success of the retail industry, which translates into the supply chain and logistics capability,” she said.
Even as JD expanded its business, the company has not neglected its social responsibilities, Xu noted. In response to the severe flooding in the central China province of Henan this summer, JD donated over 20 truckloads of rescue supplies and daily necessities; and opened a free 24-hour hotline for medical consultation, and more.
During the second quarter, JD also published its Sustainability Report discussing the company’s achievements from 2018 to 2020 in creating a low-carbon enterprise, including gradually replacing traditional fuel-combustion trucks with new energy vehicles, reducing carbon dioxide emissions by more than 120,000 tons each year.
Speaking of recent regulatory changes, Xu said, “We believe these policies are not intended to restrict or suppress the internet and relevant industries, but rather to create a fair and orderly business environment and to promote long-term and sustainable development of these industries.” Further, these goals do not contradict either JD’s business goals or the company’s business philosophy of “doing business the right way.”
While global circumstances have at times felt precarious in the past year, JD is traveling a steady path. “I’d like to reiterate that JD is committed to delivering certainty and high-quality growth in a time of uncertainties, and living up to everyone’s support and faith in us,” Xu said.