Advertisement
JD.com
TechTech Trends

JD.com takes heavy losses in first quarter after strict Covid-19 lockdowns disrupt e-commerce

  • JD.com reported a US$444 million loss in the three months ended March, which does not account for the Shanghai lockdown that started the following month
  • Sales increased 18 per cent for the period, but it marked the e-commerce giant’s slowest growth since going public in 2014

Reading Time:2 minutes
Why you can trust SCMP
0
A JD.com company sign seen at the Appliance and Electronics World Expo in Shanghai on March 23, 2021. Photo: Reuters
Jiaxing Li

China’s Covid-19 lockdowns, which have severely disrupted logistics and dampened consumer spending, have dealt a heavy blow to the country’s e-commerce giant JD.com, which is known for its efficient national distribution and delivery system.

The company reported 3 billion yuan (US$444 million) in losses for the first quarter because of logistics disruptions and weak consumer spending, in sharp contrast to the 3.6 billion yuan in profit it posted in the same period last year. Costs in warehousing and transport surged when local Chinese governments rushed to impose travel restrictions and quarantine requirements amid the country’s worst outbreak since the beginning of the pandemic.

The heavy losses in the first quarter do not factor in the rigid citywide Shanghai lockdown, which started in April. Xu Lei, JD.com’s newly appointed CEO, said in a conference call Tuesday evening that the start of 2022 proved much harder for the e-commerce industry compared with the past two years, when restrictions were put in place for a limited time and affected a smaller portion of the country.

Both online and offline businesses have taken a heavy hit while economic powerhouses like Beijing, Shanghai and Shenzhen were paralysed by strict lockdown measures to various extents this year, Xu said. “The pandemic has affected consumers’ income and confidence and overall consumption is sluggish,” he added.

Sales for JD.com in the first three months of the year increased 18 per cent to 239.7 billion yuan, a record-low growth rate for the company since going public in 2014.

In addition to weakening consumption, draconian Covid-19 control measures have clogged up supply chains, with warehouses and delivery stations locked down for weeks to prevent Covid transmission. Truck drivers have also been forced to undergo repeated coronavirus testing and quarantines while travelling between different cities, prolonging delivery times.

“In April, the order cancellation rate was significantly higher than last year due to logistics disruptions,” Xu said. “The situation improved this month, but was still higher than a year earlier.”

Advertisement