An impressive third-quarter performance helped JD.com to continue its role as China’s leading e-commerce company and technology provider.
JD.com (NASDAQ: JD and HKEK: 9618) posted a substantial increase in net revenue in Q3 2020 compared to Q3 2019. Total net revenue was $25.7 billion USD or 174.2 RMB, an increase of 29.2 percent from the same quarter of the previous year. Net service revenue grew 42.7 percent to $3.4 billion or $22.8 RMB.
What was especially welcome news for the company and for its shareholders is that JD.com also saw a significant increase in customers from this time last year. Active customer accounts grew by 32.1 percent to 441.6 million, from 334.4 million at the end ofF September 2019. This is the highest annual growth for customers in three years. A significant amount, about 80 percent, of the new users came from lower-tier cities.
Analysts suggest much of this increase can come from the COVID pandemic which encouraged people to shop online from home, although JD does have some retail locations.
Company founder, chairman, and CEO Richard Liu Qiangdong gave a lot of credit to the company’s extensive supply chain network, strong relationships that have been created with suppliers, and the wide amount of services available for customers.
JD.com has already been known for having a strong focus on the customer experience from start to finish, but efforts in recent quarters led to the creation of more categories for shoppers to choose from and more special promotions such as Singles Day.
Part of the customer focus is on JD Plus, a paid membership program, and the first e-commerce program of its kind in China. Members receive a variety of discounts from more than 600 partners, everything from entertainment and dining to travel and education. They also receive coupons for free shipping or rebates and 24-hour customer support and service.
This year JD Plus created a partnership with Trip.com, the country’s largest travel agency, an arrangement that works well for both parties. JD Plus customers have access to making reservations, arranging transportation and organizing tour packages, while Trip.com gets useful customer marketing and demographic information.
JD Plus members also receive access to designer brands of clothing, luggage, leather good and jewelry.
Liu said membership in JD Plus continues to grow and hit a record 20 million in October 2020.
Another trend that JD.com customers benefitted from in the last quarter was the company’s ability to easily offer fresh produce. It has created five different models that range from traditional online ordering and delivery to physical locations where shoppers can go to buy products in person. These include Seven Fresh locations in several cities.
Produce offerings are designed with a customer-first philosophy, including creating strategies to make sure the most-frequently purchased products are always available.
The ability to access fresh produce was especially appealing during the lockdowns earlier this year in part of the country when people were unable to get to a market or a farm.
Because customers are especially health-conscious this year, JD.com created a Health division that includes products and services. JD Family Doctor offers access to a variety of online health services such as a family doctor, referrals, specialist consultations and health management plans.
It also saw an increase in shoppers seeking everything from basic health and wellness items such as masks and steam foot baths to more complex appliances like refrigerators with disinfectant properties.
Another new feature was JD Logistics, which improved the entire supply chain operations. This includes looking closely at customer data to predict where future warehouses should be located. This effort has included a partnership with Nestle to create a smart storage and distribution center. JD Logistics operates more than 800 warehouses that cover about 20 million square meters.
Liu said he appreciates that many new customers indicated they tried other e-commerce platforms in the past, and have decided they like all the features and services of JD.com.
