Samuel Yi
Samuel is Category Director of Retail, Technology and Media at Mintel, for China market. Samuel has rich research experience focusing on retail market research, product innovation, consumer research and business strategy etc.

In recent,  JD.com,China’s leading technology-driven e-commerce company released its Q2 financial report, its Q2 revenue growth of JD.com is 33.8% and higher than the forecast. During the June 18 online shopping festival in 2020, JD.com reached over 30% growth compared with last year, the online shopping festivals helped to activate consumption and contributed a lot in its strong revenue growth in Q2. The nice number as we’ve seen from the report, is also the reflection of the fast recovery of Chinese consumers’ willingness to consume. 

Certainly this growth is also driven by many other factors. From the product aspect, the general merchandise revenue increased by 45.4%, which is higher than that in Q1. It indicates that consumers rely on e-commerce for grocery shopping more often and this trend of shopping behavior will continue. From Mintel COVID-19 tracking data in July, it showed 95% consumers have purchased groceries online, even as the pandemic has been controlled in most areas of China.

Samuel Yi, tech and retail director at Mintel shared his comments on JD.com’s Q2 financial report, as well as his views on the development of the entire China e-commerce market. 

The key to e-commerce: logistics capability

Logistics is a very important pillar for all e-commerce brands. The advantage of JD.com’s logistics capability is quite outstanding in the pandemic period. It not only helps the brand to enhance the shopping experience for millions of online shoppers but also build a unique advantage in that special period. Meanwhile, logistics is a key factor to help JD.com to achieve continued revenue growth in Q1 and Q2, and JD.com’s logistics business has reached financial balance since 2019. With outsourcing these capabilities, logistics has become another growth driver for JD.com.

Adapt better to lower tier cities in China

For consumers who live in the lower tier cities, they will value the shopping experience more than the price as they do online shopping more frequently. As JD.com keeps improving their logistics in lower tier cities and intending to provide more cities and villages with 24 hours delivery service, it will help to grow their user base in lower tier markets. However, another Chinese e-commerce platform Pinduoduo is strong in lower-city as well, Pinduoduo’s success has proven that social commerce is an efficient way to increase online shoppers in lower tier cities. As a competitive move, JD.com upgraded their social commerce business in 2019 and named it JingXi, and we can see that it brought significant results in new users increase in 2019 and 2020. 

What we think

Due to the level-up competition in the e-commerce industry, more brands are trying more innovative ways. What we’ve seen is that JD.com’s growth not only relies on e-commerce, but also on new business development. Besides the logistics, JD.com is developing their capability in health, finance and other diversified business areas. 

In this pandemic, JD.com’s internet healthcare performed well and showed great potential in medicine retailing and online health consulting. In addition, JD.com just announced their cooperation with Ctrip to enhance their business in travelling. These new businesses will jointly drive the sustainable growth of JD.com’s business.