JD.com, China’s second largest e-commerce platform after Alibaba, made major announcements regarding its upgraded e-commerce strategy and financing for JD Finance on Wednesday. These announcements came on the heels of the company’s Q4 2015 report on Tuesday where they recorded a quarterly net loss of RMB 7.6 billion (USD 1.15 billion).
Despite the macroeconomic slowdown of China, the consumption growth remains healthy, said Sidney Huang, JD.com’s chief financial officer, Reuters reported.
Although JD.com achieved net revenue of RMB 54.6 billion in the fourth quarter of 2015, an increase of 57% year over year, the company’s quarterly net loss in the same period soared to RMB 7.6 billion, compared to RMB 500 million in Q4 2014. The company said the net loss was connected to the impairment of Paipai.com, an online marketplace that came under fire for counterfeit goods, and other investments recognized during the fourth quarter.
Even with the persisting net losses, JD.com didn’t stop from increasing the pace of expanding its new businesses. It announced on Wednesday the completion of fundraising for its financial subsidiary JD Finance, a sum of RMB 6.65 billion from Sequoia Capital China, China Harvest Investments and China Taiping Insurance. This values JD Finance at RMB 46.65 billion.
JD.com is also rolling out its e-commerce business in China’s rural regions. According to a simultaneous announcement made by Yan Xiaobin, head of JD’s home appliance division, JD.com will scatter home appliance franchise outlets in China’s rural markets.
Yan said they plan to place only one store in each town (the administrative region under county level) letting operators deal with sales only, with supporting services, including storage, delivery, installation and maintenance, provided by JD.com.
JD.com sells products itself and also opens its platform for third-party retailers, selling electronics (mainly phones, computers and their accessories), household appliances and household goods.
JD.com also uses an Amazon-like model of building its own infrastructure, including warehouses, order-fulfillment centers and a self-operating delivery arm. As of the end of 2015, JD.com has set up 213 bulk warehouses in 50 cities and 5,367 order-fulfillment centers.
(Top photo from http://www.zuixitong.com)