JD.com surprises with first profitable quarter
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JD.com profit soared 50 per cent after a 39 per cent increase in sales during the Chinese online retailer’s latest quarter.
Its unaudited results for the three months to the end of September show revenue of RMB83.7 billion (US$12.6 billion), with a record 50.3 per cent surge in gross profit to RMB13 billion. Non-GAAP gross profit was RMB12.8 billion, up 51.9 per cent.
Active customer accounts increased by 34 per cent to 266.3 million in the 12 months to September 30.
Chairman/CEO Richard Lio says the company is building robust product content and enhancing user engagement with innovative tools that enable brands to launch highly targeted online marketing programs.
“The scale economies of our model are becoming clearer with every quarter,” says CFO Sidney Huang. “Looking ahead, we will continue to prioritise investments in technology and leading R&D talent as we execute on our vision to revolutionise China’s retail industry.”
While releasing its third-quarter figures, JD.com also listed its latest business developments…
In October, JD and Tencent expanded their partnership with the launch of a marketing initiative that integrates insights on consumer behaviour from Tencent’s social-media platforms with online and offline shopping data from JD and its brand partners. As well as enabling more precise target marketing, the move benefits consumers by offering them wider access to sales promotions and preferred discounts.
Strategic partnerships
During the past three months, JD.com also formed strategic partnerships with Baidu, iQIYI, NetEase, Sogou and Qihoo 360 with their big-data resources, massive user bases and AI algorithm technologies.
JD also continued to strengthen its position among top-tier international brands, expanding its partnership with high-fashion brand Armani with the opening of official online stores for Armani Exchange and Emporio Armani.
JD Worldwide also launched flagship stores for such companies as Reckitt Benckiser, Spectrum Brands and Tiger, while its new Toplife platform attracted marquee brands like Dyson, La Perla, Rimowa (LVMH) and Trussardi.
“The scale economies of our model are becoming clearer with every quarter,”
During the quarter, JD Logistics test-launched an unmanned sorting centre, the first of its kind in the logistics industry. JD also signed agreements to lay the groundwork for the rollout of China’s largest drone network.
In September, JD Logistics expanded its environmentally friendly logistics and packaging campaign, working with brands including Johnson & Johnson, Kimberly-Clark, Lego, L’Oreal, P&G, Nestle, Unilever, Watsons and Wrigley. The aim is to minimise environmental impact by cutting back on packaging materials.
Customer demand
JD also enhanced its fresh product offerings during the quarter to meet customer demand. In July, it launched the Canadian Fresh Food Pavilion, the first country pavilion for fresh products on the JD.com platform. Live lobsters from Canada can now be delivered to customers’ doorsteps in China in as little as 48 hours. During JD’s Super Canadian Day, 140,000 lobsters were sold within 24 hours.
In September, JD.com, JD Finance, Central Group and Provident Capital announced agreements to establish two JVs in Thailand covering e-commerce and fintech services, with an aggregate investment of $500 million. JD.com is providing its expertise in technology, e-commerce and logistics while Central Group is drawing on its retail store network, brand and merchant relationships, and retail behaviour insights from its loyalty program.
In October, JD and Sam’s Club launched a promotion offering customers discounted bundled memberships for Sam’s Club and the JD Plus paid-for membership service.
By the end of October, JD.com JV New Dada had partnered with 146 Walmart stores and 301 Yonghui stores, as well as many other supermarkets and grocery stores, to provide online fresh grocery shopping with one-hour home delivery.
At the end of September, JD.com had 405 warehouses and provided scheduled delivery services in 250 Chinese cities. It had about 160,000 merchants on its online marketplace, and 137,975 full-time employees.
Questions & Answers
Q.What specifically contributed to JD.com's profit increase in the latest quarter?
What specifically contributed to JD.com's profit increase in the latest quarter?
JD.com's profit rose 50 per cent following a 39 per cent increase in sales. Gross profit also surged by 50.3 per cent, reaching RMB13 billion, indicating improved margins on its revenue.
Q.How is JD.com expanding its international presence and brand offerings?
How is JD.com expanding its international presence and brand offerings?
JD.com is expanding internationally through JD Worldwide, which launched flagship stores for companies like Reckitt Benckiser. It also formed a $500 million e-commerce and fintech joint venture in Thailand with Central Group and Provident Capital.
Q.What strategic initiatives is JD.com undertaking to enhance its logistics and customer experience?
What strategic initiatives is JD.com undertaking to enhance its logistics and customer experience?
JD Logistics test-launched an unmanned sorting centre and plans for China’s largest drone network. JD.com also enhanced fresh product offerings, such as Canadian lobsters delivered in 48 hours, and expanded one-hour grocery delivery with partners like Walmart.
Q.How is JD.com using partnerships and technology to drive growth and user engagement?
How is JD.com using partnerships and technology to drive growth and user engagement?
JD.com expanded partnerships with Tencent for targeted marketing using consumer insights. It also formed strategic alliances with Baidu and iQIYI for big-data and AI technologies. The company is prioritising investments in technology and R&D talent.
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