Last quarter, Chinese retail giant JD.com experienced its slowest growth since 2014. “Slowest” is very relative, though: sales were still up 18 %, despite the lockdowns and economic deceleration in China.
Consumer confidence affected
The new wave of Covid-related lockdowns in China is weighing heavily on consumption and the economy. A telling example: not a single car was sold in Shanghai in the month of April. The fact that JD.com recorded its slowest revenue growth last quarter since its listing in 2014 should therefore be put into perspective. Earlier, rival Alibaba also experienced its weakest quarter ever.
Overall, JD.com sales still rose 18 % to 239.7 billion yuan (34 billion euros), more than analysts had predicted. The e-commerce company gained market share now that many physical stores are closed again. Thanks to its strong logistics focus, the Chinese retailer usually manages to deliver on the same day, despite the lockdowns.
“JD.com’s robust supply chain capabilities and technology-driven operating efficiency underpinned our solid performance during the quarter as we continued to deliver healthy growth amidst a challenging external environment”, CEO Xu Lei confirmed to CNBC. He nevertheless admits that consumers’ income and confidence have been affected, causing the average purchase price to drop in April and May.
Chinese government eases
The company also reported a net loss of 3 billion yuan (400 million euros). A year earlier, the company still reported a net profit of 3.6 billion yuan. In April, Chinese President Xi Jinping did promise extra support for the platform economy.
However, the Chinese government had previously hit technology giants such as Alibaba and JD.com hard, even threatening to delist JD.com and others. But it is not all bad news: because China has banned exclusivity contracts, JD has been able to bring in brands like Starbucks and Estée Lauder. Before, these could only be found on Alibaba platforms.