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China’s largest online retailer doubles its sales in 2014

January 20, 2015 04:53 PM
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China’s largest online retailer got a lot bigger last year. While JD.com has not yet reported its full-year sales for 2014, it reported growth for the first nine months of the year of 174.4 billion yuan ($28.07 billion), a 102.1% jump from the same period a year earlier.

The retailer also says the number of active customers increased to 45 million in Q3, more than double the number a year earlier. JD.com plans to report 2014 sales in March.

JD.com ranks No. 1 in the Internet Retailer 2014 China 500, even though sales on its e-commerce site are far behind the gross merchandise value of sales on Alibaba Group Holding Ltd.’s web marketplaces. Alibaba’s two big online shopping portals, Taobao and Tmall, accounted for 1.487 trillion yuan ($239 billion) in sales in the first nine months of 2014. However, Alibaba is not ranked in the China 500 because it does not own the merchandise sold on its marketplaces, much like eBay Inc. in the United States and other countries.

Both Alibaba and JD.com went public on U.S. exchanges last year--Alibaba on the New York Stock Exchange in September and JD.com on NASDAQ in May. That listing raised JD.com’s profile internationally and built trust among suppliers, Richard Liu, founder and CEO of JD.com, said at the web-only retailer’s annual meeting last week in Beijing. “50,000 brands now sell on JD.com and we have served more than 100 million consumers,” he said.

JD.com says that it is the largest Chinese retailer of computers and mobile phones, even including offline retailers. “I believe we could have a bigger market share,” Liu told the annual meeting. He noted that JD.com continues to expand its logistics network, and now can deliver to 1,880 villages in China. “In the future, we plan to recruit 100,000 agents in Chinese villages who can make deliveries, take orders and make loans to rural residents,” he said.

More than 70,000 employees work for JD.com, up 75% from a year ago, according to JD.com. Unlike rival Alibaba, JD.com operates its own logistics network, which includes warehouses and delivery vehicles.  

Despite the revenue growth, JD.com continued to lose money last year,  which Liu attributes to investments in new businesses. While he suggested that the retailer’s e-commerce business was profitable last year, its other businesses “are still in their early stages and need time to grow.”  Those businesses include an online crowd-funding platform that helps entrepreneurs raise money, as well as  a planned banking  division that will make loans to merchants and consumers. The retailer also spent heavily to acquire the Paipai.com online marketplace as part of a deal in which Chinese Internet giant Tencent Group took an equity stake in JD.com last year.

The retailer also plans to launch an equity-based crowd-funding business in 2015 to help small startups get investments from small investors, Liu said. 

Like many big Chinese e-commerce companies, JD.com is adding  products from foreign brands and retailers, to widen its selection and cater to the desire among China’s growing middle class for Western goods. “We are focused on continuing to partner with international brands—Gap, Forever 21, Nine West and Steve Madden are just a few of the companies that opened stores on JD.com in 2014,” Liu said. “Chinese consumers are extremely excited about getting easier access to international brands. That will be a huge growth engine for us in 2015.”

 

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