2017 Double Eleven Later, Liu Qiangdong: Jingdong Logistics Will Continue To Innovate.

The growth of clothing category is almost stagnant because of competition with friends and businesses.

In response to Goldman Sachs Group analyst Ronald Gon (Ronald Keung) about the third party platform business competition strategy, Liu Qiangdong said, I believe that all investors have noticed a lot of media reports, Jingdong is indeed facing the very difficult "two election one" unfair competition in clothing category.

In fact, since the second quarter, more than 100 Chinese local clothing brands have been forced to withdraw from the Jingdong platform because they are too weak and international brands have not withdrawn.

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In terms of category, the overall GMV growth has almost stagnated.

But in the long run, from the first day of its establishment, Jingdong will face a "two election one" every two to three years. This time the clothing category "two election one" is not the first time we face such a situation, and I believe it will not be the last time.

From the earliest IT digital products, we faced "two elections". Later, when we launched the book products, we experienced two years of "two elections". The household appliance business has gone through three years of "two election". But today, whether IT digital or books or appliances, Jingdong has finally become the absolute first place on the Chinese line.

In the fourteen big categories, we have made China's first place among twelve of them. Only two categories of home textiles and clothing, we are not the first.

We will hold a small investor meeting tomorrow, which will be more detailed at that time, because today's time is limited.

In a word, for us, the growth of brand manufacturers is not limited to the growth of sales, but also the growth of brand building and the growth of net profit. This is the core factor for attracting partners to cooperate with us for a long time.

Whether in the past books or household appliances, we always insist on allowing partners to get the most benefits, so eventually they are on our side.

Today, in clothing category, we are not the largest platform. The scale may be only 1/3 or 1/5 of the main business, but we can interview any clothing brand. Their net profit on Jingdong is not less than that of their friends. This will become an important attraction for our close cooperation with the clothing brand.

Therefore, in any category, when we threaten the main business, we will face the competition of "two elections". This is almost the last time.

Clothing category is the fastest growing category in Jingdong in the second quarter. The growth rate of clothing category in the third quarter and the fourth quarter will almost stagnate. But I believe that our time will not exceed three quarters, mainly in the third quarter and the fourth quarter of this year. By the first quarter of next year, there will be countless ways to accelerate the growth of clothing categories.

Most importantly, we can see that all the clothing brands that did not withdraw from the Jingdong platform today, such as some international brands, their growth rate in Jingdong, especially in the "double eleven" period, has also reached the worst growth rate of 200%.

This fully illustrates the entire Jingdong platform for this.

The purchasing power is very strong.

The last thing I want to share with you is that in the last few quarters, all female products in Jingdong have performed well. Although all the GMV of clothing category has not increased, all other female categories are accelerating. Apart from the clothing category, jewelry, cosmetics, food and maternal and child products all female categories have accelerated growth in the past few quarters, which has become the main driving force for the overall growth of Jingdong. This shows that more and more female consumers join the Jingdong platform, trust Jingdong and likes to play the role of consumption and shopping.

When the Jingdong platform has more and more female users, the sales growth of clothing brands is inevitable.

The contribution of international brands is still relatively small.

In response to Eddie Leung, a US bank analyst at Merrill Lynch, about the revenue contribution of different product categories, Huang Xuande said that the high-end brand profit margins of daily products were quite good, and this is also the result of Jingdong's efforts to attract international brands this year.

On the whole, the contribution of international brands to the company's revenue is still relatively small, although it will have a positive impact on profit margins, but this effect is not significant in the short term.

"My problem is also related to profit margins," Alicia Yap Alicia Yap said. "In particular, the third quarter gross margin.

The driving force of gross profit margin improvement this quarter seems to come from Jingdong's proprietary business. Is this because the third quarter is off season, there is no large-scale promotion, or is it because of the changes in the company's revenue from different categories? In view of the company's annual net interest rate of 1% to 1.5% before 2017, and now still maintaining this expectation, since the profit margin of the third quarter exceeds expectations, does it mean that the net interest rate in the fourth quarter relative to the three quarter will have a relatively large decline?

Huang Xuande indicated that there were three reasons for gross profit margin growth in the third quarter.

First, in the proprietary business, the cost of procurement has been declining due to the economies of scale, which has been the main reason for the increase in gross margin of Jingdong. Second, because Jingdong has provided better products, user participation and brand participation have performed well, and the profitability of the entire platform has been improved.

Even though Jingdong did not have large-scale promotional activities in the third quarter, gross margins increased compared to the second quarter.

For the fourth quarter, Jingdong did not provide any single quarterly profit margin forecast, but if you want to make a reference, the fourth quarter is more comparable with the second quarter, because there are also very large-scale promotional activities in the second quarter.

Liu Qiangdong added that in terms of long-term strategy,

We all hope that the net profit of the company will increase steadily every year, but we do not have any wish to make a substantial increase in net profit in a short time.

If we perform very well in the last quarter, we will increase investment in the next quarter, so long as we can ensure that the net profit will increase a certain proportion every year.

In the long run, we will take 30%-40% out of the net profit above our expectations and invest in growth. More than half of it will be invested in technology.

It will establish a full channel and all-round cooperation with Tencent.

Morgan chase analyst Alex Yao (Alex Yao) said in a question: "my problem is related to user growth.

In the third quarter, Jingdong users grew by 34% over the same period last year. What is the main driving force for user growth? Is it because marketing promotion is due to the expansion of products that are more popular with female users, such as fast food products? In addition, we want to know about the latest contribution of Tencent traffic to Jingdong. How does Jingdong attract users from social networking products to its own platform through data exchange and product integration? What is the trend of user growth in the next few quarters?

Liu Qiangdong replied, "the growth of Jingdong users mainly comes from two aspects.

The first is the rapid growth of female users, the second is the rapid growth of low tier cities, that is, three to six line urban users.

In the past, we are relatively weak in these two aspects compared with friends, and we have made great efforts in the past two years, and now the effect is also very significant.

Over the past few years, our cooperation with Tencent has been very good, and now we are getting deeper and deeper.

Recently, our two companies have decided that the cooperation between the two sides is not only limited to online traffic cooperation, but also gradually penetrated into the line, that is, full channel and all-round cooperation.

Jialong Shi, a Nomura Securities analyst, said in a question that the agreement between Jingdong and Tencent appears to have expired in early 2018. The two companies will certainly extend such an agreement.

According to the current agreement of Tencent and Jingdong, Jingdong does not need to pay any cash fees to Tencent for the traffic from WeChat and QQ.

Then, in the new cooperation agreement, does Jingdong need to provide cash charges for such diversion? Second questions, Liu Zonggang mentioned.

By the end of the first quarter of next year, will Liu be able to talk about what kind of measures he will take?

Liu Qiangdong said, first of all, the contract between Jingdong and Tencent will not expire until 2019, which is far from being negotiated.

But in any case, we all have priorities.

If we talk about it, I believe we will have the best conditions. If it can not be done, it must be because there is a better choice.

But one thing is certain that our cooperation with Tencent may change, but the cooperation between our two countries is bound to continue.

As for the growth plan of clothing category, it is difficult to disclose specific business plan because of the most intense competition with friends.

Over the past decade, our commitment to investors has finally been fulfilled.

Southeast Asian market remains the focus of overseas expansion

In response to domestic and overseas M & amp; acquisition strategies, Huang Xuande said that Jingdong would adopt a more prudent strategy in mergers and acquisitions. Jingdong set up a joint venture in Indonesia, and recently announced cooperation with Thailand's Shang Tai Group to set up a joint venture with similar shareholding structure. We hope to make Jingdong technology and

The experience is combined with the experience of international partners in the local market and the understanding of local consumers.

So this is a more conservative model, but it is also an effective way to develop the international market.

For now, Jingdong will focus on the Southeast Asian market. After gaining valuable experience, it will accelerate the pace of development in the region.

Huang Xuande added that in terms of domestic investment, our strategy is also consistent with that before. Jingdong hopes to invest in its own ecosystem, so as to achieve synergy between Jingdong and the invested companies.

Obviously, we have a very good distribution channel. At the same time, we are developing the company's technology to help partners grow together, so our investment may also be in terms of technology, and not only for investment in the company's internal R & D capability, but also for acquiring a minority stake in other leading companies in other technologies, so that Jingdong can make use of their technology.

Jingdong has two advantages in developing B2B business.

In response to the question of Jingdong cooperation with WAL-MART, John Choi, analyst at Da he securities, Liu Qiangdong said that Jingdong is discussing the possibility of online and in-depth cooperation with WAL-MART.

In addition, when clothing category is faced with "two choices", the loss is mainly GMV and commission income, but Jingdong's ARPU value, repeat purchase rate and visitor number are in very healthy growth.

Some brands' advertising investment on Jingdong platform has not been reduced, and even some brands have been temporarily closed, but they still do various advertisements on Jingdong.

Jingdong is hardly affected by this income.

Jingdong has 300 million active users this year, and almost all of the 300 million users come from China's middle class and high-end families.

For users like this, I believe no brand will give up easily.

In reply to the Jingdong's strategy and competitive advantage in the B2B business, Liu Qiangdong said that the new channel Department of Jingdong, the application product called "treasurer treasure", is actually facing the Chinese wife and wife store, which is a very small convenience store. We have opened nearly 10000 by the end of this year, and only 1111 on the "double eleven" day.

Jingdong has two advantages, the first is the supply chain advantage, because Jingdong has proprietary business, and many brands do B2C business models on Jingdong.

Such as Procter & Gamble and Unilever.

Therefore, we will help businesses who have already worked with Jingdong platforms and set up their own terminal retail stores.

The second is logistics advantage.

By the end of this year, Jingdong logistics has covered the entire population of China, and every village will have our own logistics.

Nowadays, the logistics equipment of Jingdong will enter the village level one day, so when we do "new access", we have another advantage. That is, for us, the cost of entry is almost zero, and the supply to local small businesses is almost negligible.

For companies without this logistics system, if they want to cover these corner shops, their logistics costs will be very high.

Will continue to innovate in logistics.

Thomas Chong, an analyst at Credit Suisse, said in a question: "my question is related to Jingdong logistics. Can you tell me about the future of this business?" (Thomas Jean)

As competitors increase their investment in the logistics sector, competition will become more intense in the next few years. How will Jingdong differentiate itself from competitors? "

Liu Qiangdong expressed this.

It is self integration and full process logistics service. After ten years of investment, by the end of this year, the regional expansion of Jingdong logistics in mainland China has ended, because we have covered one hundred percent of the population.

Therefore, in the future, Jingdong will improve the logistics system from three lines.

The first line is to reduce logistics costs by increasing orders and order density.

Second, from the beginning of this year, Jingdong will vigorously develop the third party logistics service. Our goal is to let Jingdong logistics more than half of its revenue come from merchants outside the Jingdong system within five years.

In just two quarters, more than 100 large brands have been using Jingdong's logistics services.

Third, we will continue to innovate in logistics. We will not only maintain speed advantages and service advantages, but also carry out a lot of innovations. For example, we recently introduced cold storage cold chain and whole process temperature monitoring services, which have brought great surprises to our customers and made our customers more comfortable with our services.

Through dada, a company invested by Jingdong, we will also develop vigorously.

Such a new business.

With the deepening of our unbounded retail solution with Tencent, we believe that quite a few brands will be shipped in the future. Most of today's clothing brands, such as some clothing brands, are shipped from warehouses, and more than half of them will be shipped through stores.

City Express will become an important way to attract customers to create value and reduce customer costs in the future.

Of course, we also built the world's first unmanned and 100% automated B2C warehouse. Our UAV has been flying for more than 170 thousand hours. At the end of this year, we use UAV delivery in more than 100 universities in Beijing.

All of these are the fruits of our massive investment in the past many years.

I believe there will be a lot of innovation in Jingdong logistics in the future, which will continue to bring many surprises to you.

There is also a set of figures that we have never announced before. Now we share with you that Jingdong's driverless logistics vehicle only needs five hundred times of artificial interference at most two times per vehicle.