SHANGHAI — Growth in China’s lower-tiered cities boosted JD.com’s revenue for the third quarter ended Sept. 30 to 134.8 billion renminbi, or $18.9 billion, an increase of 28.7 percent year-over-year, the highest growth rate in the last five quarters.
However, net income attributable to ordinary shareholders was 612.3 million renminbi, or $85.7 million, down sharply from 3 billion renminbi for the same period last year.
“We are seeing particularly rapid new customer growth in lower-tier cities, with more than 70 percent of new customers from lower-tier cities during Q3,” the company said. Annual active customer accounts increased to 334.4 million in the third quarter, up from 321.3 million.
In September, JD.com launched its group-buying platform, Jingxi, to directly counter the fast growth of Pinduoduo, a company whose market cap recently exceeded that of JD.com’s. Pinduoduo is known for its ultra-cheap products and its social, group-buying model in which product prices are lowered for each friend that a user invites to join in the deal.
Over the Singles’ Day sales period, which concluded four days ago, JD reported 204.4 billion renminbi, or $29.2 billion, in gross merchandise value, nearly matching the amount recorded by Alibaba last year. This year, Alibaba raked in $38.4 billion, although its cofounder Jack Ma said it undershot internal expectations.
JD.com shared that it was able to cover 90 percent of the nation with same or next-day delivery speed during the Singles’ Day promotional period.
“Chinese consumers don’t seem too anxious about spending,” the company said. “When they open their wallets and purses, they seek quality — whether it’s in lower-tier or upper-tier cities.”
Among lower-tier cities, the top five categories over the last three years were: home appliances, mobile phones, desktops, sports, baby and maternal products, while the fastest-growing categories for the region were luxury products, furniture, sports and apparel, curling irons, smart toilets.
It also debuted E-Space on Nov. 11, an electronics experience store in Chongqing located in the country’s southwest, its largest and most bold attempt at an omnichannel experience.
“Chinese consumers generally visit electronic stores with a clear plan to buy a certain product, so they are not in the habit of walking around to browse and to play and experiment,” the company said. “However, JD E-Space encourages experimentation through an immersive shopping experience that is unusual to see in one place.”