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Is 71% a fast enough growth rate for JD in Q3?

November 17, 2015 11:59 AM
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JD.com Inc., China’s top online retailer, reported that consumers purchased 115.0 billion yuan ($18.1 billion) worth of products on JD.com in the third quarter, a 71% increase from 67.3 billion yuan ($10.6 billion) a year ago.

JD said it generated 44.1 billion yuan ($6.9 billion) in revenue, up 52% from 29.0 billion ($4.55 billion) in the third quarter of 2014. The company also reported a 530.8 million yuan ($83.5 million) net loss for Q3, compared to 164.4 million yuan ($25.8 million) net loss in same period of 2014

"This was another quarter of strong growth, as JD.com increasingly becomes China's source for fast, worry-free shopping online," said Richard Liu, founder and CEO of JD.com. "Our partnership with Tencent's dominant Weixin and Mobile QQ platforms puts JD.com at the fingertips of virtually every Chinese mobile online consumer, and continues to drive rapid user growth."

For the fourth quarter of 2015, JD estimates its revenue will grow 47%-51%. 

Though smaller than competitor Alibaba Group Holding Ltd., JD has been growing its gross merchandise volume as a percent of sales faster than Alibaba for several years. In the third quarter, JD’s 71% growth is more than double Alibaba’s 28% growth. JD.com is No. 1 in the Internet Retailer 2015 China 500. Alibaba is not ranked in the China 500 because it operates online marketplaces and does not own merchandise. 

But when comparing the worth of the gross merchandise volume added in the third quarter, the difference between the companies is stark, and JD has a long way to go to catch up with Alibaba. In the third quarter, JD added $7.50 billion in gross merchandise volume compared with Q3 2014, while Alibaba added $24.5 billion in the same period.

Another significant gap between JD and Alibaba: sales from mobile users. JD reported that 52% of orders were placed from mobile devices in the third quarter while sales on mobile devices accounted for 62% of Alibaba’s gross merchandise volume.

For the third quarter ended Sept. 30, JD also reported:     

  • 115.0 billion yuan ($18.1 billion) in gross merchandise value, a 71% increase from 67.3 billion yuan ($10.6 billion) a year ago.
  • 44.1 billion yuan ($6.9 billion) in revenue, up 52% from 29.0 billion ($4.55 billion).
  • 131.9 million annual active users, up 59.3% compared with 82.8 million in the same quarter of last year.
  • 329.7 million fulfilled orders, an 85.0% increase from 178.2 million. 52% of those orders were placed from mobile devices.
  • Cross-border business grew over 100% compared to the seasonally strong second quarter. Key categories included baby products, packaged food and cosmetics.
  • Nearly 90% of JD’s direct sales orders were delivered on the same day or the next day.

For the first three quarters of 2015, JD reported:

  • Net revenue of 126.6 billion yuan ($19.9 billion), up 57.7% from 80.3 billion yuan ($12.6 billion) in the same period of 2014.
  • Net income of 1.751 billion yuan ($274.8 million), compared with a 4.54 billion yuan ($712.6 million) net loss.
 

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