JD doubles its shoppers in the past year, shifts toward Alibaba-style marketplace model

JD, China’s biggest online direct sales store, announced its third quarter earnings results today.

The report saw revenues rise 61 percent to RMB 29 billion (US$4.7 billion) year-on-year, with a loss of RMB 164.4 million (US$26.8 million). Non-GAAP net income was positive at RMB 370.8 million (US$60.4 million), a discrepancy still lingering from Tencent’s purchase of a 15 percent stake in JD earlier this year.

“We maintained excellent momentum in the third quarter as we saw stronger than expected year-over-year growth in both gross merchandise volume and active customer accounts,” said founder Richard Liu in a statement.

JD added 24 million more quarterly active users in the last year to a total of 46.1 million, an increase of 109 percent. The company sold RMB 67.3 billion (US$11.0 billion) worth of stuff during the quarter, up 111 percent from the same period last year. That’s 178.2 million orders. The current quarter’s results will likely be even higher thanks to the annual Singles Day shopping event.

JD is mostly known for its direct sales model that stands in stark contrast to Alibaba’s third-party marketplace models on Taobao and Tmall. But that model is gradually shifting. A JD spokesperson told Tech in Asia that the company is increasingly moving toward a marketplace model with more third-party merchants.

As a result, gross merchandise value will grow faster than revenue. Marketplaces typically have higher margins, but less revenue.

“GMV generated from our marketplace tripled compared to the third quarter of 2013 as we expanded our merchant base and diversified our product offerings,” said Liu.

The third quarter was a busy one for JD. The company started exclusive sales of the first game console legally sold in China for years, the Xbox One. It launched a new crowdfunding platform called Coufenzi that’s been pulling in higher dollar amounts per project than the old market leader, Demohour. And, of course, it collaborated with Tencent to acquire new customers on WeChat.

The spokesperson says JD has been experimenting to find out the best ways to conduct sales on WeChat, but China’s most popular messaging app is not meant to be a long-term shopping platform. Instead, the main purpose of JD’s integration with WeChat is user acquisition, with the ultimate aim of getting more users on the JD app and website.

See: The complete English-language guide to shopping on JD’s mobile app