1 McKinsey & Company

JP Morgan Global China Summit – Beijing, June 5, 2017

Panel on E-commerce and Payments in China

Chris Ip

Senior Partner

叶远扬

全球资深董事合伙人

Ron Kalifa

Vice Chairman and

Executive Director

罗恩·卡利法

副主席兼执行董事

Sidney Huang

CFO

黄宣德

首席财务官

2 McKinsey & Company

Worldpay at a glance

SOURCE: Worldpay

3 McKinsey & Company

A very attractive global market

SOURCE: Worldpay

4 McKinsey & Company

Global footprint: Worldpay has a global network across

a complex ecosystem

SOURCE: Worldpay

Overview of JD.com

#2 eCommerce

Company in China (2) #1 Retailer in China by Revenues (1)

(both online and offline)

Our Core Principles

(1) Source: company filings. For the year ended December 31, 2016.

(2) Source: iResearch, in terms of transaction volume as of 3Q2016.

Superior Customer Experience

Lower All-in Operating Cost

World-Class Technology

Larger Growth Potential and Smaller Competitors (vs. US Market)

Market leadership and operating efficiency allows everyday low price and tremendous margin potential, driven by economies of scale in procurement and cost advantage as an online retailer.

(1) Source: company filings. Based on total net revenues for top 10 listed Chinese retailers in FY2016. The conversion of RMB into US$ is based on the noon

buying rate in The City of New York for cable transfers in RMB per US$ as of December 31, 2016, which was RMB6.9430 to US$1.00. The year-over-year

revenue growth rates were calculated based on revenues in RMB.

(2) Source: company filings. Based on retail sales in the United States or North America of top 10 listed US retailers in FY2016.

Top 10 Retailers in China (1)

4

5

5

7

7

8

11

14

21

37

(Net Revenue in US$ bn) YoY

Growth

43%

4%

10%

19%

(9)%

(7)%

(2)%

(4)%

17%

41%

36

65

69

80

81

84

87

87

98

365

(Net Retail Sales in US$ bn) YoY

Growth

8%

6%

3%

0%

10%

(6)%

25%

13%

3%

Top 10 Retailers in US (2)

3%

7 McKinsey & Company

10%

76%

Others

14%

China $708 bn2

23.9%

USA $385 bn

13.6%

3 year CAGR %

2016 online retail1 market transaction value in bn USD

The Chinese digital commerce market is now almost double that of the USA

by transaction value, and is growing at double the rate of the USA

1 Including both B2C and C2C 2 Data from iResearch, exchange rate at 1:6.64

SOURCE: iResearch, Euromonitor, eMarketer

Top 3 categories: Top 3 categories:

Others

5% 7%

47%

33%

8%

8 McKinsey & Company

Nov, 2016

Provide

3rd party logistics

243

Bn

RMB

658 Bn

RMB

447 Bn

RMB

xxx

Core

GMV2

SOURCE: Bloomberg, company website, press search

Market capitalization of JD.com from 2014 to present and significant events

Bn USD

1 No.1 online direct sales company in China in 2016; No.2 B2C ecommerce company in China according to iResearch

2 Data for all periods represent core business which excludes Paipai.com. Mix for 2015 & 2016 represents core GMV excluding virtual items.

20

30

60

10

50

40

0

2017 2015 2014 2016

has made significant moves since its IPO in 2014 to establish

itself as the leading direct retailer1 in China

IPO in

May, 2014

Jul, 2014

Launched China’s

largest

crowdfunding

platform

Apr, 2015

Launched JD

Worldwide, a cross-

border e-commerce

platform

Launched JD daojia to

provide express delivery

services

Apr, 2016

JD daojia merged

with Dada, a crowd

sourcing logistics

company

Jun, 2016

Built strategic alliance

with Walmart, took

control of

Yihaodian.com

Mar, 2014

Formed a strategic

partnership with

Tencent

Jan, 2017

Provide

marketing

service to 3rd

party

9 McKinsey & Company

Retail /

Loyalty

Finance/

Payments

Delivery/

Logistics

Entertain-

ment Lifestyle

Cloud Social

Smart

device/

IoT

Transporta

tion

High overlap JD.com, Alibaba, Tencent & Amazon US extended set of extended services

NON-EXHAUSTIVE

Going beyond e-Commerce / retail to stay relevant to the consumer

E-commerce players are all building digital ecosystems to

provide relevant products and services to their consumer base

10 McKinsey & Company

Mobile payment

Transaction

Value

Mobile payment overtook internet payment last year by transaction value,

top two players capture 90% share in mobile vs 60% in internet

Trillion CNY

2.4 4.1

69 64

2015 Q1 2016 Q1

90 91

SOURCE: iResearch, team analysis

China e- and m-payment transaction value X % top 2 player

market share

▪ 67% YoY

quarterly

growth

▪ Top two

players,

accounts for

60% of

market share

▪ 203%

YoY quarterly

growth

▪ Top 2 players

capture

90% of

market share

Internet payment

Transaction Value

2.0 6.2

20 49 101%

Others

1.2 20 43

Others

2 100%

1477

0.3 100%

Others

38 52

Others

101% 1

11 McKinsey & Company

Self-

owned/operated Outsourced Leased

Main orders Secondary orders

SOURCE: Press, McKinsey analysis

Logistics: top companies are investing heavily

in the space to stay ahead

Business

Model

Investment

Self- owned Hybrid Outsourced

Storage

Transport

Delivery 3rd party

delivery

Delivery team

(owned) 3rd party delivery (last mile)

Leased warehouse Warehouse (self-operated) Warehouse (self-operated)

Vendor logistics Contracted lines Owned

Amazon invests in own logistics

infrastructure beyond its warehouses

2015

Own fleet of trucks

Own automated

warehouse tech (Kiva)

Leased 20 767 planes

for air transporation

2016

2016

Developed and tested

drone delivery

(Cambridge, UK)

JD logisitics as fully owned

subsidiary

Cainiao logistics advances in

technology and aim for global

Applied robots for

sorting & dispatching

2016

3rd party delivery

3rd party Owned

Invested data analytics

in logistics operation

2013 2016

Started to design

unmanned warehouse

Tested automous robot

delivery

2016

2016

Piloted drone delivery

and obtained license1

1 From Jiangsu, Sichuan, Shan’xi provinces and Beijing for air clearance license as of 2016 Dec

12 McKinsey & Company SOURCE: Press search; McKinsey analysis

▪ May 2016, set up JDX, a new

BU dedicated to using

technology to make the

logistics industry "smart"

▪ Established JD logistics lab

in Beijing for independent

R&D and IPR on AI, image

recognition, and logistics

solutions

▪ The first partnership JD has in

the field of robotics is Siasun

Robot & Automation, which

is a listed tech company under

the Chinese Academy of

Sciences. Siasun's first

solution for JD partnership is

to offer automated guided

vehicles to its warehouses

▪ JD is also setting up an open

platform to cooperate with

more leading smart equipment

manufacturers

▪ SHUTTLE shelf robot, for moving

goods on the 3-dimentional shelf

space, with a walking speed up to

6m/s and a throughput of 1,600

cases per hour

▪ AGV intelligent handling robot i.e.

automated guided vehicles, for

automatic goods handling and

autonomous route planning

▪ DELTA sorting robot, for dynamic

picking and automatic pickup

replacement

▪ 6-AXIS robot, for automatic

dismantling and stacking

▪ Unmanned delivery drones and

cars

JD “smart logistics” strategy Automation status and focus

Org

In

tern

al

res

ea

rch

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xte

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View in “slide show” mode to see

how they work

JD is investing heavily in warehouse and logistics automation