Since the inception of what became Richard Liu’s e-commerce juggernaut, now known as JD.com, the company has enjoyed annual growth, an increase in the scope of influence, and a generally positive direction. From the first foray into a physical retail space, Liu’s company, then known as Jingdong, expanded rapidly in its first few years of operations. From one retail space selling magneto-optical wares, Liu parlayed his previously mastered business skills to successfully open a dozen satellite locations. With China’s SARS outbreak on the horizon, Liu recognized the changing landscape of commerce and revamped his entire business model to focus solely on e-commerce.
Through constant technological advancement, a strong focus on implementing customer service built for the world of online shopping, and constant development of new business partnerships, Richard Liu built JD.com into a leading e-commerce platform, servicing an active user base of 300 million individuals. While the company has enjoyed a positive annual trajectory, JD.com has also received many accolades, including becoming the first Chinese company to be publicly traded on NASDAQ. With various global partners, including Walmart, and many structural growth incentives, JD.com’s annual trends include an upward trajectory. But, as is the case with all companies, the road is not always so straightforward.
With the year 2018 coming to a close, companies often reflect on the successes and pitfalls of the year and create new business plans for the upcoming year. Much like millions of people who make resolutions, even large corporations learn from the inevitable pitfalls suffered and develop ways to gain traction for an increasingly fruitful next year. For JD.com and founder Liu, the practice of creating an internal inventory and subsequent action plan leads to the company’s ability to utilize insight as a powerful tool for positive change.
When 2018 began, Liu’s company enjoyed the continuing benefits of some of the previous year’s largest changes, including the company’s decision to open over 1,000 fresh food grocers throughout China, which yielded vastly positive results. To continue to scale the company according to consumer demand, the need for JD.com to develop a data platform and product research division became crucial. Thus, in the beginning of the year, Liu acquired Pei Jian, a leader in big data research. With Jian’s innovative approach to product development and logistics, JD.com bore the benefits of garnering such talent.
As China’s largest retailer, JD.com continued to enjoy success within the early parts of the year and even commanded record sales with its 618 shopping event. Though JD.com has garnered many impressive partnerships with global companies in previous years, 2018’s newly acquired partnership with Google resonated as a highlight of the year, as it suggested Google’s vested interest in partnering with the company, rather than just seeking monetary gains from the acquisition of shares. As Google received a lower price point per share than the going market rate, the transaction provided insight regarding the intrinsic value of the partnerships, where both companies respectfully saw long-term benefits of initial peace offerings. With Liu’s extensive focus on the utilization of technology to propel JD.com, the company’s use of drone fleets for delivery to rural areas remains a forward-thinking business practice. Thus, with Google’s own investment in the envelope-pushing technology market for retail and business, the partnership makes sense from a “big picture” perspective.
However, throughout the later portion of the year, JD.com’s stock prices did suffer a slight hiccup as the result of an international shift in stock values. As the U.S. and China have seen a decline in their respective markets throughout the last months of 2018, JD.com’s China-based counterparts have seen small decreases in market valuation that parallel that of JD.com. Despite some general end-of-year hiccups for this sector of e-commerce, the stock market perpetually looks forward and creates predictions based on future events, plans, and company strategies. With that in mind, the future is bright for Liu and JD.com as the company prepares to aggressively take on 2019 and parlay its vast array of skills, advancements, and strategies into a successful year.
Of course, a company of the magnitude of JD.com already has a plan of action and is ready to implement it, aiming to improve net profit throughout 2019. For starters, 2018’s profit margins showcased a vastly increased cost of Research and Development, spearheaded by the acquisition of new talent, and extra costs associated with refocusing the R&D sector of the company. With this integral part of the company now firmly planted on the ground, it stands to reason that 2019 should not see another spike in funds utilized for R&D, which will undoubtedly even out the overall profit margins for the company.
Additionally, JD.com will continue to see benefits from sister companies – including JD Logistics, the warehousing partner for JD.com –in the coming year. As JD Logistics has come to expect an ongoing increase in the utilization of space and services, its own loss ratio will diminish and, subsequently, increase the overall success of JD.com. With all of the aligned companies working together to narrow the loss gap, JD.com will see benefits on a recognizable scale. Furthermore, these run-off benefits could easily bolster the company, garner increased interest, and move the market share value in an increasingly positive direction.
With increased cash flow available through 2019 as a result of the completion of payment in 2018 for the company’s proposed IPO, Liu’s JD.com is already garnering buzz from new investors. In fact, logistic assets have been relocated to a fund that has been garnering attention from investors, and the company expects fruitful action based on these unfoldings within the first few months of the new year.
As 2018 wraps up, CEO and founder Richard Liu takes an inventory of the year at large as he prepares for a positive following year. The natural ebb and flow of business will be favorable to him in the upcoming twelve months, and JD.com should see continued growth, prosperity, development, and leadership within the realm of e-commerce. Though external forces are often uncontrollable, and the global market economy can be fickle, JD.com remains at the forefront of e-commerce, where it has earned its place through years of continued growth. With Liu at the helm, 2019 will be a year to celebrate market growth, global investment and influence, and continued interest from other industry titans.
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