top of page, Inc. (JD US Equity)

Updated: Apr 11, 2021

JD, not the jedi you saw in the starwars movie, is one of the largest e-commerce player in China.


JD is a leading technology driven e-commerce company transforming to become a leading supply chain-based technology and service provider. JD generated total net revenues of RMB362.3 billion, RMB462.0 billion and RMB576.9 billion (US$82.9 billion) in 2017, 2018 and 2019 respectively. JD incurred net losses from continuing operations of RMB19 million and RMB2,801 million in 2017 and 2018, respectively, and generated net income from continuing operations of RMB11,890 million (US$1,708 million) in 2019.

E-commerce Business

JD are the largest retail company in China by total revenues in 2019, according to Fortune Global 500. JD believe their scale and market leadership are built upon their competitive edge in customer experience and operational efficiency, as well as their commitment to strategically invest in technology and logistics infrastructure for the long term.

Providing superior customer experience is their top priority. Their e-commerce business offers customers a wide selection of authentic products at competitive prices. JD have built and operate their own nationwide fulfillment infrastructure that supports their e-commerce business. Their speedy, efficient and reliable fulfillment services ensure a high degree of customer satisfaction. JD offer an enjoyable online shopping experience mainly through their content-rich, user-friendly and highly personalized mobile apps and website JD also provide comprehensive customer services and convenient payment options. Owing to the superior customer experience JD provide, their loyal customer base has expanded rapidly. JD had 292.5 million, 305.3 million and 362.0 million annual active customer accounts in 2017, 2018 and 2019, respectively.

JD operate online retail and marketplace e-commerce businesses. In their online retail business, JD purchase products from suppliers and sell them directly to their customers. JD offer a wide range of product categories through their online retail business, including electronics products, home appliances and a large variety of other general merchandise categories. JD have established strong relationships with their suppliers as their online retail business grows rapidly over time. As of December 31, 2019, JD sourced products from over 24,000 suppliers.

Timely and reliable fulfillment is critical to their success. JD believe JD have the largest fulfillment infrastructure of any e-commerce company in China. Leveraging this nationwide fulfillment capability, JD deliver a majority of the orders to customers by themselves. In 2019, JD further improved their efficiency in more cities, especially the less developed areas, as JD continued to expand their same day and next day delivery service in these areas. Their fulfillment services have been proven to be highly reliable in response to customer needs, particularly in the event of business disruptions, such as during the recent COVID-19 outbreak.

JD launched their online marketplace in October 2010, and have since then been continually adding third-party merchants and introducing new products and services, including premium international brands, to their customers. As of December 31, 2019, their online marketplace had over 270,000 third-party merchants, who are held to high standards for transacting with their customers. JD aim to offer their customers with consistently high-quality online shopping experience regardless they purchase from us or third-party merchants. To this end, JD require all third-party merchants to meet their strict standards for product authenticity and service reliability, and closely monitor their performance and activities on their online marketplace.

JD provide a variety of digital marketing services to marketers on their e-commerce platform, including suppliers to their online retail business, third-party merchants on their online marketplace and other partners. Powered by AI technology, their digital marketing platform provides their marketing customers with comprehensive digital branding and performance-based marketing solutions and various effective measurement tools, which help them reach targeted audiences, attract and retain customers and improve their returns. Their digital marketing platform also features automatic marketing operation including online marketing message creation, targeting, bidding, deployment and budget allocation, which enables marketers to manage their digital marketing strategy and spending in a convenient and efficient manner.

JD proprietary and scalable technology platform enhances user experience, improves operating efficiency and supports the growth in our e-commerce business. Leveraging machine-learning technology and massive data sets amassed from online purchase behaviors, JD curate personalized product recommendations and push targeted promotions. JD utilize AI technology to refine their merchandise sourcing strategy, allowing them to efficiently manage their inventory and control cost. With consumer insights generated from big data analytics, they provide tailor-made products through customer-to-manufacturer (C2M) production, which increase sales and enhance customer satisfaction.

Supply Chain-based Technologies and Services

JD made their strategic decision in 2007 to invest in and build their own nationwide fulfillment infrastructure. As of December 31, 2019, their nationwide fulfillment infrastructure covered almost all counties and districts across China, with a network of over 700 warehouses with an aggregate gross floor area of approximately 16.9 million square meters in 89 cities, including warehouse space managed under the JD Logistics Open Warehouse Platform. In addition, JD had a team of over 132,200 delivery personnel and 43,700 warehouse staff as of December 31, 2019. Their fulfillment infrastructure is powered by proprietary smart logistics and automation technologies, such as intelligent hardware, robotics, voice recognition, computer vision and deep learning, which allow us to continuously improve their operational efficiency. With full control of the logistics network and associated data flow, JD are able to optimize operations and modularize processes so as to ensure scalability and efficiency.

Over the past decade, JD have consistently provided superior fulfillment services to their online retail customers, which has been well supported by their self-operated integrated logistics infrastructure and technology platform. JD also open up their leading logistics infrastructure to their third-party merchants and partners beyond their e-commerce business. JD are expanding their logistics services to partners across various industries, as well as individual users. JD provide services relating to almost all aspects of logistics operation, including warehousing management, storage, long-haul transportation, express and on-demand delivery and cold-chain and cross-border services, among others. JD offer integrated supply chain management solutions to customers in various vertical markets. JD also provide technology solutions for logistics operations to enable customers to transparently and effectively monitor, manage and optimize their logistic workflows.


Since founded, JD have focused on developing their online retail business as well as building their own fulfillment infrastructure, including last mile delivery capability, all based on their proprietary technology platform to support their operations. As their online retail business grew substantially in size, JD launched their online marketplace to complement it and expand their product offerings, leverage their established fulfillment infrastructure and technology platform and ensure a superior customer experience. The combination of their online retail and online marketplace, their omni-channel initiatives and their own nationwide fulfillment infrastructure and technology platform, makes them a uniquely strong player in China’s retail industry in terms of providing superior customer experience.

JD Retail

Online Retail

In retail business, JD acquire products from suppliers and sell them directly to customers. JD believe them have the largest online product review database of any online retail company in China with approximately 5,817 million product reviews generated by their customers as of December 31, 2019. As JD now offer a wide range of product categories through their online retail business model, net revenues from electronics products, which include computers, mobile handsets and other mobile digital products, and home appliances, have declined as a percentage of their total net revenues. As of December 31, 2019, JD stheirced products from over 24,000 suppliers. JD believe that large scale and market leading position are critical to success in the online retail market in China and can provide important competitive advantages to them.

Online Marketplace

In their online marketplace business, third-party merchants offer products to customers on their online marketplace and pay us sales commissions. JD launched their online marketplace in October 2010 and have been adding new products and services, including premium international brands, since then. As of December 31, 2019, there JDre over 270,000 third-party merchants on their online marketplace. JD provide transaction processing and billing services on all orders placed on their online marketplace and require third-party merchants to meet their strict standards for authenticity and reliability. JD monitor third-party merchants’ performance and activities on their online marketplace closely to ensure that they meet their requirements for authentic products and high-quality customer service. JD tag certain top stores on their platform as “JD Haodian (京东好店),” based on each third-party merchant’s quality of service during the entire purchase process. Such certification can help the top third-party merchants improve their sales volumes on the platform. Furthermore, it sets a benchmark to encourage other third-party merchants to improve their quality of service. JD aim to offer customers the same high-quality customer experience regardless of the source of the products they choose.

JD Logistics

Timely and reliable fulfillment is critical to the success of an online retail business. Leveraging their nationwide fulfillment infrastructure and their advanced technology and logistics expertise, their logistics business, JD Logistics, delivers a majority of orders directly to their customers and also provides logistics services to business partners across a wide range of industries including those beyond e-commerce.JD have opened up their technology-driven fulfillment infrastructure by offering comprehensive supply chain solutions to third parties, including warehousing management, transportation, delivery, after-sales services, and logistics technology solutions, such as cloud-based service and data analytics, or a combination of these services. JD are dedicated to developing an effective, environmentally-friendly, innovative and smart “green logistics system” through developing and promoting the use of innovative and environmentally-friendly materials and a series of technological innovations.

JD Property

JD Property, their property management group, owns, develops and manages their logistics facilities and other real estate properties, to support JD Logistics and third parties. JD Property has unique advantages to secure scarce land resources as JD continue to help boost economies across China through creating employment opportunities and contributing tax, among others. JD Property aims to develop its logistics asset portfolios while maintaining strong capital discipline. With the expansion of their asset portfolios, JD have adopted a capital recycling strategy through their fund management platform and other partnerships. JD believe this strategy will help further expand their asset portfolios, minimize their related future capital expenditures and enhance their returns. Currently, JD Property manages properties with a total gross floor area of over 10 million square meters. In February 2019, JD Property and GIC, Singapore’s sovereign wealth fund, jointly established JD Logistics Properties Core Fund, L.P., or Core Fund, for a total committed capital of over RMB4.8 billion. JD serve as the general partner of Core Fund and have committed 20% of its total capital as the limited partner, while GIC has committed the remaining 80%. The investment committee of Core Fund, which comprises the representatives from us and GIC, oversees the key operations of Core Fund. Furthermore, in February 2019, JD entered into a definitive agreement with Core Fund, pursuant to which JD sold certain of their modern logistics facilities to Core Fund for a total gross asset value of RMB10.9 billion, to unleash the full potential of their balance sheet and optimize the use of capital for their future growth initiatives. In the second half of 2019, the closing conditions for the completed assets JDre met, and JD recorded a total disposal gain of RMB3.8 billion for the completed assets in 2019.

JD got the best fulfillment experience in China. Fast and accuracy. JD fulfillment process:

Operating Results

Revenue breakdown

Net revenues include net product revenues and net service revenues.

Product sales is further divided into sales of electronics and home appliances products and sales of general merchandise products.

Net revenues from electronics and home appliances products include revenues from sales of computer, communication and consumer electronics products as well as home appliances.

Net revenues from general merchandise products mainly include revenues from sales of food, beverage and fresh produce, baby and maternity products, furniture and household goods, cosmetics and other personal care items, pharmaceutical and healthcare products, books, automobiles and accessories, apparel and footwear, bags and jewelry.

Net service revenues are further divided into revenues from online marketplace and marketing and revenues from logistics and other services. The following table breaks down total net revenues by these categories, by amounts and as percentages of total net revenues:

Cost of revenues

Cost of revenues primarily consists of cost for acquiring the products that JD sell directly and the related inbound shipping charges, inventory write-downs, traffic acquisition costs related to online marketing services, and cost related to logistics services provided to third parties. The rebates and subsidies they receive from suppliers are treated as a reduction in the purchase price and will be recorded as a reduction in cost of revenues when the product is sold.

cost of revenues increased by 24.3% from RMB396,066 million in 2018 to RMB492,467 million (US$70,738 million) in 2019. This increase was primarily due to the growth of online retail business. Costs related to the logistics services provided to third parties also increased rapidly along with the expansion of logistics business.

Fulfillment expenses

JD fulfillment expenses consist primarily of (i) expenses incurred in operating JD fulfillment centers, customer service centers and physical stores, including personnel cost and expenses attributable to buying, receiving, inspecting and warehousing inventories, picking, packaging, and preparing customer orders for shipment, processing payment and related transaction costs, (ii) expenses charged by third-party couriers for dispatching and delivering JD products, and (iii) lease expenses of warehouses, delivery and pickup stations, and physical stores. The costs related to logistics services provided to third parties are classified in cost of revenues. JD expect JD fulfillment expenses to increase in absolute amount in the near run, as they invest in new businesses, hire additional fulfillment personnel, build and lease new warehouses and establish more delivery stations to penetrate lower tier cities and to meet JD anticipated growth in sales volume and ensure satisfactory customer experience. JD plan to make JD fulfillment operations more efficient by setting up large customized warehouse facilities to make full use of the available space, improve the pick-and-pack workflow efficiency, accommodate greater product selection and minimize order splitting.

fulfillment expenses increased by 15.5% from RMB32,010 million in 2018 to RMB36,968 million (US$5,310 million) in 2019. This increase was primarily due to the increase in shipping charges, compensation costs relating to fulfillment personnel, rental expenses for fulfillment infrastructure and payment processing charges, corresponding with the growth of sales volume. Fulfillment expenses as a percentage of net revenues, were 6.4% in 2019, as compared to 6.9% in 2018, primarily due to economies of scale from enhanced logistics capacity utilization and staff productivity.

Marketing expenses

JD marketing expenses consist primarily of advertising costs, public relations expenditures, and payroll and related expenses for employees involved in marketing and business development activities. JD pay commissions to participants in the associates program when their customer referrals result in successful product sales. JD plan to continue to conduct brand promotion and marketing activities to enhance JD brand recognition and attract new purchases from new and existing customers.

marketing expenses increased by 15.6% from RMB19,237 million in 2018 to RMB22,234 million (US$3,194 million) in 2019. This increase was primarily due to an increase in advertising expenditures on both online and offline channels from RMB15,970 million in 2018 to RMB19,286 million (US$2,770 million) in 2019, as JD continued to enhance JD brand recognition and to promote new business initiatives.

Research and development expenses

JD research and development expenses consist primarily of payroll and related expenses for research and development professionals involved in designing, developing and operating JD technology platform, and improving JD AI, big data and cloud technologies and services, and technology infrastructure costs. Technology infrastructure costs include servers and other equipment depreciation, bandwidth and data center costs, rent, utilities and other expenses necessary to support JD internal and external business. JD plan to continue to invest in technology and innovation to enhance customer experience and provide value-added services to suppliers and third-party merchants.

research and development expenses increased by 20.4% from RMB12,144 million in 2018 to RMB14,619 million (US$2,100 million) in 2019 as JD continued to invest in

top-notch R&D talent and technology infrastructure. The increase in their research and development expenses was primarily attributable to the increase in the depreciation and amortization expenses in connection with an increase in the number of servers and other electronic equipment, the IDC expenses in connection with the execution of strategies of continuously improving mobile, big data and cloud computing technologies, and the compensation costs associated with research and development personnel and relating to hiring additional senior and experienced technology personnel.

General and administrative expenses

JD general and administrative expenses consist primarily of employee related expenses for general corporate functions, including accounting, finance, tax, legal and human relations; costs associated with these functions include facilities and equipment depreciation expenses, rental and other general corporate related expenses. JD plan to continue to hire additional qualified employees to support JD business operations and planned expansion.

general and administrative expenses slightly increased by 6.4% along with the expansion of business, from RMB5,160 million in 2018 to RMB5,490 million (US$789 million) in 2019.

By Segment:


The Ability to Increase Active Customer Accounts and Customer Purchases

The Ability to Manage Our Mix of Product and Service Offerings

The Ability to Further Increase and Leverage our Scale of Business

The Ability to Effectively Invest in Our Fulfillment Infrastructure and Technology Platform

The Ability to Conduct and Manage Strategic Investments and Acquisitions

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