Wen / Chen Pei, Zhou Xiao
Source: outside (ID: Excel ERS)
In 2020q4, the total revenue of Jingdong reached 224328 million yuan, up 31.4% year on year, up from 29.2% in the previous quarter, and the scale property was further highlighted.
However, we noticed that the gross profit rate of Jingdong in this quarter was only 13.88%, the lowest in nearly ten quarters.
Income increases, but gross profit decreases. Is the profitability of Jingdong not good?
The market keenly seized on this point. After the opening today, Jingdong's share price (Hong Kong stock) fell by 4.88% (as of noon closing).
Generally speaking, the response of the investment market reflects the expected value space of the enterprise. Is there any problem in the value logic of Jingdong 2020q4? Next, we make a detailed analysis from the supply side and the demand side.
As we all know, the basic market of Jingdong is 3C electronic products with high customer price, which has always been the main income of Jingdong.
But since 2020, Jingdong's income structure is undergoing some obvious changes.
In terms of the revenue structure of 2020q4, the contribution ratio of general merchandise products to revenue increased to 34%; the contribution of service revenue also increased to a certain extent, reaching 14.3%, a record high.
In contrast, the proportion of 3C's electronic products revenue dropped to 51.6%, the lowest in 12 quarters since 2018q1.
We found that the direct reason for the quarterly data change was the continuous development of sinking channel Jingxi (including the expansion of supermarket categories) and the large-scale entry of high-end luxury brands.
The data shows that in 2020, whether in a single quarter or in the whole year, the cash flow of Jingdong investment has a significant growth compared with that in 2019 and 2018.
Continuous cash investment, i.e. expansion of other categories.
At present, Jingdong's investment in supermarkets has gained some growth.
According to the 2020q3 conference call, what we see is the core categories of supermarkets. The increase of sales and market share is indeed a continuous growth. In addition, the online rate of supermarkets is not as high as electronic products, which means that we still have more space.
The effect is obvious, and the community group buying business.
From the data point of view, during the Spring Festival in 2020, the fresh sales of Jingdong will grow rapidly, the growth rate of quick-frozen food will reach 790% year on year, and the fruit category with the second largest growth will also reach 300%. In 2020h1, the number of home stores of Jingdong reached 745.
And we note that Jingdong's investment in sinking channels continues.
After last year's double 11, we established a relatively stable fresh supply chain system through online Jingdong optimization, acquisition of fresh platform meicai.com, joint venture establishment of seven fresh brands, investment in Xingsheng optimization, and cooperation with China's geographical advantages.
In 2020q4, the management once again stressed that the reinvestment of new businesses and new categories will increase: we have reserved enough budget to start and develop our business, because we need to invest in many areas. We will continue to evaluate the rate of return on investment and adjust it according to the market situation.
In addition to the specific business investment and the intentional expansion of fresh food and supermarket categories, Jingdong is also deeply integrating supermarket and group buying market from the perspective of organizational structure adjustment.
By the end of 2020, Jingdong will adjust Jingxi business division and upgrade it to Jingxi business group.
Since then, the new channel business department, community group buying business department, No.1 store business and the former Jingdong Mall Marketing Department of the former Jingdong retail group's dachangchao Omni channel business group have all joined Jingxi business group. This is also explained in the 2020q4 financial report.
While adding Jingxi, trying to occupy the consumption mind through high-frequency consumption in the sinking market, Jingdong also continues to move in the high-end market, with the goal of using more luxury brands to settle in and increase the consumption amount.
According to the data of 2020q4, the number of luxury brands in Jingdong Mall has increased by 8.
With the continuation of the logic of supply side category adjustment, Jingdong's revenue structure ratio changed again in this quarter. And such a change, whether to get the corresponding user growth in the demand side?
Demand side: jingxila new 100 million, but the customer price is not high
As shown in the figure below, after 2018q4, in the case of the huge user base of Alibaba and pinduoduo, the annual growth rate of active users slowed down, since 2019q2, the growth rate of JD has been on the rise, and the growth momentum is good.
According to the 2020q4 teleconference, in 2020, more than 470 million active users of Jingdong will purchase, with an increase of 110 million in the past year, and 80% of the new users in the whole year will come from the sinking market.
However, although the data is gratifying, the development of JD in the sinking market is not very easy.
This is reflected in the financial report, that is, although the marketing expenses of Jingdong are increasing, the difficulty of getting customers is gradually increasing.
According to the financial report, the unit price of customers in Jingdong in 2020 decreased by 3.9% compared with that in 2019.
From the above analysis, we can see that the supply side increased investment support, the layout category adjustment, the demand side sinking, the market sales of low-cost products increased significantly, and the cost rise was higher than the income growth, which eventually led to the decline of Jingdong's gross profit margin.
In terms of the performance of Jingdong 2020q4, the poor financial data has eliminated the platform's achievements in the growth of users in the sinking market. Next, how to achieve profit balance while growing is the key for JD to persuade the market again.
In this quarter, Jingdong's large investment in the adjustment of the supply side categories, especially a series of money burning measures in the sinking market, has brought a good effect. However, the high cost expenditure and the increase in the proportion of low-cost categories' income have made Jingdong's financial data show a strong growth in revenue and a decline in gross profit rate.
This has cooled the market confidence built up by JD's outstanding performance in 2020q1 and Q2. Whether Jingdong can withstand the new profit test depends on the return of current investment in the next stage.