By Exec Edge Editorial Staff
Chinese E-commerce giant JD.com, Inc. (Nasdaq: JD) has broken through to the top 50 Fortune Global 500 companies, coming in at number 46 in Fortune magazine’s annual ranking of the biggest public companies in the world.
Rising another 13 places from number 59 last year, this marked the sixth year the company has landed on the list since it became the first Chinese internet company to do so in 2016.
Fortune noted JD.com’s enormous customer base of 570 million across the globe and revenue of $147.5 billion in 2021– an increase of 27.6 percent from 2020 – in its entry for the revenues-based annual ranking. Since debuting on the list at number 366 JD.com has been growing at an increasingly rapid pace, adapting with finesse to technological, environmental and economic changes that have occured in recent years.
Over the past six years, JD.com has undergone a transformation. Operating as a successful e-commerce business for the better part of the past two decades, through heavy investment in research and development and a shift in strategy it has evolved into a supply chain-based technology and service provider.
The company performed resiliently through the Covid-19 pandemic thanks to its strong supply chain capabilities, and has used this to emphasize its ability to contribute to society and the real economy.
Founded by Richard Liu who held the position of CEO until April 2022, JD.com was unique in utilizing purpose and values to drive its company forward long before it was widely known to strengthen a business. Liu began the business in 1998 as a stall selling electronics within Zhongguancun, a tech hub in northwest Beijing, refusing to haggle but guaranteeing all of the products in his stall were authentic and high-quality.
The sentiment was divergent from the consumer market in China at the time where trust was low and counterfeits were rampant, but proved to be a successful strategy for Liu. In five years he had moved up and out of Zhongguancun, turning his business into a chain of electronics stores in multiple cities across China.
It was only in 2003 when the SARS epidemic in China caused similar restrictions and lockdowns that Covid-19 has in recent years that Liu first began selling his products online. Within a year, he had made the decision to close all of his brick and mortar stores and move operations online exclusively.
Today, JD’s product offerings have expanded to Amazon-like proportions, selling everything from groceries in under an hour to luxury goods via a white glove service.
The company went public on the Nasdaq in 2014 and completed a secondary listing on the Hong Kong Stock Exchange in 2020. It has also spawned several subsidiaries including a pharmaceuticals and healthcare branch, JD Health, that went public on the HKEX in 2020, and its logistics business JD Logistics debut on the HKEX in 2021.
In 2020, Richard Liu updated JD.com’s mission to be “powered by technology for a more productive and sustainable world.” The company positions itself as “a new type of real economy enterprise” that possesses both the attributes of the real economy in its DNA including its logistics infrastructures and more, and the technologies and know-hows to serve the digital transformation of tangible businesses.
JD.com currently has over 10 million individual SKUs and an inventory turnover of roughly 30 days. While online retail is still the lifeblood of the company, over the past few years it has been expanding its omnichannel capabilities, returning to its brick-and-mortar roots and opening over 10,000 physical stores across China. It has also opened its products’ supply chains to millions of physical stores in over 300 cities and partnered with more than 150,000 offline stores for on-demand delivery services in less than an hour.
JD.com has collaborated with over 370 additional supermarkets including Walmart and Yonghui, totaling over 34,000 stores and three million SKUs. In Walmart’s case, the US-based company has set up their online shopping portals on JD.com and adopted crowdsourced delivery services powered by Dada Group, a JD-backed on-demand delivery platform.
Chinese Resource Vanguard, one of China’s largest retail chains, adopted the Dada Group program in over 1,800 of their retail chains and by September of 2021 had seen a fourfold increase of transaction volume when compared with six months prior. During the Singles Day(November 11) Grand Promotion in 2021, JD.com further collaborated with over 600 China Resource Vanguard stores, leveraging their on-demand delivery and retail platform to help it achieve a growth of over 400 percent year over year in transaction volume.
The power of JD.com’s retail brand is supported by its network of warehouses, a chain of over 1,400 that span almost the entire Chinese mainland. The warehouses’ combined floor area totals over 25 million square meters, and JD Logistics also manages roughly 50,000 transportation lines and six specialized logistics networks for cold-chain, cross-border, last-mile deliveries amongst others.
This extensive network means that consumers in China can expect the same or next-day delivery service from JD.com. They are able to do so in 94 percent of counties and 84 percent of towns and villages, and are continuously working to grow these percentages. Founder Liu Qiangdong was raised in one of China’s many rural villages and has placed a strong emphasis on making rural revitalization efforts a part of the company’s business operation.
The company has also been gearing up its international logistics networks. It currently runs close to 80 bonded warehouses and overseas warehouses, and its network spans nearly 230 countries and regions. It has also opened automated warehouses in the United States, United Kingdom, Australia and the Netherlands, and has launched cargo flights from China to Thailand, the United States, United Kingdom and more.
JD.com’s proliferation in logistics and products are largely made possible by its decision to invest heavily in technology. Estimates put the company’s spending over the last five years at nearly $12 billion toward research and development. JD.com has applied its achievements in R&D to real-world industries, providing digitally intelligent solutions in a variety of fields, including retail, logistics, supply chain, city planning and more.
Additionally, JD.com’s investment in cloud computing and technology have aided its retail business in handling massive surges in traffic caused by the blockbuster sales events China has become known for such as JD.com’s own 618 Grand Promotion, Singles Day, and the nearly 70 billion hits on its app during China’s Spring Festival Gala Show on national TV early this year. Externally, it is providing services for more than 80 cities, 800 financial institutions, 1,800 large-scale enterprises and over 1.95 million SMEs.
Combined, the three networks of products, warehouses and cloud computing that JD has been weaving over the years enabled its ascent up the Fortune Global 500 list. A strong focus on purpose has seen the company through times of uncertainty and powered it forward toward its goal of contributing to society’s higher efficiency and development.