October 28, 2022

JD, 1024 HK, 700 HK, AAPL, BABA, ByteDance Ltd., Huawei Technologies Co. Ltd., KUASF, PDD, TCEHY, Xingyin Information Technology (Shanghai) Co. Ltd.

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Sources and Background

24 sources in China representing electronics (6), food/beverage (4), grocery (2), home goods (2), apparel/shoes (5), cosmetics (2), healthcare (1), accessories (1) and auto accessories (1), representing 3.692 billion yuan in overall 2021 JD.com sales

REPEAT SOURCES 22 from OTR Global’s July report



Weak Consumer Spending Limits Vendor Sales
Prolonged pandemic-related restrictions and repeated lockdowns caused consumer spending power to deteriorate during 3Q22 and the sales recovery through JD was limited.
• Vendors’ 3Q22 sales through JD flat–up 3% yy (vs. flat–down 5% in 2Q22), consumer spending power/willingness to spend deteriorated vs. June for 16 of 24 vendors
• 3Q22 sales below expectations for 11 of 24 vendors (vs. 11 of 23 in 2Q22); average selling prices lower yy for 14 of 24 as discounts deepened yy
• Vendors’ total cost paid to JD at 13%–18% of vendor sales during 3Q22 (vs. 14%–19% in 2Q22); 9 of 14 vendors added to advertising, KOL budgets outside JD (vs. 10 of 13 in 2Q22)
• Area to Watch: Consumers traded down for 17 of 23 (vs. 7 of 21 in June); consumer confidence weak regardless of income level

Meredith Sun