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
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.
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 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.”
China’s vice-premier Liu He told the country’s tech leaders on Tuesday that the government will help boost the development of the platform economy and private firms, and support digital enterprises in going public on domestic and overseas capital markets.
While the lockdowns still loom large, e-commerce growth could see an uptick in the second quarter with easing Covid measures in Shanghai and upcoming midyear shopping festivals, according to Zhang Yi, chief analyst at iiMedia research.