JD Executives: Supply Chain Capability Drives Growth amid COVID Uncertainties

by Doris Liu

JD's supply chain capabilities and resilient business model had helped the company achieve healthy and high-quality earning results amid external challenges, with an 18 percent year-on-year (YOY) rise in net revenue to RMB239.7 billion (US$ 37.8 billion) yuan in the first quarter, announced Lei Xu, CEO of JD.com, on a conference call to discuss the results of the Q1 2022 earnings released on May 17.

As a supply chain-based technology and service provider, JD's supply chain capabilities are not limited to the physical forms of warehousing, delivery, fulfilment network, Xu said, but also the algorithm capability that has been accumulated for 19 years, the industry know-how, and the supply chain collaboration with some major brands, he emphasized.

"Facing the more transmissible Omicron variant, JD once again fully leveraged our supply chain and mobilized all of the group's forces to fight the epidemic and ensure supply of daily necessities across China," said Xu. "Our efforts and commitment to social responsibility enabled us to win society's trust and resulted in stronger reputation and appreciation among our users and business partners. This is highly significant for our long-term development."

JD.com generated RMB35.2 billion yuan (US$5.6 billion) in net service revenue, an increase of 26.3 percent from the first quarter of 2021. Income from operations went up to RMB2.4 billion yuan (US$0.4 billion), compared to RMB1.7 billion for the same period last year. Non-GAAP income from operations in Q1 increased by 32.8 perce to RMB4.7 billion yuan (US$0.7 billion) from RMB3.5 billion yuan for the first quarter of 2021.

Confronted with COVID resurgence and soft consumer sentiment, JD.com has further expanded its annual active users to 580.5 million in the twelve months ended March 31, 2022, up 16.2 percent YOY, with record-high accelerating growth in purchasing frequency and Average Revenue Per User (ARPU).

"We are encouraged to see user engagement metrics continue to improve, demonstrating our strengthened brand image and expanded consumer mindshare," said Sandy Xu, CFO of JD.com.

JD's retail business, its largest division by revenue, brought in revenue of RMB217.5 billion yuan in the first quarter with a 17 percent YOY increase. As the mid-year shopping festival JD 618 Grand Promotion approaches, merchant registration and engagement are seen to reach a higher level than previous years as brands and merchants are eagerly looking for sales growth in the complex epidemic situation and macro economy.

Revenue of JD Logistics reached RMB27.3 billion yuan, up 22 percent YOY. The growth of JD Logistics' revenues from external customers accounted for a record high of nearly 60 percent of total revenues in Q1. Meanwhile, the strengthening of logistics infrastructure is also progressing, with approximately 1,400 warehouses being operated by JD Logistics.

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