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TMCNet:  Anniversary promotion helps boost JD.com's Q2 earnings [GCTL Insights Magazine (China)]

[August 12, 2014]

Anniversary promotion helps boost JD.com's Q2 earnings [GCTL Insights Magazine (China)]

(GCTL Insights Magazine (China) Via Acquire Media NewsEdge) BEIJING, Aug 13 (GCTL) - JD.com the mainland's second-largest business-to-consumer e-commerce platform operator, could well be on the fast track to profitability as its net margins improve on the back of a steady increase in mobile users and transactions.


Analysts forecast Nasdaq-traded JD, in which internet giant Tencent Holdings is a major investor, to post second-quarter revenue of US$4.36 billion in its first earnings results announcement as a public company this Friday, before the market opens in the United States.

In a report on Monday, Barclays estimated JD would narrow its net loss in the second quarter to US$10 million, compared with US$13 million in the quarter to March.

Ricky Lai, a research analyst at Guotai Junan International, said JD's strong performance was anchored by its successful "6.18" anniversary promotion, which celebrated the founding of the Beijing-based company in 1998 by billionaire entrepreneur Richard Liu Qiangdong, South China Morning Post reported.

"Other e-commerce providers also launched their own campaigns to counter that promotion, but JD was helped by mobile campaigns with Tencent's widely popular social platforms Mobile QQ and Weixin," Lai said.

Weixin is the mobile messaging application known outside the mainland as WeChat, which has about 400 million users worldwide. Like Mobile QQ, WeChat provides mobile payment services based on Tencent's online payments platform.

The 6.18 promotion was an extended initiative for JD, which had a preliminary launch from May 26 to 31 and concluded the campaign on June 20. Mobile orders accounted for about 25 per cent of JD's total transactions on June 18.

Alicia Yap, lead author of the Barclays report, said the integration of JD's online retail service with Mobile QQ and WeChat "should lead to a fast ramp of mobile traffic and transaction volume growth", boosting margins in the long term because of low mobile user acquisition costs.

JD had 47.4 million active user accounts, 323.3 million total orders and gross merchandise volume worth 125.5 billion yuan (HK$158 billion) last year. Its net loss narrowed to about 50 million yuan last year from 1.7 billion yuan in 2012.

(c) 2014 FocusAsia Media Ltd. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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