JD.com (Jingdong) reported a net revenue of 104.8 billion yuan (US$15.3 bn) in Q3 2018, an increase of 25.1% year-on-year. Annual active customer accounts increased to 305.2 million in the twelve months ended September 30, 2018 from 266.3 million in the same period last year.

Shares of JD.com plunged as much as 4% before Monday’s opening bell after the company posted worse-than-expected revenue for Q3 2018.

Operating margin of JD Mall before unallocated items for Q3 2018 was 2.2%, as compared to 2.3% for the same period last year.

Net service revenues were 10.9 billion yuan (US$1.6 billion), an increase of 49.4% year-on-year. Net income from continuing operations attributable to ordinary shareholders for Q3 2018 was 3.0 billion yuan (US$0.4 billion), compared to 1.0 billion yuan for the same period last year.

Non-GAAP net income from continuing operations attributable to ordinary shareholders for Q3 2018 was 1.2 billion yuan (US$0.2 billion), compared to 2.2 billion yuan for the same period last year.

Diluted net income per ADS from continuing operations for Q3 2018 was 2.03 yuan (US$0.30), compared to 0.69 yuan for Q3 2017. Non-GAAP diluted net income per ADS from continuing operations for Q3 2018 was 0.80 yuan (US$0.12), compared to 1.52 yuan for Q3 2017.

Recent Business Highlights

JD.com’s premium membership program JD Plus surpassed 10 million users in September 2018.

Cosmetics brands including L’Occitane de Provence, HOUSE 99 and Hera, and fashion brands including Salvatore Ferragamo and Furla, opened flagship stores on the JD.com platform. JD’s dedicated luxury platform TOPLIFE also welcomed John Galliano, Buccellati, Shang Xia, and other major international brands.

JD.com entered into strategic agreements with textile and fashion giant Ruyi to provide premium technology and infrastructure solutions covering smart logistics, inventory management, and marketing in Q3 2018. Four international menswear brands under Ruyi-owned Trinity Group, including Gieves & Hawkes, Kent & Curwen, Cerruti 1881, and D’Urban opened flagship stores on JD.com.

JD.com launched its “Zu Chongzhi” platform in September, leveraging its comprehensive big data and supply chain capabilities to enable offline retailers to conduct real-time store performance analysis, marketing campaigns, merchandise selection, site selection, and public opinion monitoring and management.

JD Logistics opened up its leading logistics network to consumers in October, offering parcel delivery service to users, beginning in Beijing, Shanghai, and Guangzhou. Leveraging JD’s extensive delivery network, users in these areas can conveniently send items intra-city and throughout most of mainland China with JD’s same fast and reliable delivery service.

JD Logistics launched an initiative allowing consumers to receive reward points by choosing recycled packaging for their orders in Q3 2018. The service was trial launched in Beijing, Shanghai, and Guangzhou and is expected to expand to dozens of cities in the near future. JD Logistics also joined hands with corporate partners to promote recycled packaging across the entire supply chain.

JD.com’s joint venture, Dada-JD Daojia, announced the completion of a new US$500 million financing round with investments from Walmart and JD in August. The financing marks a new stage in the companies’ partnership to explore innovative “Boundaryless Retail” solutions.

Leveraging Dada’s crowd-sourcing delivery network, Dada-JD Daojia has partnered with Walmart, Yonghui, Carrefour, CR Vanguard, Family Mart, LAWSON, and numerous other supermarkets and grocery stores covering 63 cities, to provide a premium online fresh grocery shopping experience with one-hour home delivery service. Dada-JD Daojia is China’s leading on-demand logistics and omnichannel e-commerce platform.

JD.com operated over 550 warehouses covering an aggregate gross floor area of approximately 11.9 million square meters in China. It had approximately 200,000 merchants on its online marketplace and a total of 175,366 full-time employees as of September 30, 2018.

Check out the Q3 highlights of other e-commerce platforms Vipshop and Alibaba.

China’s online retail B2C market reached US$186.13B in Q3 2018. Tmall led this market with a share of 59.5%, followed by JD.com (25.8%) and Suning (6.4%).

The online retail B2C was a 1,284.37 billion yuan (US$186.13B) market in China in Q3 2018, which increased by 30.3% compared with the prior year period.

Tmall continued to lead this market with a lion’s share of 59.5%. The GMV on Tmall grew by 31.4% year-on-year. JD.com followed behind with a lesser market share of 25.8% (a little decline compared with 26.2% in Q2) and GMV growing at 24.9% year-on-year.

Tmall and JD.com combined represented 85.3% of the online retail B2C market. Notably, Suning kept expanding its market share from 5.5% in Q2 to 6.4% in Q3. Vipshop and Gome took the fourth and fifth position with a market share of 3.2% and 1.2%, respectively.

Check out the top mobile e-commerce apps in China Q3 2018

In China, the online retail B2C e-commerce grew by 28.4% to a US$226.38bn market in Q4 2018. Tmall took the lead, followed by JD, Suning, Vipshop, and Gome.

China’s online retail B2C e-commerce market reached 1,526.76 billion yuan (US$226.38bn) in Q4 2018, an increase of 28.4% year-on-year.

Revenue from Alibaba’s core commerce grew by 40% year-over-year to 102,843 million yuan (US$14,958 million) as of Q4 2018. Its annual active consumers on the China retail marketplaces reached 636 million.

Related: New e-commerce regulations in China you should be aware in 2019

Tmall took a market share of 61.5%, with a GMV increase of 29.5% year-on-year. JD ranked in the second place with a share of 24.2%, whose GMV grew by 21.1% year-on-year. Suning, Vipshop, and Gome listed third, fourth, and fifth with a share of 6.7%, 3.7%, and 0.7%, respectively.

71 brands exceeded 100 million yuan (US$14.37 million) in GMV in the pre-sale period of Double 11. Among that, 15 brands came from Tmall apparel, i.e. Nike, Adidas, Puma, Lining, Converse, Anta, Fila, Skechers, New Balance, Underarmour, Uniqlo, Eifini, Only, Vero Moda, and Bosideng. The same figure was only 40 in last year’s Double 11. You can find out the top statistics of Double 11 2018 here.

In 2018, the online retail sales of goods and services totaled 9,006.5 billion yuan (US$1,328.59 billion), up by 23.9% year-on-year. China’s retail market is estimated to hit US$6.77 trillion by 2019 with e-commerce representing 14.46% of this market.

Individual agents (Daigou), who frequently promote products on WeChat Moment or sell products in live streaming and short videos, are facing a new e-commerce policy on the first day of 2019. Under this new regulation, they need to make market entity registration and perform the obligation of tax payment.

In order to meet the ever-changing consumer preferences, companies should adjust their products and marketing based on people’s shopping motives, methods, time and results. Read more on Chinese digital consumer trends here.

China’s US$16bn cross-border e-commerce market overview in Q4 2018

JD.com (Jingdong) reported annual active customer accounts of 305.3 million in the twelve months ended December 31, 2018 (up 4.7%), from 292.5 million in 2017. JD’s quarterly active customer accounts increased by 22% year-on-year in Q4 2018.

In Q4 2018, net revenues grew by 22.4% year-on-year in net revenues to 134.8 billion yuan (US$219.6bn) in Q4 2018. Net service revenues were 14.6 billion yuan (US$2.1bn), an increase of 45.7% year-on-year. For the full year of 2018, net revenues totaled 462.0 billion yuan (US$67.2bn), an increase of 27.5% year-on-year. Net service revenues were 45.9 billion yuan (US$6.7bn), an increase of 50.5% year-on-year.

JD’s technology and content expenses increased by 82.6% year-on-year to 12.1 billion yuan (US$1.8bn) in 2018.

JD Business Developments

In October, JD held its second “Green Planet-Sustainable Week” program, partnering with the World Wide Fund (WWF) and The China Children and Teenagers’ Fund (CCTF) to raise awareness around sustainable consumption through initiatives including recycling used clothing and appliances in around fifty cities across China.

In December 2018, JD Fresh partnered with Japanese chemical manufacturing giant Mitsubishi Chemical to open the largest hydroponic “plant factory” featuring Japanese hydroponic technology in China, providing JD customers with new options for safe, nutritious and environmentally friendly products both online and offline at JD’s 7FRESH supermarkets.

As of Q4 2018, JD.com’s joint venture, Dada-JD Daojia, had partnered with more than 100,000 stores from leading supermarket brands including Walmart, Yonghui, Carrefour, and CR Vanguard, leveraging Dada’s crowd-sourcing delivery network covering more than 450 cities. Dada-JD Daojia is China’s leading on-demand logistics and omnichannel e-commerce platform.

In October 2018, JD.com formed a strategic partnership with Xinyu Group, the largest international watch retailer in China. The partnership creates one of the largest omnichannel watch sales and service alliances in China, allowing Chinese customers to enjoy seamless shopping experiences and convenient aftersales services.

In addition, in Q4, Rado, Hamilton, and Certina joined JD’s platform, adding to the list of premium international watch brands available on JD.

Iconic New York-based luxury fashion brand DKNY, and Sulwhasoo, a leading luxury beauty brand in Korea owned by Amorepacific, launched flagship stores on JD.

As of December 31, 2018, JD.com operated over 550 warehouses covering an aggregate gross floor area of approximately 12 million square meters in China.

JD.com had over 210,000 merchants on its online marketplace and over 178,000 full-time employees as of December 31, 2018.

Alibaba generated 117,278 million yuan (US$17,057 million) in revenue for Q4 2018, an increase of 41% year-over-year. Vipshop GMV exceeded US$19bn in 2018, up 21%. Tmall and JD had a combined market share of over 85% in China’s B2C e-commerce market in Q4 2018.

China’s cross-border online shoppers to exceed 200 million by 2020

Jingdong (JD) net revenues for the first quarter of 2019 were RMB 121.1 billion (US$118.0 billion), an increase of 20.9% from the first quarter of 2018. Net service revenues for Q1 2019 were RMB12.4 billion (US$1.9 billion), an increase of 44.0% from the first quarter of 2018.

Income from operations for the first quarter of 2019 was RMB1.2 billion (US$0.2 billion), compared to RMB4.4 million for the same period last year according to JD’s announced financial results.

Non-GAAP income from operations for the first quarter of 2019 was RMB2.0 billion (US$0.3 billion) with a non-GAAP operating margin of 1.6%, as compared to non-GAAP income from operations of RMB0.8 billion in the first quarter of 2018 with a non-GAAP operating margin of 0.8%.

Operating margin of JD Retail (formerly known as JD Mall) before unallocated items for Q1 2019 increased by 0.6 percentage point compared to the same period last year.

Net income attributable to ordinary shareholders for the first quarter of 2019 was RMB7.3 billion (US$1.1 billion), compared to RMB1.5 billion for the same period last year.

Non-GAAP net income attributable to ordinary shareholders increased by 215% to RMB3.3 billion (US$0.5 billion) in the first quarter of 2019 from RMB1.0 billion in the first quarter of 2018.

Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS for the first quarter of 2019 was RMB4.96(US$0.74), compared to RMB1.04 for Q1 2018. Non-GAAP diluted net income per ADS for the first quarter of 2019 was RMB2.23(US$0.33), compared to RMB0.71 for the same quarter last year.

Annual active customer accounts increased to 310.5 million in the twelve months ended March 31, 2019, from 305.3 million in the twelve months ended December 31, 2018.

Quarterly active customer accounts in the first quarter of 2019 increased by 15% as compared to the same period in 2018.

JD.com’s focus on delivering the best and most trusted online retail experience to customers throughout China drove another strong performance for the first quarter

said Richard Liu, Chairman and CEO of JD.com.

We will continue to invest in key technologies and top industry talent as we work to reach an even broader customer base through cutting edge innovation. With our growing scale and increasingly efficient operations, JD.com remains well positioned to deliver strong shareholder value for the long term.

JD Business Highlights for Q1 2019

AEG, a renowned German manufacturer of design-focused premium home appliances, signed a strategic partnership with JD and debuted its high-tech products exclusively on JD.

Brands which launched flagship stores on JD recently include Swiss independent luxury watch brands ORIS, Tissot and TITONI, Italian fashion house MOSCHINO and popular New Zealand fresh food brands, Rockit and Zespri, among others.

In March, JD and Michelin China signed a strategic cooperation agreement, and JD became the first direct-supply e-commerce platform for Michelin in China. Consumers who buy Michelin tires on JD will be given priority to choose Michelin’s high-end service networks such as TYREPLUS to enjoy premium installation service.

JD Logistics launched China’s first rotating package handling system designed for frozen storage at its Wuhan Asia No.1 warehouse.

Featuring mobile shelves which convey frozen products to staff in a separate area, the system alleviates the need for frequent trips to the freezer area and significantly enhances working conditions and efficiency as compared to traditional approaches.

In March, JD Logistics also launched its self-developed visual recognition batch scanning system at its Wuhan Asia No.1 warehouse, greatly improving efficiency and accuracy at the warehouse’s receiving station.

As of April 30, 2019, JD.com’s joint venture, Dada-JD Daojia, had partnered with over 270 Walmart stores, over 700 Yonghui stores, over 180 Carrefour stores and over 1,000 CR Vanguard stores, among numerous other leading supermarket brands, to provide customers with an integrated omnichannel shopping experience through Dada’s crowd-sourcing delivery network.

In addition, JD Daojia helped over 300 offline partners digitalize their operations.

Strategic Cooperation with Tencent

On May 10, 2019, JD renewed the strategic cooperation agreement with Tencent, for a period of three years starting from May 27, 2019. Tencent will continue to offer the company prominent level 1 and level 2 access points on its WeChat platform to provide traffic support, and the two parties also intend to continue to cooperate in a number of areas including communications, advertising and membership services, among others.

It is estimated that such traffic support, advertising spending, and other cooperation will amount to over US$800 million, which will be paid or spent over the next three years.

JD will issue to Tencent a certain number of the company’s Class A ordinary shares for a total consideration of over US$250 million at prevailing market prices at certain pre-determined dates during the three-year period.

Financing for JD Health

On May 9, 2019, the company entered into definitive agreements for the non-redeemable series A preferred share financing of its healthcare subsidiary, JD Health, with investors including CPEChina Fund, CICC Capital, and Baring Private Equity Asia, among others.

The total amount expected to be raised is over US$1 billion, representing over 14.5% of the equity interest of JD Health on a fully diluted basis, subject to closing conditions including regulatory approval applicable to certain investors.

JD will remain the majority shareholder of JD Health after the completion of the transaction. The new financing will enable JD Health to further expand its core business, attract industry talent and explore new initiatives in the broader healthcare sector.

JD (Jingdong)’s net revenues grew by 22.9% to US$122 billion in the second quarter of 2019. Its annual active customer accounts increased to 321.3 million and there is a total number of 220,000 merchants on its online marketplace. The company’s adjusted EPS rose 560% to $0.33.

JD reported net revenues for Q2 2019 of RMB150.3 billion (US$121.9 billion), an increase of 22.9% from Q2 2018. Net service revenues for Q2 2019 were RMB16.8 billion (US$2.4 billion), an increase of 42.0% from Q2 2018.

JD’s income from operations for Q2 2019 was RMB2,266.6 million (US$330.2 million), compared to loss from operations of RMB1,033.9 million for the same period last year. Non-GAAP income from operations for Q2 2019 was RMB3,217.5 million (US$468.7 million) with a non-GAAP operating margin of 2.1%, as compared to RMB113.2 million in Q2 2018 with a non-GAAP operating margin of 0.1%.

Net income attributable to ordinary shareholders for Q2 2019 was RMB618.8 million (US$90.1 million), compared to net loss attributable to ordinary shareholders of RMB2,212.5 million for the same period last year. Non-GAAP net income attributable to ordinary shareholders increased by 644% to RMB3,558.9 million (US$518.4 million) in Q2 2019 from RMB478.1 million in Q2 2018.

Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS for Q2 2019 was RMB0.36(US$0.05), compared to diluted net loss per ADS of RMB1.54 for Q2 2018. Non-GAAP diluted net income per ADS for Q2 2019 was RMB2.30(US$0.33), compared to RMB0.33 for the same quarter last year.

Operating cash flow for the twelve months ended June 30, 2019 increased to RMB31.8 billion (US$4.6 billion) from RMB16.4 billion for the twelve months ended June 30, 2018. Free cash flow, which excludes the impact from JD Baitiao receivables included in the operating cash flow, for the twelve months ended June 30, 2019 increased to RMB7.4 billion (US$1.1 billion), compared to outflow of RMB5.8 billion for the twelve months ended June 30, 2018.

Annual active customer accounts increased to 321.3 million (up 3.48% QoQ) in the twelve months ended June 30, 2019, from 310.5 million in the twelve months ended March 31, 2019. In comparison, annual active consumers on Alibaba’s China retail marketplaces was 674 million.

JD Business Activities in Q2 2019

During JD’s June 18 Anniversary Sale, legendary Italian fashion house Prada Group announced a partnership under which three of its major brands Prada, Miu Miu, and Car Shoe opened first-party flagship stores on JD.com.

Twenty other fashion and luxury brands have joined the JD platform since April, including French apparel brands Sandro and Maje under the SMCP Group, iconic British brand Mulberry and Italian high-end footwear brand Giuseppe Zanotti.

As part of JD’s Consumer to Manufacturer (C2M) initiative, TCL, one of China’s leading appliance manufacturers, partnered with JD in April and launched three new customized smart appliances specifically for the Chinese consumer market. JD also worked with top food and beverage company Nestlé on two C2M projects. Using insights from JD, the brand was able to optimize the flavor of its Purina cat food as well as its wafer bar packages to support customer needs for a larger variety of flavors.

In June, JD PLUS, JD.com’s premium membership program, announced an in-depth cooperation with nineteen international hotel brands including InterContinental Hotels and Resorts, AccorHotels, the Ascott and WANDA Hotels and Resorts, providing JD PLUS members even more benefits, including special discounts, room upgrades and extra loyalty points at over 15,000 hotels worldwide.

The hotel partnerships join other recent additions to JD PLUS’ lifestyle offerings, including bundled memberships with key partners including Sam’s Club, iQIYI and Tencent Video. JD.com was the first e-commerce company in China to introduce a paid membership service in 2016.

In Q2 2019, JD.com continued to enhance its Environmental, Social and Governance (ESG) program. On World Book and Copyright Day in April, JD Logistics, JD Foundation, the China Children and Teenagers Foundation, and the Stars Youth Development Center teamed up to launch the “Book Sharing Project” enabling people from 12 major cities in China to donate children books to nearly 250 primary schools, kindergartens and community libraries in rural areas through JD’s logistics network.

From May 29 to June 8, JD, Disney China, and China Charities Aid Foundation for Children launched a used toy donation project, enabling consumers from ten cities to reserve free pickups on the JD app.

In April, JD Logistics introduced its new cold chain service which utilizes idle capacity in the industry to offer cold chain transport services. Combined with JD Logistics’ previously launched cold chain services, it has formed a one-stop-shop F2B2C cold chain delivery system to meet the service demands of manufacturers, merchants, and consumers.

Relying on JD Logistics’ cold chain transport capacity, iconic American food and treats brand Dairy Queen recently teamed up with JD’s direct sales platform for the global debut of its ice cream tubs.

As of June 30, 2019, JD.com’s joint venture Dada-JD Daojia has partnered with over 300 well-known chain retailers and continued to enrich its offerings through cooperation with other retail brands.

Dada-JD Daojia teamed up with over thirty cosmetics and home retailers, including Watsons, Mannings, MINISO and NATURE REPUBLIC, launching a dedicated channel for home and fashion products on its platform.

Dada cooperated with JD Logistics to provide fast intra-city delivery services for merchants and consumers, with the majority of goods delivered within 30 to 60 minutes. Dada-JD Daojia is China’s leading on-demand logistics and omnichannel e-commerce platform.

JD expanded its leadership position in fulfillment capabilities among China’s e-commerce companies.

As of June 30, 2019, JD.com operated approximately 600 warehouses. The total warehouses covered an aggregate gross floor area of over 15 million square meters, including approximately 2.5 million square meters managed under the JD Logistics Open Warehouse Platform.

Leveraging JD Logistics sophisticated warehouse systems, the JDL Open Warehouse Platform was launched in late 2017 and consolidates warehouse capacity from partners to offer merchants and retailers convenient and flexible warehouse management solutions.

JD.com had over 220,000 merchants on its online marketplace, and over 179,000 full-time employees as of June 30, 2019.

JD Financial Results in Q2 2019

Net Revenues.  For the second quarter of 2019, JD.com reported net revenues of RMB150.3 billion (US$21.9 billion), representing a 22.9% increase from the same period in 2018. Net product revenues increased by 20.8%, while net service revenues increased by 42.0% in the second quarter of 2019, as compared to the second quarter of 2018.

Cost of Revenues.  Cost of revenues increased by 21.2% to RMB128.2 billion (US$18.7 billion) in the second quarter of 2019 from RMB105.8 billion in the second quarter of 2018. This increase was primarily due to the growth of the company’s online direct sales business and the logistics services provided to third parties.

Fulfillment Expenses.  Fulfillment expenses, which primarily include procurement, warehousing, delivery, customer service and payment processing expenses, increased by 11.4% to RMB9.2 billion (US$1.3 billion) in the second quarter of 2019 from RMB8.2 billion in the second quarter of 2018.

Fulfillment expenses as a percentage of net revenues decreased to 6.1% in the second quarter of 2019, compared to 6.7% in the same period last year, mainly due to economies of scale from enhanced logistics capacity utilization and staff productivity.

Marketing Expenses.  Marketing expenses increased by 6.8% to RMB5.6 billion (US$0.8 billion) in the second quarter of 2019 from RMB5.3 billion in the second quarter of 2018.

Technology and Content Expenses.  Technology and content expenses increased by 34.0% to RMB3.7 billion (US$0.5 billion) in the second quarter of 2019 from RMB2.8 billion in the second quarter of 2018 as a result of the company’s continued investment in top R&D talent and technology infrastructure.

General and Administrative Expenses.  General and administrative expenses increased by 5.0% to RMB1.4 billion (US$0.2 billion) in the second quarter of 2019 from RMB1.3 billion in the second quarter of 2018.

Income/(loss) from operations and Non-GAAP income from operations.  Income from operations for the second quarter of 2019 was RMB2.3 billion (US$0.3 billion), compared to loss from operations of RMB1.0 billion for the same period last year.

Non-GAAP income from operations for the second quarter of 2019 was RMB3.2 billion (US$0.5 billion) with a non-GAAP operating margin of 2.1%, as compared to RMB0.1 billion in the second quarter of 2018 with a non-GAAP operating margin of 0.1%.

Non-GAAP EBITDA for the second quarter of 2019 was RMB4.4 billion (US$0.6 billion) with a non-GAAP EBITDA margin of 2.9%, as compared to RMB0.9 billion with a non-GAAP EBITDA margin of 0.8% for the second quarter of 2018.

Net income/(loss) attributable to ordinary shareholders and Non-GAAP net income attributable to ordinary shareholders.  Net income attributable to ordinary shareholders for the second quarter of 2019 was RMB0.6 billion (US$0.1 billion), compared to a net loss attributable to ordinary shareholders of RMB2.2 billion for the same period last year.

Non-GAAP net income attributable to ordinary shareholders for the second quarter of 2019 was RMB3.6 billion (US$0.5 billion), compared to RMB0.5 billion for the same period last year.

Diluted EPS and Non-GAAP Diluted EPS.  Diluted net income per ADS for the second quarter of 2019 was RMB0.36 (US$0.05), compared to diluted net loss per ADS of RMB1.54 for the second quarter of 2018. Non-GAAP diluted net income per ADS for the second quarter of 2019 was RMB2.30 (US$0.33), as compared to RMB0.33 for the second quarter of 2018.

Cash Flow and Working Capital

As of June 30, 2019, the company’s cash and cash equivalents, restricted cash and short-term investments totaled RMB60.2 billion (US$8.8 billion), compared to RMB39.5 billion as of December 31, 2018.

JD Worldwide has recently expanded its strategic partnership with The a2 Milk Company, the renowned ANZ region dairy brand. The strengthened partnership will see JD help a2 Milk bring more high-quality dairy products to the Chinese market through tailored marketing campaigns in both online and offline channels, and the exploration of more innovative marketing strategies.

In 2015, a2 Milk chose JD Worldwide as the first online platform to launch its first-party store in China and introduce its world-famous milk powder products to the Chinese market. China is the top priority market for a2 Milk, and many Chinese parents have become customers of the company’s milk formula, which is designed to be easier for children to digest.

Over the past 4 years, JD has leveraged its unique insights into the Chinese market and consumer preferences to provide a2 Milk with customized marketing solutions, increasing the brand’s recognition among Chinese consumers.

On June 18 this year, the peak day of JD.com’s annual 18-day “6.18” anniversary sales festival, a2 Milk was the top-selling brand on JD Worldwide, and the brand’s platinum baby milk powder was the best-selling product. Sales of a2 products on the day increased 210% compared to the previous year.

Earlier this year, a2 Milk was a participant in JD.com’s “Brand Competitiveness Plan“, a one-month program which is an extension of JD’s previous Super Brand Day program and provides brands with comprehensive marketing solutions to increase sales performance and build up brand recognition.

Marketing solutions offered through this initiative include guidance on marketing campaign timing, choice of promotional channels, and help in identifying the target audience for a campaign. On every day of the one-month long campaign for a2 Milk, JD helped the company identify a group of customers who had indicated interest in a2 products within a specific period of time but had not yet made an order.

Coupons were then sent to these high potential customers. The ROI of coupons during the month of the campaign was 3.6 times higher than the typical average, and fans of the a2 Milk online store on JD Worldwide surpassed 1 million users.

“China is the top growth market for The a2 Milk Company, and JD.com’s expertise in innovative marketing has consistently allowed us to make the most of this exciting opportunity,” said Xiao Li, CEO of a2 Greater China. “Last year, we launched a blockchain partnership with JD, using a QR code on a2 Milk products to show logistics information at every stage of delivery. This is just one of the ways we are working together to give customers more peace of mind and confidence in their purchases.”

“The a2 Milk Company’s premium dairy products are an increasingly popular choice for Chinese parents across the country,” said Chris Cui, Head of JD Worldwide. “As China’s largest retailer, JD has unique capabilities to offer a2 Milk assistance in terms of marketing solutions, logistics and technology, helping a2 continue to grow their market share.”

With a reputation for safety and quality, products from Australia and New Zealand have consistently sold well on JD.com, with health supplements, maternal and baby products, wine, milk and cosmetics among the best-selling categories.

In addition to a2 Milk, popular brands including Swisse, Blackmores, Devondale, Penfolds, and Jacob’s Creek have also seen impressive growth in sales on the JD platform, with sales of Penfolds products increasing by more than 200% YoY during the first 30 minutes on June 18th.

China’s cross-border e-commerce users overview 2019

In today’s consumer environment, the market competition of FMCG has been very competitive, and major brands are trying their best to seize the new generation of consumers. It is no longer easy for them to breakthrough.

While facing fierce competition, Mead Johnson has achieved rapid growth in China. One of the important factors is the marketing promotion and optimization on its e-commerce platform. Mead Johnson has become a benchmark for maternal and child products, and the marvelous marketing performance of the two major shopping festivals (618; Double 11) is indispensable.

Marketing for E-Commerce Shopping Festivals

The promotion of consumer goods in the e-commerce shopping festival has become a “must-do” and “must pay attention” marketing strategy for major brands. On the other hand, China’s e-commerce shopping festival has been in the market for more than ten years, and the mass users have already immunized with early discount sales.

Just as the shopping festival is given a new era of carnival, brand marketing needs to find a new breakthrough.

Traditional promotion, theme promotion, platform activities, and other shopping festival marketing actions have become the standard marketing strategy of major brands.

The biggest problem is that although these standardized marketing actions can boost sales, it is difficult to achieve brand value differences. In other words, traditional marketing is unable to leave an impression among consumers.

At the same time, as users gradually become immune against previous marketing techniques, their sales boost effects are rapidly diminishing or even failing. Therefore, for the various brand (especially the top brand), such marketing techniques are inadequate to sustain their business.

On the other hand, multi-dimensional and multi-channel marketing have seen a good performance, through the on-site and off-site integration, IP (Intellectual Property) marketing, entertainment marketing, and others can bring a wider range of quality traffic to the product.

Strategy: shifting from “buy and leave” to “return customer”

If consumer purchase is driven by promotion, it will not create brand loyalty and repeat purchase. This is a problem that the shopping festival marketing has not been able to solve in the past. Most of the customers are attracted to buy with “one time” low price sales. Therefore, many brands are unable to retain their customers.

For various mature brands, they are able to avoid the price war if only they are able to work on the brand value in order to create an impression among consumers, maintain the customer journey, continuously transform the brand power into a sales force. Changing the “buy and leave” into “return customer”.

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Jingdong’s (JD) annual active customer accounts increased to 334.4 million in the twelve months ended in Q3 2019 from 321.3 million in the twelve months ended in Q2 2019. Meanwhile, Alibaba’s active consumers on its China retail marketplaces reached 693 million. Mobile monthly active users in September 2019 increased by 36% as compared to September 2018. In contrast, Alibaba’s China retail marketplaces had 785 million mobile MAUs in September 2019.

As of September 30, 2019, JD.com had over 250,000 merchants on its online marketplace, and over 200,000 employees excluding part-time and interns.

JD Retail in Q3 2019

In September, JD.com officially launched its social e-commerce platform Jingxi as part of its strategy to penetrate into lower-tier cities and compete with Pinduoduo.

Social e-commerce in China has much higher conversion rates than traditional ones. Social e-commerce GMV reached 626.85 billion yuan in 2018 with an increase of 255.8%. It’s expected to continue the fast growth and exceed 1.3 trillion yuan in 2019 and 2.86 trillion in 2021. 80% of internet shoppers are using social e-commerce channels.

Jingxi is available to consumers across multiple channels including the standalone Jingxi app, Jingxi mini program and a WeChat first-level entry point. Combining social media and retail, Jingxi provides products at attractive prices.

Jingxi also has partnered with domestic manufacturers in over one hundred industrial clusters, serving as a bridge between manufacturers and consumers. During the Singles Day promotion season, approximately 75% of Jingxi’s new users came from lower-tier cities, and approximately 55% of total Jingxi users were female.

In the third quarter, JD.com continued to apply its data-based customer insights to help brands tailor their products to satisfy consumers’ customized demands on JD’s platforms.

To date, JD has established partnerships with over 140 appliance brands under its Consumer to Manufacturer (C2M) initiative covering over 800 SKUs, with premium names including GREE, Midea, Philips, Siemens and Hisense, among others.

In Q3 2019, JD Retail segment had net revenues of RMB128.7 billion, an increase of 27.3% from Q3 of 2018. The operating profit margin for the segment was 3.3% during the quarter.

JD’s Double 11 2019 sales reached 204.4 billion yuan (US$29 billion yuan).

JD Logistics

During the quarter, JD Logistics further improved its efficiency in lower-tier cities as it continued to expand its 24-hour delivery service in these areas.

By optimizing its expanding warehouse network with AI-driven technologies, JD Logistics is able to deliver approximately 90% of its direct sales orders within 24 hours in China.

In the third quarter, JD Logistics remained top-ranked in customer satisfaction rate in the national survey of express service satisfaction conducted by State Post Bureau. JD Logistics continued to expand its third-party businesses rapidly in the third quarter with external revenues accounted for nearly 40% of its total revenues.

As of Q3 2019, JD Logistics operated over 650 warehouses. The warehouses covered an aggregate gross floor area of approximately 16 million square meters, including warehouse space managed under the JD Logistics Open Warehouse Platform.

By the end of October 2019, JD.com joint venture Dada-JD Daojia, China’s leading on-demand logistics and omnichannel e-commerce platform, had formed partnerships with over 300 well-known chain retailers and more than 50 first-tier international and domestic FMCG brands.

In the third quarter, Dada-JD Daojia provided its omnichannel customer relationship management (CRM) services to an expanding number of retail partners, helping them develop their own digital membership programs. To date, 135 merchants and over 18,000 stores have joined Dada-JD Daojia’s omnichannel CRM program.

JD Health

JD Health, a majority owned subsidiary of Jingdong, successfully completed its series A preferred share financing in November 2019, with a post-money valuation of approximately US$7 billion.

Over the past few years, JD Health has built a comprehensive “Internet + healthcare” ecosystem, providing pharmaceutical and healthcare products, internet healthcare, health management and intelligent healthcare solutions to the customers.

“JD Pharmacy” is China’s largest online pharmacy by revenue. JD Health, which benefits from JD.com’s trusted e-commerce brand image and collaboration with leading industry players, continues to expand its customer base and service offerings, aiming to become the most trusted “chief health manager” for customers.

JD Property

In February 2019, JD Property Management Group (“JD Property”) established its first logistics properties fund (“Core Fund”) with GIC and entered into an agreement to dispose of certain logistics facilities to Core Fund for a total gross asset value of RMB10.9 billion.

By the end of September 2019, the disposition of the majority of these logistics facilities had been completed. Currently, JD Property manages properties with a total gross floor area (“GFA”) of over 10 million square meters, including properties that are completed, under construction and held for future development, making JD Property a top 3 logistics property company by GFA in China.

JD Financial Results for Q3 2019

Net revenues for Q3 2019 were RMB134.8 billion (US$118.9 billion), an increase of 28.7% from Q3 of 2018. Net service revenues for Q3 2019 were RMB16.0 billion (US$2.2 billion), an increase of 47.0% from Q3 of 2018.

Cost of Revenues. Cost of revenues increased by 29.4% to RMB114.7 billion (US$16.1 billion) in the third quarter of 2019 from RMB88.7 billion in the third quarter of 2018. This increase was primarily due to the growth of the company’s online direct sales business and the logistics services provided to third parties.

Fulfillment Expenses. Fulfillment expenses, which primarily include procurement, warehousing, delivery, customer service and payment processing expenses, increased by 12.8% to RMB8.8 billion (US$1.2 billion) in the third quarter of 2019 from RMB7.8 billion in q3 2018.

Fulfillment expenses as a percentage of net revenues decreased to 6.5% in the third quarter of 2019, compared to 7.4% in the same period last year, mainly due to economies of scale from enhanced logistics capacity utilization and staff productivity.

Marketing expenses increased by 7.6% to RMB4.4 billion (US$0.6 billion) in q3 2019 from RMB4.1 billion in the third quarter of 2018.

Income from operations for Q3 2019 was RMB4,973.2 million (US$695.8 million), compared to loss from operations of RMB650.7 million for the same period last year.

Non-GAAP income from operations for Q3 2019 was RMB2,974.9 million (US$416.2 million) with a record non-GAAP operating margin of 2.2%, as compared to RMB638.3 million in Q3 2018 with a non-GAAP operating margin of 0.6%.

Net income attributable to ordinary shareholders for Q3 2019 was RMB612.3 million (US$85.7 million), compared to RMB3,000.6 million for the same period last year.

Non-GAAP net income attributable to ordinary shareholders increased by 160.6% to RMB3,085.9 million (US$431.7 million) in the third quarter of 2019 from RMB1,184.3 million in the third quarter of 2018.

Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS for Q3 2019 was RMB0.41(US$0.06), compared to RMB2.03 for Q3 2018. Non-GAAP diluted net income per ADS for Q3 2019 was RMB2.08(US$0.29), compared to RMB0.80 for the same quarter last year.

Operating cash flow for the twelve months ended September 30, 2019 increased to RMB30.8 billion (US$4.3 billion) from RMB18.2 billion for the twelve months ended September 30, 2018.

Free cash flow, which excludes the impact from JD Baitiao receivables included in the operating cash flow, for the twelve months ended September 30, 2019 increased to RMB15.6 billion (US$2.2 billion), compared to outflow of RMB5.5 billion for the twelve months ended September 30, 2018.

JD net revenues for the fourth quarter of 2019 are expected to be between RMB163 billion and RMB168 billion, representing a growth rate between 21% and 25% compared with the fourth quarter of 2018.

3 popular models of social e-commerce in China

Following Double 11 2019, the last major shopping festival is Double 12. Alibaba’s Taobao of Double 12 will focus on live broadcasting; everyone is the host and everything can be broadcasted. Interesting content will become a huge highlight of Double 12 on Taobao.

Live broadcast is not necessarily limited to a single “product”; orchard, factory assembly line, … can also be used to push product sales.

Hosts competition is also a major highlight during this year’s Double 11. The winner of the daytime session will get the chance to join the top hosts in the evening.

Industrial live broadcasting is another important theme for this year. From December 1 to 8, Taobao Live will carry out 8 consecutive days’ direct supply of industrial goods. In addition, it will also empower the hosts of local industrial resources.

The theme of Taobao double 12 this year is creativity and personalization. In addition to “20 yuan off 200 purchase”, small and medium-sized businesses on Taobao could deeply tap the diverse needs of young consumers.

Different from previous years, this year’s Double 12 Alipay Lifestyle Festival was started by Alipay jointly with platforms in Alibaba’s ecosystem including Koubei, Ele.me, Taopiaopiao (movie tickets platform), and OTA Fliggy.

Compared with e-commerce, the promotion of retail store will launch on the day of “Double 12”, and citizens are more willing to go to the physical store for consumption.

JD Double 12 2019

On November 22, Jingdong announced the strategic upgrade of large import business, integrating its cross-border goods and general trade import goods, and having officially launched the first domestic consumption platform focusing on large import business – Jingdong International, a one-stop consumption platform for imported goods.

JD started warming up for Double 12 on 1 December with the theme of “12.12 JD Warm Festival”.

Pinduoduo

Pinduoduo announced that its “global shopping” business has set up “global shopping overseas stations” in the United States, UK, Germany, and Japan, targeting Black Friday shoppers through comprehensive measures such as global direct purchase, free trade zone direct shipping, free delivery, and RMB 10 billion subsidies.

From midnight on November 28, nearly 500 international brands and more than 20,000 international popular imported goods started cross-border shopping for six days.

Pinduoduo offers 30 yuan off every 159 yuan purchase for Double 12. It also launched authentic product insurance in combination with PICC insurance to ensure that the “10 billion” subsidized brand are authentic and genuine.

China Double 11 best-selling brands