This article is reproduced from IT House
On the evening of March 11, JD.com released its fourth quarter and full-year financial report for 2020.
The financial report shows that in the fourth quarter, JD.com's total revenue was 224.3 billion yuan, a year-on-year increase of 31.4%. Among them, net service revenue was 32.1 billion yuan, a year-on-year increase of 53.2%, and the proportion of total revenue also reached a new high, reaching 14.3%.
Compared with the revenue growth rate, JD.com's operating profit only increased by 12.4% year-on-year to 590 million yuan, which was less than the expected 850 million yuan. In the fourth quarter, Jingdong’s net profit was 24.3 billion yuan (approximately US$3.7 billion), compared with 3.6 billion yuan in the same period in 2019, a nearly 7-fold increase year-on-year. The financial report explained that the reason for the increase was “the price increase of listed companies in the equity investment market The resulting increase in net income" means that Jingdong made money mainly by "speculating" its own company stocks.
Last year (2020), JD’s total revenue was RMB 745.8 billion, an increase of 29.3% over 2019. The annual net service income was 93.9 billion yuan, an increase of 42.0% over 2019. The operating profit for the whole year of 2020 was 12.3 billion yuan, a year-on-year increase of 36.7%. Net profit was 49.34 billion yuan, a year-on-year increase of 315%, of which the income from equity investment reached 32.6 billion yuan, accounting for more than 60% of the total profit.
Because the performance exceeded expectations, JD.com's US stocks rose more than 10% before the market. As of the close, JD’s gains narrowed to 0.76%, with a total market value of 907 billion yuan.
"Self-operated and open" slow results
"Self-operating and opening up" has been the main theme of JD.com's retail business in the past year, that is, all self-operating operations, data, and marketing tools are open to third-party merchants.
"Last year, the number of merchants and the renewal rate of JD.com's open platform increased significantly. At the same time, JD.com also retired some low-quality and inefficient operators on the platform." Jingdong Group CEO Xu Lei said on the earnings call.
From the specific data point of view, in the third quarter of last year, Jingdong's net service revenue has increased significantly, increasing by 42.7% year-on-year to 22.82 billion yuan, and its proportion of total revenue has also increased from 11.9% to 13.1%. In the fourth quarter, Jingdong’s net service revenue accounted for a record 14.3% of total revenue, an increase of 53.2% to 32.13 billion yuan.
However, the increase in the proportion of net service revenue is not due to the increase in commission and advertising revenue brought about by the open platform, but is mainly due to the rapid growth of the logistics business.
In the whole year of last year, JD’s advertising revenue growth rate was only 25.3%. In contrast, the growth rate of logistics and other revenue reached 72.3%. In the fourth quarter, Jingdong Logistics' revenue growth almost doubled, an increase of 95.3%.
In terms of net product revenue, Jingdong’s base camp 3C digital and home appliances are similar to commissions and advertising, and are also at a relatively low growth rate. Last year, the growth rate was only 22.0%.
It is worth mentioning that JD’s growth rate in the field of general consumer goods is impressive, with an increase of 37.9% last year. This part of revenue is also one of the important driving forces supporting JD’s total revenue to maintain high growth.
In addition, JD.com also disclosed its annual GMV data in its financial report. In 2020, JD.com’s GMV reached 2.6 trillion yuan, a year-on-year increase of 25%, which is basically the same as the 24% growth rate in 2019.
In the conference call, Xu Lei, CEO of JD Retail, introduced JD’s growth history and methods. He said that JD.com initially expanded through categories and around "goods". In the second stage, it focused on crowd expansion to attract sinking markets and female users. Now JD.com is beginning to explore a decentralized business development model, whether it is to The offline expansion still extends to the omni-channel aspect.
At the same time, Xu Lei also revealed the future development plan of JD’s retail business. JD’s “base camp” 3C digital and home appliance business is the first growth curve, and the developing health and industrial product MRO fields are the second growth curve. The track of innovative retail, services and technical services in the early stages of development is the third growth curve.
Heavy bet on community group buying
The 110 million net new users are a number that cannot be ignored in JD’s financial report. According to JD.com, 80% of it comes from the sinking market. In contrast, the proportion of new users of Ali and Pinduoduo in the sinking market is 70%, which shows that JD is more effective in sinking the market.
In December last year, JD.com integrated a series of businesses into the "Jingxi Business Group", including the social e-commerce platform "Jingxi", the convenience store business "Jingxitong" (formerly JD New Channel) and the community group buying business "Jingxi Pin Fight" and Jingxi Express.
In addition, JD.com has also strengthened its supply chain capabilities in sinking markets through business cooperation and strategic investment. In December last year, JD.com announced a strategic investment of USD 700 million in the community group buying e-commerce platform Hunan Xingsheng Optimal. In addition, 798 million Hong Kong dollars participated in the investment in the agricultural product wholesale market operator and the Hong Kong listed company China Dili Group, accounting for about 5.37% of the shares.
Subsequently, in February this year, Prosperity Optimal completed a US$3 billion Series D financing led by Sequoia Capital, followed by Tencent, Fangyuan Capital, Temasek, KKR, DCP, Chunhua Capital, Evergrande, etc. Funding has made Xingsheng Optimal the only startup that can compete with Meituan, Didi, and Pinduoduo.
When it comes to community group buying, I have to mention JD’s old rival Ali. Alibaba is not the first Internet giant to test the waters, but it is the most fierce internal horse racing. In addition to the Shihui Group that invests abroad, Ele.me, Liaotong, Cainiao, Hema, etc. have all explored communities based on their original business. Group buying business, although many but not specialized. However, according to Yibang Dynamics report, after the Spring Festival, Lingxiaowa, the main community group purchase, began to go online in Henan's three cities.
As the teams of major Internet companies gradually become available, community group buying is about to enter a more fierce competition stage.
Some time ago, Didi’s Orange Heart Optimal, Meituan Optimal, Pinduoduo’s Duoduo Maicai, and Alibaba’s participation in Shihui Tuan, etc. have disrupted the normal production and operation order, used false or misunderstood because of low-price dumping. The State Administration of Market Supervision fined 1.5 million each for reasons such as tricking consumers into trading with them.
Although the prosperous selection of Jingdong's heavy bet is not included in the penalty list, the track is not smooth. Not only because of the competition between platforms in terms of funds, strategy, and play, but also because the barbaric play used by the Internet in the past to compete for the market at low prices has been banned by official orders.
Logistics to be listed
In addition to retail-related businesses, JD’s most noteworthy business is JD Logistics, which is still in the process of listing.
This is a project that has been questioned for many years due to losses. For example, Jack Ma once said that JD Logistics "is too heavy for the company, and it will drag JD.com sooner or later."
However, Jack Ma's prediction did not come true. Nowadays, logistics is not only a "signboard" of JD.com, it is also expected to become a "money cow" of JD.com.
In 2018, 2019, and the first three quarters of 2020, JD Logistics' revenues were RMB 37.873 billion, RMB 49.848 billion and RMB 49.5 billion, respectively. Among them, the revenue in the first three quarters of last year increased by 43.2% from 34.576 billion yuan in the same period last year.
At the same time, JD Logistics' losses are rapidly narrowing. In 2018, 2019 and the first nine months of 2020, JD Logistics lost RMB 2.8 billion, RMB 2.2 billion and RMB 11.7 million, respectively.
In November 2016, JD.com announced its opening to the outside world. Subsequently, the proportion of revenue from external customers has continued to increase, from 29.9% in 2018 and 38.4% in 2019 to 43.4% in the first nine months of 2020.
Regarding the openness of JD Logistics, in August last year, JD.com also caused heated discussions due to the suspension of access to Shentong. The explanation given by JD.com was that Taobao has never allowed access to JD Logistics. At that time, it was rumored that Ali or Will become the largest shareholder of Shentong.
As of the end of last year, JD Logistics has operated more than 900 warehouses across the country. Including the cloud warehouse area managed by JD Logistics, the total warehouse area of JD Logistics is approximately 21 million square meters.
The reason why JD Logistics can achieve same-day delivery or next-day delivery is mainly based on the large number of warehouses. Merchants prepare goods to JD’s warehouses in advance, and consumers place orders from the nearest warehouse. The "storage-for-shipment" model Can be realized.
This is the advantage of JD.com, and it also caused JD's insufficient investment in trunk transportation. In order to make up for the shortcomings in air and land transportation, in August last year, JD Logistics acquired Leap Express for a consideration of 5.4 billion. At present, most of the 620 air cargo routes owned by JD Logistics come from Leap Express.
In terms of efficiency growth, JD Logistics' inventory turnover days reflecting the supply chain capabilities continued to drop from 35.8 days in the same period last year to 33.3 days, and the number of accounts payable days also dropped from 54.5 days to 47.1 days.
However, for JD’s heavily betting community group buying, JD’s business synergy is actually not high. The reason is that cold chain and conventional cargo transportation are two completely different systems, and the previous investment is also difficult to reuse.
In addition to logistics, on March 10th, JD.com, a subsidiary of JD.com, which provides infrastructure asset management and integrated services, also received Series A preferred stock financing from Hillhouse Capital and Warburg Pincus. The total amount of financing is expected to be approximately 700 million US dollars.
The purpose of JD.com is to provide financial leasing services for JD.com, that is, to purchase part of the modern logistics and warehousing infrastructure from JD.com and lease it back to JD.com. Up to now, the total asset management scale of the two core funds and development funds of JD.com has exceeded 19 billion yuan.
In fact, Hillhouse Capital has appeared in various projects of the JD series more than once. As early as 2010, Hillhouse Capital founder Zhang Lei invested US$300 million in JD. This was one of the largest single investments in the domestic investment community at that time. In addition, Zhang Lei also led the cooperation between JD and Tencent.
In February 2018, Hillhouse once led JD Logistics’ US$2.5 billion financing to help JD.com develop supply chain and logistics channel optimization. This has also become the largest single financing in China’s logistics industry. JD Logistics was valued at US$13.4 billion after the investment. In the prospectus of JD Logistics, HHJL Holdings Limited, a subsidiary of Hillhouse Capital, holds 2.9% of the shares. According to the current valuation of 40 billion U.S. dollars generally recognized in the market, Hillhouse Capital can obtain a return of about 3 times and a profit of about 50%. 100 million yuan.
In addition to JD Logistics, in August last year, JD Health also signed a final agreement with Hillhouse Capital on the B round of non-redeemable preferred stock financing. Hillhouse Capital has invested more than US$830 million.
JD.com is in the IPO harvest period. Among the four carriages of retail, logistics, technology (a subgroup formed by the merger of JD.com, AI and cloud business), and health, except for the suspension of JD.com’s listing, the rest of the business has been listed or will be listed soon.
But just before the listing, the senior executives of the JD department also ushered in great turmoil: Wang Zhenhui, the former CEO of JD Logistics, resigned due to personal reasons, and Chen Shengqiang, the former CEO of JD Digital, served as the vice chairman of JD Digital and the chief of staff of JD Group. Putting it on the roof," Xu Lei is the only one of the three former Jingdong executives who has the real power. The voice of "Liu Qiangdong coming back" began to rise.
Now, the CEO of JD Logistics is Yu Rui, the former chief human resource officer of JD.com, and the CEO of JD Digital is taken over by Li Yayun, the former chief compliance officer of JD.com. We will wait and see how they will continue to write the story of JD.