JD.com’s E-Commerce Sales Surge As 100 Million New Users Sign Up, Health Business Gets Closer To Listing

JD.com made strong third quarter gains. (Photo Illustration by Miguel Candela/SOPA … [+] Images/LightRocket via Getty Images)

Boasting a better growth rate than Amazon

in the three years to 2019, China’s JD.com said today that over 100 million new active users had joined its platform compared to a year ago. This pushed up total user accounts by a third to 442 million by September, setting the company up for continued sales expansion into 2021.

The comparison of home market performance between the two e-commerce giants shows that JD.com has led Amazon by two percentage points in CAGR sales growth—31% versus 29%—in recent years. In the third quarter, the Chinese company’s net revenue climbed by 29% year-over-year to reach RMB174.2 billion ($25.7 billion).

Subscribers of JD Plus, the company’s paid membership program also exceeded 20 million in October helped by an expanded range of offerings including exclusive sales discounts, shipping savings, and 24-hour customer services, plus additional benefits through brand and other tie-ups (more on that below).

Competition in China is fierce among the leading e-commerce players Alibaba

, JD.com and Pinduoduo, the latter gaining share according to some brokers. An eMarketer report says that the trio will account for almost 84% of China’s retail e-commerce market this year, up from just over 80% in 2019. By the end of 2020, China’s total retail market is also expected to overtake the U.S. for the first time.

JD.com—listed on the Nasdaq

and Hong Kong exchanges—is in the process of becoming more of a supply chain-based technology and service provider. In China the company is well positioned with distribution centers in 31 cities giving it coverage of almost all counties and districts in the country.

Going offline too: By November, 2,000 JD Home and JD Mobile stores were operating in China.

Referencing this transformation, JD.com CEO Richard Liu said in a statement: “Today, as China emerges from the pandemic, we are glad to see that our business partners are recovering rapidly with the support of our online and offline supply chain infrastructure.”

Profitability gains and spin-off plans

Despite the uncertainties arising from Covid-19 this year, China has been a retail success story, with Alibaba’s Single’s Day driving $74 billion in sales while the offshore duty-free business in Hainan has gone from strength to strength, helped by buoyant demand for luxury goods.

JD.com has been no slouch either. The company set new records for profitability in the third quarter pushing gross margins above 15% “driven by improved operating efficiency and the realization of scale benefits” according to chief financial officer Sandy Xu. She added: “With solid profitable growth as our basis, we will continue to invest in technology and infrastructure to enhance our user experience.”

Meanwhile, as part of the spin-off process of JD Health—China’s largest online healthcare platform and online retail pharmacy by revenue according to research group Frost & Sullivan—JD.com has now submitted the post-hearing information pack to the Hong Kong Stock Exchange. The parent company plans to indirectly hold at least 50% of JD Health’s shares and therefore keep JD Health as a subsidiary. The listing is subject to various approvals.

Partnering up to boost luxury sales

On the brand side, a number of European luxury and fashion marques officially launched stores on JD.com in the third quarter, including Italian luxury menswear brand Zegna; French fashion house Balmain; luxury luggage label Rimowa, part of billionaire Bernard Arnault’s LVMH Group; and Japanese designer brand Yohji Yamamoto.

Efficiency drive: Autonomous delivery robots at Changsha Smart Delivery Station.

A slew of other names joined the JD.com platform including France’s Ami Paris and sneaker label Golden Goose Deluxe from Italy; Chinese-American designer brand 3.1 Phillip Lim; leather goods label Manu Atelier from Turkey; South Korean designer house Juun.J; fashion jewelry brand Ahkah from Japan; and luxury lifestyle player Seletti.

JD.com is also strengthening its market position with strategic tie-ups. In August, it joined forces with China’s largest online travel agency. Nasdaq-listed Trip.com will leverage JD.com’s user and traffic resources to beef up its marketing and operations, while JD.com will have access to Trip.com’s core service supply chain, including accommodation reservations, transportation ticketing and tour packages, among others.

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