JD.com Grows Faster Than Wider Chinese Ecommerce Sector

Posted by on Jul 31st, 2017

Reports indicate that Alibaba’s rival, JD.com, is growing at a faster rate than the wider ecommerce sector in China. This is being attributed to an expansion of the product line in order to entice wealthy shoppers as well as widening its appeal among women.

The second largest online retailer in China has also made efforts at ensuring that its product offerings with regards to gadgets and food items are the latest and of the best quality. In 2017 the ecommerce sector in China is expected to grow at a rate of 19% compared to six years ago when the growth rate was over 70%. This is according to a report by McKinsey & Co.

First quarter report

Two months ago when JD.com reported earnings for its first quarter, revenue came in at $11.1 billion while adjusted earnings were 15 cents per share. Consensus estimates from Wall Street had been expecting adjusted earnings of one cent per share and revenues of $10.6 billion. The number of annual active customers rose by 40% to reach a figure of 236.5 million while the gross merchandise volume increased by 42% to reach a figure of $26.7 billion.

“The strong results across the board reflect that the Chinese market is embracing our model of a high-quality online shopping experience. China’s increasingly discerning consumers are migrating en masse to our unwavering vision of online retail…” said the chairman and chief executive officer of JD.com, Richard Liu, back in May when unveiling the results.

Stock growth

Since the start of the year shares of JD.com have appreciated by close to 80%. The next set of quarterly results are expected next month on 9th. At its current rate of appreciation, which has seen its market capitalization reach a level just $5 billion lower than Baidu’s, JD.com has the potential to eclipse the Chinese search giant in market value in the course of the year.

According to China Merchant Securities International analyst, Richard Ko, this is an indication that the ecommerce sector is growing at a faster rate in China compared to the search market, the core business of Baidu.

Initially JD.com started out dealing specifically in electronic items. It has since then diversified and is increasingly stocking items that appeal to high-end shoppers. To increase its bets in that niche, the Chinese online retailer recently invested $397 million in Farfetch, an online marketplace operating in the United Kingdom which focuses on premium goods.