Alibaba and JD.com Boast Big Numbers

Alibaba Group and JD.com both released quarterly sales results this week that show ecommerce in China shows no signs of slowing down.

For the second quarter of 2016, JD.com reported Wednesday that net revenues of RMB65.2 billion (US$9.8 billion), representing a 42% increase from the same period in 2015. Net revenues from online direct sales increased by 40%.

JD.com said GMV from the online direct sales business was RMB94.7 billion in the second quarter of 2016, which ended June 30, up 46% from the second quarter of 2015. GMV from the online marketplace business, excluding virtual items, totaled RMB62.5 billion in the second quarter of 2016, an increase of 62% from the second quarter of 2015.

JD.com’s fulfillment expenses, which primarily include procurement, warehousing, delivery and customer service expenses, increased by 57% to RMB5.1 billion (US$0.8 billion) in the second quarter of 2016 from RMB3.3 billion in the second quarter of 2015. Fulfillment expenses as a percentage of net revenues increased to 7.8% compared to 7.1% in the prior year period primarily due to the strategic expansion into the consumable product category, which has lower average order size.

Marketing expenses for JD.com increased by 31% to RMB2.6 billion (US$0.4 billion) in the second quarter of 2016 from RMB2.0 billion in the second quarter of 2015. Its technology and content expenses increased by 71% to RMB1.3 billion (US$0.2 billion) in the second quarter of 2016 from RMB0.8 billion in the second quarter of 2015.

As of June 30, JD.com operated 234 warehouses with an aggregate gross floor area of approximately 5.2 million square meters and a total of 6,756 delivery stations and pickup stations across China, and its delivery network covered 2,639 counties and districts. JD.com had approximately 100,000 merchants on its online marketplace and a total of 113,679 full-time employees as of June 30.

In June, JD.com and Walmart announced a strategic alliance to better serve consumers across China through a powerful combination of e-commerce and retail. The two companies will collaborate on e-commerce, including further building the Yihaodian brand and business, launching a Sam’s Club flagship store on JD.com, pursuing O2O initiatives, and leveraging one another’s supply chains to increase product selection for customers across China.

In July, JD.com and Lenovo expanded their existing relationship with the announcement of a new multi-year partnership designed to address the growing online demand for Lenovo products from consumers and businesses throughout China. As part of the agreement, JD.com will become the preferred platform for Lenovo to debut strategic products, and the two companies will leverage each other’s strengths to collaborate on precision marketing and expanding rural outreach.

On Thursday, Alibaba announced its China retail marketplaces revenue was RMB23,383 million (US$3,518 million) for the quarter ended June 30, an increase of 49% year-over-year. Mobile revenue for its China retail marketplaces was RMB17,514 million (US$2,635 million), an increase of 119% year-over-year, representing 75% of its total China retail marketplaces revenue.

GMV transacted on Alibaba’s China retail marketplaces was RMB837 billion (US$126 billion), an increase of RMB164 billion (US$25 billion), or 24% year-over-year, with mobile GMV accounting for 75% of total GMV.

Revenue from Alibaba’s international commerce retail business in the quarter was RMB1,117 million (US$168 million), an increase of 123% compared to RMB501 million in the same quarter of 2015. The increase was primarily due to the consolidation of Lazada in mid-April 2016 and also due to the growth in revenue generated from AliExpress.

Revenue from Alibaba’s international commerce wholesale business in the quarter was RMB1,432 million (US$216 million), an increase of 15% compared to RMB1,245 million in the same quarter of 2015. The increase was due to growth in revenue generated by the import/export related value-added services.

In the June quarter, Tmall Global’s GMV growth exceeded 130% year-over-year, driven by strong growth across categories, including FMCG, digital devices and home appliances. We have also enhanced merchant recruitment efforts in U.S., Europe, Japan, Korea, Australia and New Zealand, particularly in categories of food and personal and health care.

Tim Parry is Multichannel Merchant’s Managing Editor, and the lead programmer for Growing Global.

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