Expanding in China’s less-developed cities
Last year was mixed for JD.com (JD). While its revenue rose ~28% to $67.2 billion, the company swung into a loss of ~$400 million from a profit of $18 million in the previous year. Could this year be better for JD?
To improve, JD is planning to expand in China’s smaller cities. A year ago, JD launched a group buying platform, Pingo, which executives said at JD’s earnings conference last month was a hit in smaller Chinese cities. To build on Pingo’s success, JD wants to bring more products to the platform this year. Pingo is JD’s answer to Pinduoduo (PDD), the high-flying Chinese e-commerce company that lets people team up to make bulk purchases to enjoy steep price discounts. Revenue rose ~380% year-over-year at Pinduoduo in the fourth quarter.
Opening more offline businesses
JD’s other big plan for this year is to open more offline operations. It already targets Chinese consumers’ grocery budgets through an offline supermarket chain. Alibaba (BABA), which also runs a supermarket chain, partnered with Kroger (KR) last year to sell the latter’s brand of grocery products to Chinese consumers.
To achieve its expansion goals, JD plans to hire 15,000 new workers this year for roles in retail, logistics, and more, according to China Daily. JD exited last year with 178,000 employees, compared with 157,831 employees at the start of the year. Alibaba (BABA) and Amazon (AMZN) closed 2018 with 101,550 employees and 647,500 employees, respectively.