E-commerce platforms resumed growth in the first quarter, and after Alibaba, JD.com delivered a surprising financial report. On May 16th, JD.com released its financial report for the first quarter of this year, with a revenue of 260 billion yuan, a year-on-year increase of 7%, a significant rebound from 1.4% in the same period last year, and outperforming the growth rate of total retail sales of consumer goods in society. The sales revenue of core products was 208.5 billion yuan, a year-on-year increase of 6.6% and a month on month increase of 2.9%. Surprisingly, the revenue of daily necessities increased by 8.6% year-on-year to 85.3 billion yuan in this quarter, after transitioning from negative to positive in the fourth quarter of last year.
E-commerce platforms are returning to the essence of retail and increasing investment around user experience. Last year, JD.com only launched services such as refunds and lowering the threshold for free shipping, and sponsoring Spring Festival Galas led to increased marketing expenses, which has raised concerns about its profitability. The financial report shows that JD's profit in the first quarter was not bad. The operating profit increased by 19.8% year-on-year to 7.7 billion yuan. JD Retail's operating profit was 9.33 billion yuan, a year-on-year decrease of 5%, higher than market expectations of 8.3 billion yuan.
Revenue from daily necessities increased by 8.6%
In the first quarter of this year, the total retail sales of consumer goods reached 12032.7 billion yuan, a year-on-year increase of 4.7%; The national online retail sales reached 3308.2 billion yuan, a year-on-year increase of 12.4%. After more than a year of adjustment, the main goal of e-commerce platforms in the first quarter was to restore growth. In terms of revenue, JD's revenue in the first quarter increased by 7% year-on-year, not only outperforming social zero, but also far higher than the 1.4% in the same period last year.
In terms of revenue structure, the sales revenue of goods increased by 6.6% year-on-year to 208.5 billion yuan, which has resumed growth compared to the same period last year and is consistent with external expectations. Specifically, the revenue of daily necessities increased significantly in the first quarter of this year, with a year-on-year increase of 8.6% to 85.3 billion yuan, exceeding expectations. This portion of revenue showed negative growth in the first, second, and third quarters of last year, and turned positive in the fourth quarter. 3C's household appliance revenue was 123.11 billion yuan, a year-on-year increase of 5.3%. The growth rate of this portion of revenue in the fourth quarter of last year was 6.1%, which slowed down compared to the previous quarter.
This is related to the JD Power Supermarket category. At the financial report conference call, Xu Ran, CEO of JD Group, stated that in the first quarter, the supermarket category quickly recovered, driving the sales revenue of daily hundred products back to normal growth, achieving a growth rate faster than the corresponding category in social zero. In terms of business strategy, JD.com focuses on improving the ability of supermarket categories, deepening segmented category operations, and reducing procurement costs. "We are confident in the growth of the supermarket category, which will once again become an important driving force for JD's growth."
At the same time, she also said, "Recently, we have found that some categories that we believe have high online penetration rates, such as computers and home appliances, have a potential higher online conversion rate than previously estimated. We believe that there is still room for improvement in the future online conversion rate."
JD.com has been promoting the construction of its platform ecosystem, attracting third-party merchants to settle in through free commission and other forms. In the first quarter, platform and advertising revenue reached 19.3 billion yuan, a year-on-year increase of only 1.2%. At present, the platform ecological construction is still in the investment period.
In addition, JD Logistics generated a revenue of 42.13 billion yuan, a year-on-year increase of 14.7%, slightly higher than expected.
Quarterly active users have surprised profits with double-digit growth for two consecutive quarters
In the new competitive cycle, e-commerce platforms are returning to their main business and focusing on improving user experience. JD lowered the free shipping threshold for the first time at the end of August last year. The free shipping threshold for ordinary users was lowered from 99 yuan to 59 yuan, and JD PLUS members were free of shipping throughout the year. Afterwards, JD.com launched services such as "refund only" and "free door-to-door return and exchange". At the same time, in order to create a low price mentality for users, JD.com has increased its investment by providing billions of yuan in subsidies and sponsoring Spring Festival Galas, which has raised concerns about profits from the outside world.
In the first quarter of this year, JD's operating profit increased by 19.8% year-on-year to 7.7 billion yuan. JD Retail's operating profit was 9.33 billion yuan, a year-on-year decrease of 5%, higher than market expectations of 8.3 billion yuan. Under heavy investment, profits exceeded market expectations, which was a major highlight of the financial report.
JD's first quarter financial report this year showed an increase in expenses, with marketing expenses of 9.3 billion yuan, an increase of 1.3 billion yuan compared to the same period last year. The proportion of marketing to total revenue was 3.6%, compared to 3.3% in the same period last year, without significant overspending. The performance fee increased by 9.3% year-on-year to 16.8 billion yuan, higher than the growth rate of commodity sales revenue. However, while the cost increases, JD.com continues to reduce costs and increase efficiency. In the first quarter, research and development expenses decreased by 3.6% to 4 billion yuan. General administrative expenses decreased from 2.5 billion yuan in the first quarter of last year to 2 billion yuan, mainly due to a decrease in equity incentive expenses.
Regarding this, Zhang Yi, Chief Analyst of iMedia Consulting, told Southern Metropolis Daily that JD's series of actions such as lowering the threshold for free shipping have played a role in stabilizing performance and retaining users, forming a differentiated advantage. Although the fulfillment cost has increased, in the long run, JD's revenue and user growth will benefit.
It is understood that through continuous optimization of user experience, JD.com achieved a significant improvement in various user indicators in the first quarter. The number of active users in the quarter has maintained double-digit year-on-year growth for two consecutive quarters, and the frequency of user shopping, NPS (Net Recommended Value), and the number of users in lower tier cities are all significantly increasing.