JD.com emphasizes that the standards for product quality and service quality are stricter.
Editor’s note: This article comes from the WeChat public account “IPO known early” (ID: ipozaozhidao), author: Stone Jin.
According to the IPO’s early news, the official website of the Hong Kong Stock Exchange disclosed the prospectus after JD.com passed the hearing on the morning of June 5. The latter will be listed on the Hong Kong Main Board on June 18.
Before the secondary listing in Hong Kong, JD.com, on May 27, 2020, based on the share subscription agreement it entered into with Huanghe Investment Co., Ltd., a wholly-owned subsidiary of Tencent, on May 10, 2019, to the latter 2,938,584 Class A ordinary shares.
As of the Latest Practicable Date, Liu Qiangdong, Chairman and CEO of JD.com, holds 448.5 million shares of common stock, with a 15.1% shareholding and 78.4% voting rights. Tencent holds 527.2 million shares of common stock, with a shareholding ratio of 17.8% and voting rights of 4.6%. JD.com’s important strategic partner Wal-Mart holds 289 million shares of common stock, with a shareholding ratio of 9.8% and voting rights of 2.5%.
The prospectus shows that JD.com is transforming from a leading technology-driven e-commerce company to a leading supply chain-based technology and service company.
This is also JD’s latest strategic positioning. On May 19 this year, Liu Qiangdong, chairman and chief executive officer of JD.com, issued a letter to all employees, stating that the new mission of the group is “technology-based, committed to a more efficient and sustainable world”, that is, JD.com officially entered a new development stage.
JD.com mentioned in the prospectus that the funds raised from the secondary listing will be used to invest in key technological innovations based on the supply chain to further enhance the customer experience and improve operational efficiency. Supply chain-based technologies can be applied to key business operations, including retail, logistics, and customer engagement.
China’s largest retail group
According to the Fortune Global 500 ranking by income, JD.com is already China’s largest retail group. Its core advantages include competitive prices, a wide range of authentic licensed goods, efficient and reliable logistics services, etc.
As of December 31, 2019, JD.com purchases commodities from more than 24,000 suppliers; during the same period; JD.com’s online e-commerce platform has more than 270,000 third-party merchants. The JD.com prospectus stated that it requires all third-party merchants It meets Jingdong’s strict standards for product quality and service quality, and closely monitors the operation of their online e-commerce platform.
Based on the above-mentioned high-quality customer experience, Jingdong’s number of users is also increasing year by year. Number of active users of JD.com in 2017, 2018 and 2019Reached 292.5 million, 305.3 million and 362 million.
In addition, JD.com is also constantly exploring the combination of online and offline to meet the growing needs of customers, that is, with the help of huge online business, in-depth industry insights and online and offline related technologies and systems to empower traditional offline Retailer.
For example, JD.com and Wal-Mart have cooperated in the field of e-commerce, opening official flagship stores of Wal-Mart and Sam member stores on the JD.com platform and providing logistics solutions for them; establishing a strategic partnership with the local instant retail and distribution platform Dada Group relationship. Dada Group cooperates with JD Logistics to provide customers with a variety of supermarket grocery and other fresh products on-demand delivery services through JD Daojia; at the same time, explore offline retail through the offline fresh market 7FRESH Market, open up the omni-channel online and offline combination model.
Technology-driven is also the core competitiveness of JD.com’s retail business, which is based on its own technology and extensible technology platform to continuously reduce costs and increase efficiency and enhance user experience, thereby supporting the growth of e-commerce business.
As of now, JD.com uses deep learning and big data to plan personalized product recommendations and carry out precise promotions; and uses AI technology to carry out procurement management, so as to effectively manage inventory and control costs; use big data analysis and consumer The deep insights that connect users directly to manufacturers through reverse customization and launch products tailored for users not only increase the sales of manufacturers, but also increase customer satisfaction.
Transform to supply chain-based technology and service companies
With its leading position in the retail industry, JD.com has established strong relationships with a large number of suppliers, brands and partners. In the past ten years, JD.com has built a logistics infrastructure and technology platform for its retail business. Currently, it is continuously opening up its logistics infrastructure and technology platform to third parties and providing comprehensive logistics services and technical solutions.
In 2007, JD.com made a strategic decision to invest and build its own logistics infrastructure throughout the country. As of December 31, 2019, JD.com’s logistics infrastructure layout covers almost all districts and counties in China, including more than 700 warehouses in 89 cities with a total total construction area of approximately 16.9 million square meters, including JD.com’s Logistics Technology Open Platform Managed warehouse area. During the same period, JD.com has a team of more than 132,200 delivery personnel and more than 43,700 warehousing employees.
Technical capabilities are also the key to logistics services. For example, logistics infrastructure is supported by self-developed intelligent logistics and automation technologies, such as intelligent hardware, robot logistics, speech recognition, computer vision, and deep learning, which can continuously improve operational efficiency.
At the same time, JD.com also uses retail data, infrastructure and technology to export retail services to brands and partners in the retail industry. Through these services, JingdongWe can work together with partners to build an advanced and perfect retail ecosystem to provide consumers with better services.
The Kepler technology service platform operated by JD.com mainly provides retail services for partners who use third-party traffic. Such as helping brands to set up mini-programs on WeChat and provide one-stop services, including mini-program creation, product selection and pricing, digital marketing, inventory management, logistics, and customer service.
At the same time, JD.com also uses artificial intelligence and big data to help traditional brick-and-mortar retailers perform intelligent predictive analysis and provide services, including analyzing local consumer preferences, accurately recommending products, and optimizing inventory management, thereby improving the operational efficiency of physical stores. .
The prospectus says that services like these are rare for brands that lack mature online retail experience but want to promote sales through emerging mobile Internet channels, as well as traditional brick-and-mortar retailers.
In terms of supply chain, JD.com has built three major systems focusing on artificial intelligence, big data analysis and cloud computing. In April 2018, JD.com established NeuHub, an intelligent supply chain platform, including artificial intelligence infrastructure built on a cloud platform. NeuHub also includes numerous application-level products to cover a variety of application scenarios, that is, it is fully suitable for JD business and ecosystem, and also serves customers in various industries.
In summary, JD.com is focusing on the entire supply chain covering upstream manufacturing, procurement, logistics, distribution, and retail to end users, thus fulfilling its new development goals.
Performance performance supports imagination and realizes a bigger vision
In 2017, 2018 and 2019, JD.com’s net income was 363.6 billion yuan, 462 billion yuan and 576.9 billion yuan (RMB, the same below). In 2017 and 2018, the net operating losses of continuing operations were 19 million yuan and 2.801 billion yuan, respectively, while in 2019 it turned losses into profits, and the net operating profit of continuing operations was 11.89 billion yuan.
In the first quarter of 2020, JD.com’s net income increased by 20.7% year-on-year to 146.2 billion yuan. Among them, sales of daily necessities merchandise and service revenue were 52.5 billion yuan and 16.1 billion yuan, respectively, an increase of 38.2% and 29.6% compared with the first quarter of 2019.
In the first quarter of 2020, JD.com achieved an operating profit of 2.3 billion yuan, nearly double the 1.2 billion yuan in the same period in 2019.
In terms of user data, for the twelve months ended March 31, 2020, JD.com’s annual active users reached 387.4 million, which is still a year-on-year increase of 24.8% when the user base is so large; and March 2020 Of mobile phone daily active users increased by 46% from March 2019.
As for the analysis of JD’s financial report in the first quarter of 2020, the IPO already knew that it was already in “Jingdong Q1 earnings called stunning, two great boost Hong Kong “Expectation and confidence in secondary listing” will be dismantled in detail and will not be repeated here.
But what is certain is that JD.com’s long-term competitiveness lies in experience-based, cost optimization, and efficiency. From this point of view, the strategy adopted by JD.com is “to grasp both growth and profitability”. In other words, such positioning can enable JD.com to continue to maintain a strong brand image in the minds of users and create JD.com’s long-term market leadership.