Jingdong Has Announced Surprising Profits. The Luxury Business Seems To Have A New Direction.

After the ups and downs of the "6.18" shopping Carnival and the sharp fall in the US stock market, the Chinese electricity supplier giant Jingdong released its second quarter financial year 2019 in the evening of August 13th.

As of June 30th, Jingdong's net revenue reached 150 billion 300 million yuan, an increase of 22.9% over the same period last year, exceeding the analyst's estimate of 147 billion 390 million yuan, while creating a single quarter revenue record. The net profit was 618 million 800 thousand yuan, the operating profit was 2 billion 300 million yuan, and the loss was 1 billion yuan in the same period last year. According to non US general accounting standards (Non-GAAP), net profit attributable to ordinary shareholders is 3 billion 600 million yuan, an astonishing 644%. In advance, Wall Street analysts generally believe that Jingdong will continue to lose money this season. In early trading on Tuesday, Jingdong's share price rose 8%.

Prior to that, Liu Qiangdong, chairman and chief executive officer of Jingdong group's board of directors, was suspected of multiple reversals of sexual assault and collective collapse of US stocks, making Jingdong's stock price confused this year. It also made people pay special attention to the operation of Jingdong in the second quarter.

Jingdong launched the "6.18" Shopping Festival this year, and Liu Qiangdong said: "Jingdong's successful" 6.18 "global Mid Year Shopping Festival has promoted the strong performance of the Jingdong group in the second quarter, which further reflects the advantages of the Jingdong business mode, making it show great resilience in the competitive industry environment. According to official data, this year's Jingdong "6.18" Shopping Festival from June 1, 2019 0 to June 18th, the total amount of the order reached 201 billion 500 million yuan, more than last year's 159 billion 200 million yuan, "6.18" still contributed to Jingdong's second quarter GMV (total turnover) and the number of monthly living. The number of active users of Jingdong in the past 12 months was 321 million 300 thousand, which increased by 11 million users in the two quarter.

In terms of fashion, Jingdong made a huge change in the second quarter of this year, shifting the weight of luxury goods from Toplife to Farfetch, officially closing its own independent luxury electronic business platform Toplife and incorporating it into the UK luxury electric business Farfetch.

After a long period of polishing, Toplife formally launched the major application stores in October 10, 2017. After that, Jingdong's luxury business was split from the men's luxury department and set up as a separate two level department luxury department, and established a cooperative relationship with more than 100 brands. Jingdong once strongly aspire to make Toplife the flagship brand of China's luxury electric business. But the sale of Toplife is not satisfactory, and is regarded as a failure of Jingdong. At that time, Jingdong's strong operational capabilities and fashion ambitions seemed to be hard to find the right match.

After joining the Farfetch, Jingdong promises that Farfetch will get a first level access to Jingdong application, and users can jump to Farfetch website and download links of Farfetch application directly. Farfetch has more than 1000 luxury brand and buyer shop networks, offering 3000 luxury brand products to Jingdong users.

Farfetch founder, CEO and co chairman Jos e Neves said that through this Agreement and its strategic investment in China's acquisition of CuriosityChina, it can provide a one-stop solution for luxury brands. In this important market in China, it helps brands develop digital strategies for eager and mature audiences.

The voice of the industry is divided into two groups. One thinks Jingdong chooses "decent departure" in vogue, and the other is that Jingdong has made a good move. In May 2017, before the launch of Toplife, Jingdong had invested $397 million in Farfetch.

Although the merger has triggered a heated discussion on Jingdong's strategy in this field, Jingdong has not kept pace with luxury goods and fashion market, but still has interest. In the second quarter, Italy luxury group Prada (Prada)'s three major brands, Prada, Miu Miu and Car Shoe, officially entered the Jingdong, authorized the flagship store to go online on Jingdong, and Moschino, Mulberry, Paul Smith and Giuseppe Giuseppe also entered one after another, indicating that Jingdong did not abandon the opportunity to establish cooperation with luxury brands. Since April this year, more than 20 luxury fashion brands have started selling products on Jingdong platforms.

On this basis, the Jingdong's luxury strategy also has a new direction. In Sanlitun, Beijing, it opened a luxury nursing service line, "Jingdong luxury protection", and started selling second-hand bags, maintaining and repairing luxury goods business. This seems to be learning from the temple library. What is interesting is that Jingdong's LVMH L private equity fund Catterton Asia participated in the strategic financing of Si Ji holdings for 175 million US in the early years.

At its earnings conference, Jingdong did not focus on its luxury business. Toplife, which grabbed brand resources with Tmall Luxury Pailion, was no longer there. Jingdong transformed the performance expectation of luxury business into brand image building, and looked at the development of long-term luxury business.

In other areas such as convenience stores and supermarkets, Jingdong has made great strides, and has also invested in areas such as artificial intelligence to improve its logistics and advertising capabilities and create an ecosystem. Last week, the company announced a $142 million Fung up of the new media, which sells advertisements on elevators all over China.

According to industry analysts, China's e-commerce companies have basically enjoyed the dividends of consumers in China's first tier cities, and now they must actively strive for consumers in the two or three tier cities. Jingdong has also begun to exert power in these cities, starting to cooperate directly with manufacturers, providing private brand goods and improving the integration and experience of WeChat.

Reuters said: the optimistic performance of the online retailer has brought a bright spot for China's e-commerce industry and the entire technology industry. After years of growth, China's technology industry is slowing down. In the moment of uncertainty, the growth of Jingdong helps to enhance market confidence.

Jingdong expects revenue in the third quarter to be between 126 billion yuan and 130 billion yuan, with an intermediate value of 126 billion 210 million yuan higher than analysts forecast.