JD Group took its logistics brand public at the end of May in an initial public offering (IPO) in Hong Kong that gives the company a market capitalisation of around 33 billion dollars. The move confirms the importance of integrated, value chain in the fashion market.
After pricing shares at the lower half of its indicative range (about 6 dollars apiece), the stock gained as much as 18 percent in early trade last Friday. It plans to use the bulk of proceeds from the offering to upgrade and expand its logistics networks, and to develop technologies for use in its supply chain and logistics services. Key investors include Japan’s SoftBank Group, Singapore’s Temasek Holdings and Blackstone.
Noteworthy, JD Logistics’ IPO follows share sales in the city by JD.com and another of its subsidiaries last year, which in total raised nearly 8.5 billion dollars, according to Dealogic. Richard Liu, chairman and chief executive officer of JD.com said the company now has 500 million active users across its services, and highlighted the growing importance of its supply chain infrastructure as a driver of new business and revenue. “JD is also increasingly the partner of choice for millions of businesses who benefit from our advanced supply-chain infrastructure to reduce costs and boost operating efficiency,” Liu said.
JD Logistics’ IPO expected to attract more luxury brands to their ecosystem
Unable to find a third-party that could keep up with the speed and volume of its ecommerce business, JD.com established JD Logistics in 2007 as a separate unit to serve its growing supply chain and logistics demands. The network’s first locations were based in Beijing, Shanghai, and Guangzhou.
In three years, it became the world’s first ecommerce company to offer next day delivery, ahead of Amazon’s two-day promise in the States. In 2017 the group spun it off into its own entity and began offering services to third-party retailers. In 2018 it began serving consumers with a new parcel delivery service. Today, JD Logistics operates more than 800 warehouses, serving merchants selling on JD.com as well as customers outside the platform. It competes with businesses such as Shenzhen-listed S.F. Holding Co., ZTO Express Cayman Inc. and Alibaba’s logistics arm, Cainiao Network Technology Co. With the creation of JD Logistics, JD.com foresaw expectations from brands and took action ahead of competitors, explained to ‘Vogue Business China Edit’ Chris Lo, associate professor of fashion retail and marketing at the Hong Kong Polytechnic University.
Competition between e-commerce platforms is heating up in China, as savvy consumers seek for outstanding delivery and customer service as a key differentiator, particularly for luxury brands. “JD and JD Logistics have emphasised their omnichannel solution for luxury,” pointed out Professor Lo. Earlier this month, JD.com inked a partnership with Louis Vuitton for the French luxury brand to sell on the Chinese e-commerce’s platform. It’s worth recalling that Louis Vuitton is not on JD’s competitor Tmall. Before then, other high-end brands, including JW Anderson, Anya Hindmarch, Queen Anne Silver, Bohemia Crystal, and White Mountaineering, launched official flagship stores on JD.com, with some of them choosing JD as their first e-commerce partner in China. “JD.com is leading in guaranteeing product quality and authenticity, and is the ideal first choice for international high-end brands,” said a spokesperson from Queen Anne Silver explain their choice. JD has established partnership with over 200 luxury brands, including Prada, Miu Miu, Delvaux, Salvatore Ferragamo, covering clothing, bags, shoes, watches, jewelry, home furnishings and other categories.
Image: JD Logistics IPO on Hong Kong Stock Exchange, JD.com Corporate