Liu Qiangdong’s JD.com Prepares to Spin Off Logistics Division in Much-Anticipated IPO

Liu Qiangdong JD.com

Logistics division this month in a highly-anticipated IPO. The new company is expected to raise around $5 billion and be valued at around $40 billion. JD Logistics, the shipping and delivery arm of the company, has helped JD.com realize explosive growth in the COVID-19 pandemic period. Last quarter, JD.com reported a third-quarter net revenue increase of 29%, year over year, something the company says was largely due to JD Logistics.

Bloomberg analyst Vey-Sern Ling said of the IPO “The spinoff and the separate listing will help JD.com crystallize the value of its logistics arm, which it had invested in heavily for more than a decade. The funds raised can aid JD Logistics’s expansion without burdening JD.com.”  

As explained in the IPO’s prospectus, which was filed on February 16th in Hong Kong, “Supply chain technology is the bedrock of our operations and differentiates (JD.com) from our competitors.” JD.com further explained that JD Logistics makes use of technologies “such as 5G, AI, big data, cloud computing and Internet of Things” in its delivery operations. Even after the IPO, JD.com will hold more than 50% of JD Logistics stock.

The JD Logistics IPO is reported to be the fulfillment of a part of the deal JD.com founder Richard Liu made with investors in early 2018 when the company raised US$2.5 billion. One condition of that deal was that JD Logistics complete an IPO within three years or before March 2021.

Chinese e-commerce is having a banner year and is expected to account for more than 50 percent of the country’s retail sales in 2021, something that has never happened in any country before. Most analysts credit the boom in e-commerce worldwide to the stay-at-home orders mandated by the global COVID-19 pandemic.

JD.com built JD Logistics from the ground up to become one of China’s largest delivery services. It was born from the need of the parent company to find a way to control the on-time and efficient delivery of its growing e-commerce offerings. Today, JD Logistics has more than 800 warehouses throughout China, owns a fleet of thousands of drones, robots, and autonomous vehicles, and employs more than 240,000 delivery persons. It is believed to be the first company to use drones for package delivery.

The JD Logistics IPO is the latest in the trend of Asian IPOs. Kuaishou Technology and New Horizon Health debuted earlier this year amid much fanfare. JD.com spun off its JD Health division in December with an IPO. Since then, the stock for JD Health has increased by more than 70%. JD.com’s grocery arm, Dada Nexus, went public in June 2020. Its value has more than doubled since the IPO.

About JD.com and Richard Liu

JD.com is the largest retailer in China and has the country’s second-largest e-commerce platform. Founded in 1998 by Richard Liu, JD.com grew from a small electronics shop to be one of the top e-commerce companies in China. A native of Suqian in the Jiangsu Province of China, Liu grew up poor, the son of peasant farmers. He earned an opportunity to attend college with his good grades and earned a degree from Renmin University of China in Beijing. He later studied at New York City’s Columbia University.

Richard Liu has created a retail empire by repeatedly being in the right place with the right product at the right time. More than luck, he has proven himself skillful at anticipating consumer needs and market