How JD.com Is Looking to Diversify Revenue

While e-commerce remains JD.com’s (JD) primary business segment, the company is looking to diversify its revenue streams. JD.com is targeting verticals like logistics to drive revenue growth. Though it’s a low margin business, JD.com is optimistic about gaining rapid traction in this space. In the first quarter, JD.com’s Logistics and Services revenue rose 91% year-over-year.

JD.com is also investing heavily in opening physical retail stores. Back in 2017, JD.com CEO Liu Qiangdong had also announced that the company would open a million convenience stores by 2022.

It’s now looking to triple the number of small stores to 15,000 and will later invest in building large scale stores with a bigger footprint. China is set to displace the United States as the biggest retail market by the end of 2019, so this might not seem like a bad idea.

However, is retail a good option when consumers will eventually shift to online purchases? Opening physical retail stores requires a great deal of capital, which will again hamper the company’s bottom line.

JD.com has entered emerging markets in South East Asia including Vietnam, Indonesia, and Thailand. A partnership with Walmart (WMT) might bear fruit and will give the company access to the US market as well.

Last June, Google (GOOGL) pumped $550 million into JD.com as it expects the latter to take advantage of China’s growing market.