On June 8, JD Group (京东) announced on the Hong Kong Stock Exchange that it officially launched its public offering at 9 am that day ^[1]. The public offering price is no more than 236 Hong Kong dollars per share. The expected pricing date is June 11. JD also announced it would go public for the second time in Hong Kong on June 18. In terms of shareholding structure, Liu Qiangdong (刘强东), chairman and CEO of JD.com, holds 15.1% of JD, while Tencent (腾讯) holds 17.8% and Walmart 9.8%.

Financial Performance

In fact, as an e-commerce head player, JD has been losing money for 15 years ^[2]. But since last year, the tide has turned. According to the 2019 annual report ^[2], JD's sales revenue reached 576.9 billion yuan ($86 billion), outpacing Alibaba's by nearly 70 billion yuan ($10 billion). In terms of GMV (gross merchandise volume), JD's total GMV in 2019 exceeded 2.1 trillion yuan ($313 billion).

In the first quarter of 2020, JD's revenue was 146.2 billion yuan, up 20.7% from a year earlier, and its operating profit was 2.3 billion yuan, up from 1.2 billion yuan a year earlier, according to the prospectus.

Core Competency: Logistics

According to the prospectus, the proceeds from the global offering will be used to invest in supply chain innovation. JD has already shown great foresight to invest heavily in improving and establishing a comprehensive supply chain solution. When Liu Qiangdong started doing logistics, Ali had not even established their own logistics arm Cainiao (菜鸟, the name of Ali's logistic business).

In 2016, JD acquired Dada (达达). Dada Group is now listed on the Nasdaq exchange ^[3].

Dada Group's net loss from 2017 to 2019 has been more than 1 billion yuan. Although Dada is still losing money, many investors think it has a very clear business strategy and is willing to provide financial support.

At present, JD logistics infrastructure covers 89 cities in China and has more than 700 warehouses. In terms of human resources, JD has a team of more than 132,200 distribution personnel and 43,700 warehouse employees, making logistics the largest part of the company's 260,000 employees. During the Covid-19 epidemic, JD transported 50 million pieces of emergency supplies, amounting to more than 15,000 tons.

Old Rival & New Battles

When it comes to E-commerce in China, Alibaba and JD are the two major players, and for this reason, the two are often compared. Although both are top players in the e-commerce market, there are essential differences: JD has products, while Alibaba focuses on providing services. Compared with the revenue scale, JD's revenue has exceeded Alibaba's since 2018, and JD surpassed Alibaba's by nearly 70 billion yuan in 2019 ^[2].

***Due to their business models being different, the size of the two companies cannot be judged by revenue.

Even though JD has surpassed Alibaba in total revenue, it still has a lot of room to grow in its main business. JD also has opportunities and potential for development in these fields:

• Offline: New retailing

After Jack Ma proposed the new retail concept in 2016, Alibaba accelerated developing its offline presence. For example, Hema(盒马鲜生)，Tmall offline store (天猫小店), etc. These offline stores are now a prominent retail presence in most large cities. By contrast, JD's offline business has developed slowly. Thus, the company aims to build JD offline supermarkets and has ambitions to achieve 500 billion yuan in revenue ^[2].

• Online: Live-streaming + E-commerce

Compared with Alibaba, JD lacks online traffic, so there is a big gap between JD and Taobao live streaming. Taobao live streaming has produced such influential KOLs as Viya and Austin Li. It is reported that from Feb. 5 to Mar. 2, the total sales of Austin's live streams reached 957 million yuan ($143 million), with the highest number of simultaneous online viewers reaching 58.29 million ^[2].

The inability to generate a large volume of traffic and failure to invest in live streaming is one of JD's current weaknesses. However, as mentioned above, Tencent is one of the significant shareholders of JD. It is reported that JD has reached a cooperation with Kuaishou (Tencent is one of the biggest investors of Kuaishou) to carry out live-streaming e-commerce and marketing ^[4].