JD Q3 2020 Earnings: JD Logistics’ Scale Model Drives High Growth

JD Q3 2020 Earnings: JD Logistics’ Scale Model Drives High Growth

by Yuchuan Wang

JD.com reported a strong Q3 2020 earnings results on November 16th.

On the call to discuss the results, Sandy Xu, CFO of JD.com highlighted the excellent performance of JD Logistics, the company’s logistics arm. She said, “JD Logistics is another example of our long-term investment in user-centric experience and supply chain infrastructure. Since we opened our service to third parties in 2017, JD Logistics has made notable progress in providing its customers with integrated logistics services to improve their warehouse management and fulfillment efficiency. As JD Logistics gained more customer recognition, revenue generated from third-party customers contributed nearly half of JD Logistics’ total revenues in September.”

According to the Q3 earnings, by September 30, JD Logistics operated over 800 warehouses, which covered an aggregate gross floor area of approximately 20 million square meters. Stocking millions of SKUs in warehouses, JD further reduced its turnover days to 34.3, which is one of the lowest among the top global retailers and the company’s own historical record. “This validates the power of our scale-driven business model and our long-term margin trajectory,” said Xu.

“JD Logistics also supports the growth of our 3P merchants on our e-commerce platform. Products marked as delivered by JD Logistics come with [the understanding that they are] more trustworthy and more reliable services, and therefore, are often the preferred shopping choices for customers and help generate more organic traffic.”

Zhenhui Wang, CEO of JD Logistics, attributed JD Logistics’ year-over-year growth to the company’s long-term commitment to the focus of user experience.

“Our value positioning is to provide the best user experience, and driven by technology and to win from our efficiency improvements. So, we have always increased our investments in our capacity building, to provide more services and infrastructure to cater to the need of our customers,” said Wang. “No matter if it’s during the COVID-19 period or in normal circumstances, we’ll always ensure we provide the best supply chain services to our customers, to provide value for them.”

According to China’s State Post Bureau, JD Express, the parcel delivery service of JD Logistics, received one of the highest satisfaction ratings among parcel delivery service providers in the third quarter, marking the second time JD has won the honor this year.

In September, leveraging JD Logistics’ superior operational capability and technological advantages in supply chain management, JD Logistics helped Nestlé, the world’s leading food and beverage company, launch a large-scale smart storage and distribution center in Tianjin.

JD Logistics also spares no efforts in promoting green logistics. Its supply chain sustainability project “Green Stream Initiative” won World Retail Congress’ Sustainable Retailing Initiative of the Year Award in Q3. During the past Singles Day period (November 1st -November 11th), the Green Stream Initiative helped reduce packaging waste by 100,000 tons. Most recently on November 12th, the company also made a commitment to reduce 50% carbon emissions by 2030.

 

(yuchuan.wang@jd.com)

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