JD.com (NASDAQ:JD), the largest direct retailer in China, recently concluded its annual 618 Grand Promotion, which lasted June 1–June 18 to commemorate the 22nd anniversary of the company's founding on June 18, 1998. Let's take a closer look at the most impressive numbers from its post-sale report.
Accelerating transaction growth
JD's total transactions rose 33.6% annually to 269.2 billion yuan ($38.1 billion) during the promotional period, marking an acceleration from its 26.6% growth last year.
Fresh food, healthcare products, and kitchenware were JD's strongest growth categories, while mobile phones, home appliances, PCs, and other digital products led in total sales. In terms of total customers, food and beverages, maternal products, and beauty products were the top three categories.
Lighting a fire under Walmart's Chinese business
Walmart (NYSE:WMT) owns a major stake in JD, and the two companies are currently partnered in online grocery deliveries. Walmart operates just 26 Sam's Club stores across China, but Sam's Club sales on JD's platform doubled year-over-year during the 618 Grand Promotion.
Sales of other groceries and household essentials across JD's broader platform also soared. Sales of daily products rose 360%, premium shampoo and conditioner sales jumped 300%, and sales of disposable cleaning products surged a whopping 32 times due to the COVID-19 crisis.
Online and offline sales of fresh food, which are supported digitally by JD and Walmart's Dada-JD Daojia grocery joint venture, doubled year over year, driven by a 174% increase in meat sales.
Remote work boosts demand for digital products
China gradually relaxed its COVID-19 lockdowns until several new clusters of cases prompted renewed lockdowns in May and June. As a result, many companies are still asking their employees to work remotely, and more people are playing video games while staying at home.
That shift boosted sales of high-end gaming laptops by 243% annually. Sales of lower-end laptops jumped 325%, and sales of video-conferencing devices surged 400%.
JD Logistics and JD Health are still growing
The bears often claimed JD's first-party logistics network, which takes on inventories and fulfills its own orders, was too capital intensive to maintain. However, JD continued to expand its network of fulfillment centers, and started offering the service to external customers to offset those expenses.
Throughout the 618 Grand Promotion, JD Logistics' revenue from external customers jumped 80% year over year -- which indicates the logistics unit's profitability should improve ahead of its potential IPO later this year.
JD Health, the company's new digital healthcare segment, experienced a 404% increase in online medical consultations throughout the crisis -- which complemented its 173% growth in sales of medical and healthcare products.
Robust demand for high-ticket products
Last but not least, JD recorded stronger sales of high-ticket items across the board -- indicating the COVID-19 crisis didn't significantly dampen the long-term spending power of many Chinese consumers.
Sales of air conditioners rose 200%, while sales of refrigerators and washing machines grew 130%. Sales of facial care products, lotions, and creams more than doubled, led by premium brands like P&G's SK-II, L'Oreal's Lancome, and Revlon's Elizabeth Arden.
Sales of luxury products also more than doubled, led by a tenfold jump in over 100 top luxury brands. Apple was also a clear winner in this rush to scoop up premium products: It sold over 500 million yuan ($70.8 million) in products on JD within the first five minutes of the shopping festival -- representing a 300% increase from a year earlier.
The key takeaways
JD's 618 numbers were dazzling, and they suggest it could surpass its own guidance for 20% to 30% annual revenue growth in the second quarter. The big promotions throughout the period might temporarily throttle its margins, but they could win over more shoppers from Alibaba and Pinduoduo -- which also launched competing promotions throughout the period.