JD (Part 1): Understanding JD

JD Group (full Chinese name Jingdong - 京东) is one of China's three major e-commerce companies, with the other two dominant e-commerce incumbents being Alibaba Group and Pinduoduo.

This article is the first part of our two-part series on JD, where we provide an overview of the company's history, business model, and key financial statistics. In Part 2, we discuss JD's long term business strategy and the company's potential success going forward.

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History and Development

Prior to 2003, JD started as a physical store selling electronic devices in Zhongguancun, what was then China's largest electronics retail mall in Beijing. With the outbreak of SARS in late 2002, China entered a near-lockdown state by early 2003. Without customers being able to shop in physical malls, JD was forced to adapt to the epidemic by accepting orders by phone and email, then subsequently mailing the goods to customers to fulfill their orders. Eventually, an online retail platform that was the precedent of what would become the current JD was launched in 2004.

After making the transition to online, JD initially kept its focus on selling electronic devices. However, the company experienced problems with unreliable delivery companies that frequently damaged the devices they sold. Consequently, in 2007, JD made the strategic decision to invest in and build its own nationwide fulfilment infrastructure, which laid the groundwork for what has become the current JD Logistics.

Since JD focuses on sourcing high-quality, authentic products with better service and more reliable delivery, buyers mostly purchase high-premium goods (e.g. phones or cameras) from their platform, although the retailer has expanded to offer general consumer merchandise as well. Additionally, since JD sold directly to buyers at first without any third-party intermediaries on the platform, the company did not develop an escrow payment function in the same way that Alibaba developed Alipay.

JD went public on May 22nd 2014 on NASDAQ.

Business Strategy Overview

JD describes itself as a technology-driven e-commerce company transforming to become a leading supply-chain-based technology and service provider. The company prides itself on being China's largest retailer in terms of revenue in fiscal 2020, with total revenues of RMB756.8 billion compared with RMB509.7 billion for Alibaba and RMB59.5 billion for Pinduoduo.

Note: JD primarily sells merchandise directly to consumers so more or less the entire sales price would be counted as revenue, except in the case of merchandise sold by third-party merchants, in which case marketing fees and commissions would be counted as revenue instead. In contrast, Alibaba's and Pinduoduo's platforms are dominated by third-party merchants, and hence their revenue figures mostly constitute of advertising fees and commissions.

JD believes that its competitive edge comes from two main factors: superior customer experience and operational efficiency. Specifically, JD's strategy is to provide consumers with a wide selection of authentic products at competitive prices, while also investing in the long term technology and logistics infrastructure necessary to facilitate efficient and reliable fulfilment services that can boost customer loyalty and satisfaction. Consequently, the strongest differentiating factors that make JD stand out to many Chinese consumers are the authenticity of products, as well as the quality and speed of the company's delivery network and personnel.

Fast, Efficient, and Customer-Oriented Delivery System

JD takes pride in providing professional training to their delivery personnel and ensuring that delivery schedules are arranged based on customers' needs and preferences. The company also introduced their 211 program in 2010, where goods that JD has in stock at a nearby fulfilment or distribution centre will be delivered in the same day for orders received before 11am, and by 3PM the following day for orders placed by 11PM the night before. Expedited delivery within 2 hours is available at an extra charge for customers in major cities. JD has also launched a premium logistics service with China Railway Corporation in order to utilize high-speed trains for secure, long distance transportation of high-end goods that allows customers to enjoy same-day delivery for high-end products originating from further warehouses.

Commitment to Customer Satisfaction

JD highlights that providing high-quality customer service is the company's "top priority", with dedicated 24/7 customer assistance and over 12,000 support staff. The company also claims to have the largest online product review database among all online retail companies in China, with approximately 7.1 billion product reviews from customers as of the end of December 2020.


JD's e-commerce segment comprises of two components: online retail business and marketplace. The former refers to JD's original business of purchasing products from suppliers and selling directly to consumers. The latter was launched in October 2010 as a platform for third-party merchants to sell their products to consumers. The e-commerce business as a whole generated gross merchandise value (GMV) of RMB1,676.9 billion in 2018, RMB2,085.4 billion in 2019, and RMB2,612.5 billion in 2020.

Online Retail Business

JD's online retail business does not include only electronics but has expanded to cover a wide range of general merchandise. As of the end of 2020, JD sources products from over 31,000 suppliers. JD mentions in their annual report that the company is trying to increase direct purchases from manufacturers and become an authorized reseller (rather than buying through an intermediate supplier) in order to benefit from better procurement terms and gain increased access to harder-to-obtain products.


Merchants with products listed on JD's marketplace pay sales commissions to JD. All merchants are required to adhere to strict standards for product authenticity and service reliability, as JD closely monitors the performance and activities of third-party merchants.


As mentioned above, JD places a huge emphasis on efficient logistics and takes responsibility for the entire supply chain process, starting from procurement of the items to transporting the products and distributing them to end customers. JD takes pride in delivering most of the orders placed on their platform themselves. Since the decision to invest in and build a nationwide fulfilment infrastructure in 2007, JD has continously remained committed to expanding the company's logistics network.

As of the end of December 2020, JD's warehouse network covered almost all counties and districts in China.

Some key statistics include:

  • Over 900 warehouses operated by JD Logistics

  • Over 1,400 "cloud warehouses" operated by third-party warehouse owner-operators under the JD Logistics Open Warehouse Platform

  • Gross floor area of 21 million sq. metres (including the gross floor area of cloud warehouses)

  • 242,452 warehouse and delivery personnel

Note: as a comparison, Amazon's fulfilment and data centres have a total area of 37.4 million sq. metres globally as of the end of 2020. Amazon does not provide a number solely for the area of its fulfilment centres in the company's annual report.

More Than Just E-Commerce

Even though JD is commonly viewed as just an e-commerce company and its core business is e-commerce, it would be more accurate to understand JD as an ecosystem of related businesses in the same manner that the businesses within Alibaba and Ant Group form an ecosystem.

We highlight some important components of JD's ecosystem below:

JD Logistics

Undoubtedly the most important component of JD's ecosystem second only to the core e-commerce business itself, JD Logistics plays a crucial role in driving JD's business success and is a key area of focus for the company's future growth.

JD Logistics was officially established in April 2017 with the goal of providing integrated supply chain and logistic services to businesses across a wide range of industries, not necessarily just those in e-commerce. Some of these solutions include warehouse management, transportation, delivery, after-sales service, and cloud-based service and data analytics. Starting in October 2018, JD Logistics opened up its logistics network to consumers by offering parcel delivery services to users in specific regions.

JD claims that JD Logistics is the largest player in China's integrated supply chain logistics services market in terms of total revenue in 2020. During that year, JD Logistics served more than 190,000 corporate customers with approximately 90% of the total online retail orders processed through its network being delivered on the same day or on the day after the order was placed.

JD Logistics prides itself on its dedication to improving the supply chain management process through the use of advanced technology. As of the end of 2020, the business group has a team of over 3,700 R&D professionals, as well as more than 4,400 patents and computer software copyrights, of which over 2,500 are related to automation and unmanned technologies.

JD Logistics went public on the Hong Kong Stock Exchange on May 28th, 2021.


JD-Y is JD's supply chain research and development unit that focuses specifically on supply chain innovation.

JD Property

JD Property was established in 2018 as a subsidiary that owns, develops, and manages JD's logistics facilities and other real estate properties to support JD Logistics. In the course of its short history thus far, the business group has established two logistics investment funds with Government of Singapore Investment Corporation (GIC - Singapore's sovereign wealth fund) in February 20