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Logistics Investments Cut JD Inventory Turnover by 4 Days

Chinese retail giant saw 39 percent revenue growth to $31 billion in the first quarter as the company is fending off the supply chain delays and costs plaguing much of retail today.

In a Nutshell:, an e-commerce company that is positioning itself more as a supply chain-driven technology and service provider for Chinese consumers, appears to be getting a big payoff from its investments.

Average inventory turnover—the days needs to turn its inventory into sales—have dropped to 31.2 in the quarter from 35.4 in the first quarter of 2020. The reduction occurred even as the retailer has increased its total directly managed SKUs to 8 million.

The company spent $800 million to take a majority stake in partner on-demand delivery provider Dada Group in March and now operates more than 1,000 warehouses across China. The warehouses cover an aggregate gross floor area of over 21 million square meters, including warehouse space of cloud warehouses managed under the JD Logistics Open Warehouse Platform. The company has approximately 200,000 delivery workers.

And on April 17, JD Logistics and Tencent Smart Retail jointly announced the launch of JD-Tencent Cloud Warehouse. Integrated with JD Logistics cloud warehouse technologies, logistics platform and supply chain capabilities, as well as Tencent Smart Retail’s smart retailing analysis technology, JD-Tencent Cloud Warehouse aims to provides integrated solutions including business leads, branding and marketing as well as logistics services to merchants and warehousing companies.

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JD Cloud Warehouse can now leverage this partnership to serve new business models including social and livestreaming e-commerce, further opening JD Logistics’s integrated supply chain capabilities for diverse commercial use cases.

Last year, invested $100 million in sourcing and logistics specialist Li & Fung to aid the company’s supply chain developments.

On the retail side, annual active customer accounts increased by 29 percent to 499.8 million in the twelve months ended March 31, 2021, from 387.4 million one year prior. More than 80 percent of the new users came from lower-tier markets, Lei Xu, CEO of JD Retail, said in an earnings call.

The growth rate of’s online marketplace has now exceeded its first-party business. In particular, the growth rate of apparel and beauty categories reached a three-year high, Xu said.

“The online marketplace ecosystem has always been an area of huge potential for JD,” Xu said. “With several years of continued efforts, we have now established a sound foundation. Since the beginning of the year, we have seen meaningful improvement in existing merchants’ renewal rates and their engagement level, as well as significant increase a variety of brands and merchants available on our platform. This year, we have welcomed more and more leading brands and merchants from home and abroad to JD’s platform, including Guozijian, Starbucks, Decathlon, and a suite of fashion brands under Bestseller Group and more.”

Sandy Xu,’s chief financial office, said the company’s core JD Retail business saw two-year compound annual growth rate (CAGR) revenues that nearly doubled the growth rate of China’s total online retail sales.

General merchandise revenues, which don’t include the company’s electronics and home appliance offerings, reported 36 percent year-over-year growth and a two-year CAGR of 37 percent in the first quarter, boosted by the structural pickup in demand and enhanced consumer main share of JD general merchandise categories, the CFO said.

Net inventories at totaled RMB 59.5 billion ($9.1 billion) in the first quarter, up 17.7 percent from RMB 50.6 billion ($7.1 percent) in the year-ago period. 

The company has an upcoming June 18 grand promotion to celebrate the 18th anniversary of, with the plan to help more than 230 brands achieve over RMB 100 million ($15.5 million) in sales.’s cash and cash equivalents, restricted cash and short-term investments totaled RMB 138.8 billion ($21.2 billion). For the first quarter, had RMB 28.1 billion ($4.3 billion) in free cash flow.

Net Sales: Net revenues at for the first quarter of 2021 were RMB 203.2 billion ($31 billion), an increase of 39 percent from the year ago period. Net service revenues for the first quarter of 2021 were RMB 27.9 billion ($4.3 billion), an increase of 73.1 percent.

The company now reports revenue in three separate segments.’s retail segment grew 35.3 percent in revenue from RMB 137.4 billion ($21.4 billion) to RMB 185.8 million ($28.3 billion). Its JD Logistics segment, which was separated into a standalone component in the quarter, jumped 64.1 percent from RMB 13.7 billion ($2.1 billion) to RMB 22.4 billion ($3.4 billion).

New businesses, which include JD Property, social commerce app Jingxi, overseas businesses and technology initiatives such as JD Cloud, generated RMB 5.2 billion ($786.7 million), a 55.7 percent boost.

Inter-segment costs, which mainly consist of revenues from supply chain solutions and logistics services provided by JD Logistics to JD Retail, and property leasing services provided by JD Property to JD Logistics, ended up taking away RMB 10.3 billion ($1.5 billion) in revenue.

Net Earnings: Net income attributable to ordinary shareholders for the first quarter of 2021 was RMB 3.6 billion ($559 million), compared to RMB 1.1 billion ($171 million) for the same period last year. Adjusted net income attributable to ordinary shareholders for the first quarter of 2021 was RMB 4 billion ($621.5 million), compared to RMB 3 billion ($466 million) for the same period last year.

Diluted net income per American Depositary Share (ADS) for the quarter was RMB 2.25 (34 cents), compared to RMB 0.72 (11 cents) for the first quarter of 2020. Adjusted diluted net income per ADS for the first quarter of 2021 was RMB 2.47 (38 cents), compared to RMB 1.98 (31 cents) for the same period last year.

The Chinese retail giant’s income from operations was RMB 1.7 billion ($264 million), compared to RMB 2.3 billion ($357.3 million) for the same period last year. Adjusted income from operations for the first quarter of 2021 was RMB 3.5 billion ($543 million), compared to RMB 3.3 billion ($513 million) for the first quarter of 2020.

CEO’s Take: Based on the company’s “close collaboration” with its suppliers and “outstanding supply chain management capacities,” JD will be less affected by the supply chain bottleneck this year, according to Xu.

“We have made very precise predictions on the supply chain projections, so we can join hands with our partners to address this supply tension together,” Xu said. “And in this process, we even strengthened our collaboration on the supply chain with all our partners.”