JD.COM, CHINA SALES GROWTH

China’s leading online retailer reports 82% sales growth in the second quarter

By Don Davis Editor in Chief

JD.com is investing $700 million in a Chinese supermarket chain and aims to offer more services like food delivery.

JD.com Inc. has a long way to go to catch Alibaba Group Holding Ltd. as China’s leading e-commerce company, but it is gaining ground.
JD.com reported today that the value of goods sold on its e-commerce site increased 82% to $18.5 billion. That followed 99% growth to $14.2 billion in the first quarter. By contrast, Alibaba’s marketplaces handled $96.65 billion in the first quarter, when the gross merchandise value of purchases on its sites grew by 40%. Alibaba reports its second quarter results Wednesday.
Unlike Alibaba, which operates online marketplaces but does not own any merchandise, JD.com sells goods it owns and lets other merchants sell on its site. The company’s direct sales increased 65% in the second quarter to RMB64.7 billion ($10.42 billion), while sales by marketplace merchants jumped 100% to RMB49.8 billion ($8.02 billion).
JD.com, Alibaba’s closest rival in China, is No. 1 in the Internet Retailer 2015 China 500. Alibaba is not ranked because it is not the merchant of record for any sales on its vast marketplaces, primarily Taobao and Tmall, where some 10 million merchants sell to online shoppers in China.
JD.com also announced today that it had purchased a 10% stake in Chinese supermarket chain Yonghui Superstores Co. Ltd. for $700 million. The retailer says it will work with the supermarket operator to offer services, such as food delivery. JD.com in May launched a service called JD Daojia that uses part-time workers to deliver groceries from bricks-and-mortar stores in some Chinese cities, a service similar to Instacart in the United States.
During the second quarter JD.com launched sections of its e-commerce site dedicated to products, which it says are guaranteed to be authentic, from the United States, Australia and Japan. The company previously opened similar portals featuring products from Korea and France.
"We are pleased to report a strong performance for the second quarter, as China's consumers increasingly look to JD.com for authentic products and the best online shopping experience," Richard Liu, founder and CEO of JD.com, said in a statement accompanying the earnings release. "During the quarter, we enhanced our mobile offering, partnered with premium international brands and expanded our JD Worldwide cross-border e-commerce initiative. Looking ahead, we will focus on serving Chinese consumers by investing in innovative business initiatives that leverage JD.com's core expertise in e-commerce and logistics."
For the second quarter ended June 30, JD.com reported:

• Net revenue of RMB45.9 billion ($7.4 billion), an increase of 61% from RMB28.6 billion ($4.61 billion) in the same period last year.
• A net loss of RMB582.5 million ($93.8 million), up 14.1% from RMB510.4 million ($82.2 million) a year earlier.
• 118.0 million consumers made purchases in the 12 months leading to June 30, up 72% from 68.5 million active customer accounts a year earlier.
• 305.6 million fulfilled orders in the second quarter, an increase of 87% from 163.7 million in the same quarter last year.

Shares in JD.com trade in the United States on the Nasdaq exchange. The company’s stock market value is currently $44.7 billion. Alibaba has a market value of $196.9 billion; its shares trade on the New York Stock Exchange.