JD.com, Inc., was founded by CEO Richard Liu in

JD.com,
Inc., was founded by CEO Richard Liu in 2004 Focusing on 3C’s Computer,
Communications and Consumer products. JD.com through its subsidiaries,
operates as an e-commerce company in the China. The company operates in two
segments, JD Mall and New Businesses. It is China’s 2nd largest e-commerce
company after Alibaba’s TMall in terms of transaction volume, offering a wide
selection of authentic products at competitive prices, with speedy and
reliable delivery. The company has built its own nationwide fulfillment
infrastructure and last-mile delivery network, staffed by its own employees,
which supports both its online direct sales and its online marketplace
businesses. JD.com launched its online marketplace business in the year
2010.As of 3Q17, the company operated 7 fulfillment centers and 405
warehouses, and total 6,906 delivery stations and pickup stations in 2830
counties and districts across the People’s Republic of China.

1.Key Strengths: JD.com has one of the largest logistics
infrastructures among China’s e-commerce players, giving it a good control

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over its own fulfillment process and its
guarantee of product authenticity.

2.Growth
Drivers: With the product mix shift and online marketplace expansion in
china would be favorable factors in

in growth of Jd.com

 

 

 

 

 

3.Strategic
Tie-ups: Jd.com has struck key partnerships with Companies, which
includes china’s Tencent and US retailer Wal-Mart

4.Business
Mix: Jd.com’s B2C sales business is its major revenue driver, Generating
over 91% of total revenues in 3Q17.

5.Industry
Trends: With rapid shift in China’s retail from C2C to B2C,Jd.com is well
positioned among its competitors.

 
Business
Segments

 

 

 

 

 

JD.com has two distinctive B2C
business segments, Direct Sales, Online Market Place

Direct sales has been JD.com’s main revenue
driver.

Online Marketplace model represents higher
margin a growth opportunity that JD.com has been actively pursuing.

Direct
Sales Business:

 

 

Direct  Sales G

M

V ,2012-2016

JD.com began its B2C business focusing on 3C’s.It
has                                                              Direct Sales GMV ( ¥ Million)
been expanding its product
offering to apparel, home                                                                                                                                372300
applaince,FMCG and other general merchandise
items.
This business is JD.com’s main revenue generator, It                                                                                                          255600
accounts 91.4% of JD.com total revenue in 2016,
a
45.7% growth over prior year
and up from ¥56.7M in                                                                                159300
2012 represents CAGR of 60.1%.                                                                                               93700
56700

 

 

 
2012                 2013                2014                2015                2016

 

 

 

 

 

 
Source: Company Data

Page
2

 

 

 JD.com Inc (JD:US

 

 

 

 

Online Market Place:

 

 

JD.com launched
its online marketplace in 2010.Online marketplace Contributed to 43.4% of total
GMV.JD.com Failed to get hold of C2C market with its acquisition of Paipai.com
a C2C platform from Tencent in 2014.It has been Focusing on B2C model since then.
its Online marketplace has geen growing rapidly in past few years. But its
contribution to total revenue amounts to 8.6%.

 

 

 

 

Financial Performance Analysis:

Source: Company Data

 

GMV (Gross merchandise volume): In
FY2016 JD.com’s GMV amounted to ¥658.2b which was 47% increase over 2015. Up
from ¥73.3b in 2012,Representing a CAGR
of 73.1%.

 

Gross Margin:JD.com’s Non GAAP gross
margin has been improving steadily. Its 3Q17 gross margin was 15.3%, a 52% (on
y/y basis) increase over previous year

 

Operating Margin:JD.com reported a
positive Non GAAP operating margin in 2016, due to greater operational
efficiency. Its 3Q17 operating margin was 1.8%, a 171% (on y/y basis) increase
over previous year.

 

Net Income: JD.com has been reporting a
net loss (on GAAP basis) since its inception. in 1Q17 it reported GAAP Net
income for the first time, of ¥ 472.3m.On Non GAAP basis it reported a net
income of ¥ 1,000M for FY2016 up from -¥860m in FY 2015

 

 

Future Growth
Drivers.

Source: Company Data

 

JD.com’s main aim is to become China’s
one stop online shopping platform
by offering wide range of products to customers and fulfilling it best
in class logistics
facilities. Its business
model is similar
to that of Amazon.com.With it’s recent earning’s results showed a shift towards margin market place model.
By Increasing penetration in Tier 3&4
cities and continuous development its product
and service offerings will strong momentum in growth. Hence these points
can summarized as:

1. Shift
Towards higher margin segments in B2C market segment 2.Expanding its markets.

3. Increase its widespread into lower tier cities of china.

4. Providing better
Mobile shopping ecosystem which is seeing
tremendous growth and concentrate more on the product offerings
there. 5.Increasing customer satisfaction by continuous development of its value added services
in the current business environment.

 

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