As we move past the second year anniversary of the coronavirus pandemic, it’s safe to say that the world as we know it has been shifted monumentally as a result. Businesses across the globe were forced to pivot and adapt to the uncertainty that came as we learned more about the virus, accelerating trends and changing the way we move throughout the world with permanency.
Amongst those that were able to take these changes in stride and use them to better their business has been JD.com. Since 2020, China’s retail giant has been able to maintain a healthy growth momentum, and its recently released Q4 and full year results for 2021 show its ability to thrive amid the evolving macro-economic and competitive challenges.
In January of 2020––just before the coronavirus brought Wuhan and later the world to a grinding halt––founder, chairman and chief executive officer Richard Liu announced in honor of the Lunar New Year that the company would be re-positioning its strategy. Starting the company as a single stall in a tech bazaar, over the course of the next twenty years Liu built JD.com into one of the biggest internet retail companies in the world.
However, the turn of the decade marked the start of a new chapter for the company, shifting from a “retail and retail infrastructure” company to a “technology and service enterprise with supply chain at its core.” Playing to the strengths in logistics and technology JD.com had developed, Liu’s decision to strategically reposition it meant that he could help tackle problems at a larger scale and improve society’s productivity as a result.
Since the repositioning, JD.com’s numbers have grown to reflect this shift. In the fourth quarter of 2021 JD’s net revenues were $43.3 billion––a 23 percent growth from the prior year––and net service revenues for the quarter increased 28.3 percent to $6.5 billion. Overall growth for the year was even higher, with net revenue growth reaching 27.6 percent at $149.3 billion and net service revenue growth rising a whopping 44.7 percent year-over-year to $21.3 billion
Amidst the company’s growing service sector, their retail endeavors have still also continued to thrive, experiencing an increase in both user volume and quality(using the metric of spending power to quantify.) The company’s annual active users reached 569.7 million in 2021, up 20.7 percent, and experienced significant improvements in shopping frequency, range of categories purchased and the average revenue per user. JD.com also achieved the lowest level of inventory turnover in the industry in 2021, shortening it from a length of 33.3 days to 30.3 days.
In particular for the retail branch of the company, JD.com saw a year-over-year growth of nearly 80 percent in its omnichannel transaction volume in 2021. While it has been apparent for many years that online shopping has increasingly become the norm over brick-and-mortar retail spaces, the pandemic served to highlight that there is still a desire for in-store shopping, and brands must as a result create a seamless experience between both online and offline channels.
In 2021, JD.com embarked on a number of endeavors to grow their omnichannel business, such as partnering with a number of merchants on initiatives to deliver products within an hour to further expand the on-demand retail business. Together as a joint effort with Dada Group, JD.com launched Shop Now, a new business for JD’s on-demand consumer retail section. Chinese Resource Vanguard, one of China’s largest retail chains, adopted the program in over 1,800 of their retail chains and by September of 2021 had seen a fourfold increase of transaction volume when compared with six months prior, a demonstration of the power of omnichannel capabilities provided by JD.
During the Singles Day Grand Promotion in the fourth quarter of 2021, JD.com further collaborated with over 600 China Resource Vanguard stores, leveraging their on-demand delivery and retail platform to help it achieve a growth of over 400 percent year over year in transaction volume.
JD.com has collaborated with over 370 additional supermarkets including Walmart and Yonghui, totalling over 34,000 stores and three million SKUS, giving customers a number of different on-demand shopping options through their app. They also recently launched a “Nearby” feature within the JD app, allowing consumers to quickly access JD’s one-hour delivery service across nearly 400 cities in China.
Richard Liu previously shuttered his successful chain of brick-and-mortar electronics stores in order to re-launch as JD.com in 2003, but in a return to form in the past year JD has since continued to expand its omnichannel layout, brands, merchants and brick-and-mortar stores while leveraging its technological capabilities to provide a new way to shop in-person. They have opened over 10,000 physical stores of different types, including JD Mall, JD Electronic Experience Store, JD Home Appliance Store, JD Computer Digital Store, JD Home, JD Pharmacy, SEVEN FRESH Supermarket, JD Convenience Store, and JD Automobile club amongst others. They are also providing their omnichannel services such as product selection, supply chain and logistics to over three million pharmacies, specialty stores, supermarkets, convenience stores, automobile repair shops and flower shops across the country.
JD.com also announced the first annual financial results for JD Logistics since its initial public offering in 2021. The company’s total revenue reached $16.5 billion for the year––a growth of 42.7 percent when compared with 2020––and the company’s revenue from external customers utilizing its logistical services was over 50 percent of the total revenue for its first year. By the end of 2020, JD Logistics was operating over 1,300 warehouses, 7,200 delivery stations, and had a staff of over 200,000 in-house delivery personnel.
In keeping with the company’s overall strategy of utilizing technology in service-related enterprises, JD Logistics grew the number of its external integrated supply chain customers over the course of 2021, reaching over 70,000 and seeing a year-over-year growth rate of 41.7 percent. It provided its services to over 300,000 industry-leading customers, including Volvo Group, Xiaomi Youpin, Cheers, Shaanxi Coal, Chemical Industry Group amongst others, while also customizing its solutions to serve middle-sized clients in other industries such as FMCG and apparel.
Known for its ability to utilize technology in logistics through artificial intelligence, big data and robots, JD Logistics has also seen a growth in popularity in overseas markets. 2021 saw the company open automated warehouses in six countries, including the United Kingdom, United States, and Australia making almost 80 bonded and overseas warehouses in total.
The warehouse opened in the Netherlands is for the European ready-to-wear brand Hunkemöller, aiding the company in both business-to-business and business-to-consumer transactions and fulfilling orders in the Netherlands, Belgium, France and Luxembourg utilizing automated ground vehicle robots.
In 2021 JD Logistics also began providing as fast as 48-hour door-to-door deliveries for customers in Thailand, the United States and United Kingdom through the launching of new cargo flights.
As technology is a key differentiator for JD Logistics, the company continued to make considerable R&D investments in 2021. Over $400 million was invested in technological innovations, a year-over-year increase of 37 percent when compared with 2020, and as of December 31st, 2021 JD Logistics had applied for over 5,500 patents and software licenses, of which over 3,000 related directly to automated and unmanned technology.
The company’s Asia No.1 logistics parks––the pinnacle of automated warehouses in the industry––piloted 5G capabilities in their Changsha and Beijing locations, and nearly 400 Level-4 autonomous delivery vehicles were brought into daily operations for last-mile delivery in cities across the country.
JD Health, the healthcare arm of JD.com, has also been hard at work in its first full year as a publicly-traded company. In 2020, revenue for the first two quarters grew by 76 percent when compared with the previous year as it provided significant coronavirus-related aid and launched its own standalone app providing telehealth service to millions. JD Health debuted on the Hong Kong Stock Exchange in December of that year, and in 2021 has continued to further expand and specialize its healthcare services.
Last year JD Health opened up a specialized center for elder care, recognizing the importance of meeting the needs for China’s growing elderly population. Focusing on using digitized and intelligent technologies to tackle the pain points and difficulties that China’s geriatric services are facing, the center integrates online and offline medical resources and JD Health utilized the company’s online traffic and big data resources to better understand areas such as health knowledge and management education and early screening of diseases.
2021 also saw JD Health expand their telehealth services from humans to pets, launching an online-to-offline healthcare service platform called “JD Pet Hospital” with a similar mission of providing comprehensive health management from disease prevention to diagnosis throughout the entire lifetime of pets.
With over 3,000 veterinarians registered on JD Pet Hospital, pet owners can access 24/7 health consultation services via text, images and video calls. With seven departments, the service currently focuses on cats, dogs and some other common pet animals, and services include medical advice, medical prescription and ordering, and physical examination report analysis.
August of 2021 also marked the one-year anniversary of the launch of JD Health’s “family doctor” service, showing at the time that active users accounted for 87 percent of the total number of the service users, and achieving an average monthly user growth rate of 220 percent. The service covers a number of different categories for patients including those with chronic diseases and those who are generally healthy. It not only provides professional medical assistance, but also helps create health management plans for users to improve their overall health.
As we move into 2022, JD Health will continue its mission of serving over 50 million families with its “family doctor” service program by 2025.
According to Lei Xu, president of JD.com, in 2022 JD will explore and satisfy more user needs with higher standards and goals.
“JD has complete capabilities of supply chain infrastructure, fulfillment, customer service, platform governance and so on,” Lei Xu said. “Compared with other e-commerce platforms, we can effectively reduce the circulation costs of the supply chain and have a greater differentiation advantage.”
JD has also said it expects that its third-party merchant business will grow faster than self-operated business in 2022, as it continues to work toward achieving its strategic alignment of technology and service-related enterprises.