Saturday, 2024 July 13’s commitment to low-price strategy pays off with strong financial performance in latest quarter

In 2023, the Chinese e-commerce arena resembled a battlefield dominated by price-based competition throughout the year. Both Alibaba Group and (also known as Jingdong) underwent substantial organizational changes, accompanied by tumult stemming from their performance. It was during this period that the market realized the diminishing prominence of the old giants, with Pinduoduo increasingly capturing attention.

This was scarcely the scenario envisioned by Jack Ma (also known as Ma Yun) and Richard Liu (also known as Liu Qiangdong). While acknowledging Pinduoduo’s ascension to become China’s highest valued e-commerce company, concerns swiftly emerged within Alibaba, prompting a push from Ma for an immediate response in the fourth quarter. The new management team, led by Eddie Wu (also known as Wu Yongming), endeavors to restore Alibaba’s competitiveness.

On the other hand, Liu’s response to Pinduoduo’s growing stature continued to revolve around pricing. Despite encountering initial resistance, persevered with this strategy throughout the fiscal year, with outcomes now apparent.

On March 5, a day before the release of’s Q4 2023 report, the market expressed skepticism over the company’s prospects, leading to a roughly 4% decline in its stock price at the market’s opening.

Key 2023 financials of JD Group

However, subsequent insights revealed that remained resilient under pressure. In Q4 2023,’s revenue totaled RMB 306.1 billion (USD 42.5 billion), marking a 3.6% year-on-year increase, surpassing the expected 2% growth rate. Although its operating profit of RMB 2 billion (USD 277.8 million) saw a significant decline, partly influenced by Dada Nexus’ mishap, excluding which, this figure reached RMB 7.8 billion (USD 1.08 billion) under non-GAAP, exceeding the RMB 7.3 billion (USD 1.01 billion) recorded in the same period last year.

Following two CEO changes in three years, external concerns mainly revolved around whether JD Retail would persist with its pricing strategy. During the earnings call, CEO Sandy Xu Ran reaffirmed this approach, stating that JD Retail will not undergo major changes in its overall strategy.

Similar to Alibaba, also initiated a share repurchase program during the earnings release, aiming for a buyback amount of USD 3 billion by the end of 2027, with USD 1.5 billion utilized as of end-2023, alongside a USD 1.2 billion dividend payout. This move ignited market enthusiasm, leading to a surge in’s stock price in the US following the announcement.

A performance that swayed the market

The most significant revelation from’s quarterly report pertains to its marketplace and marketing revenue stream, which experienced a decline for the first time in recent quarters, amounting to RMB 23.63 billion (USD 3.28 billion), a 4% decrease compared to the same period in 2022.

Following the implementation of its low-price strategy, has consistently emphasized its intent to reduce commissions and service fees for merchants. This revenue decline may suggest that the company is taking tangible steps in this direction, benefiting merchants to rebuild trust.

This achievement coincided with a significant influx of third-party merchants. In Q4, the number of new merchants joining increased substantially year-on-year, surpassing the company’s goal of recruiting a million merchants in Q3 2023, initially outlined at the beginning of the year.

During the earnings call, the company highlighted that converting the growth in the number of third-party merchants into orders, gross merchandise value (GMV), and revenue would take time. It also emphasized that monetization rate isn’t presently a core target, as it is not conducive to the platform’s ecosystem-building phase.

In terms of operating profit, JD Retail amassed RMB 6.94 billion (USD 964.1 million) in Q4 2023, slightly down from RMB 7.86 billion (USD 1.09 billion) in the same quarter of 2022. However, the group managed to elevate its non-GAAP operating profit year-on-year due to a resurgence in profit from its logistics business.

JD Logistics AGV solution applied in Sportano’s warehouse in Warsaw, Poland. Photo credit of

After enduring three consecutive quarters of decline,’s revenue from the sale of general merchandise finally stabilized, registering a slight 0.2% year-on-year increase to RMB 96.1 billion (USD 13.3 billion). Achieving this result was noteworthy as, in Q4 2022, amid the subsiding pandemic, orders and average order values for such items reached historic highs.

During the earnings call, Xu highlighted that, following the reduction of the free shipping threshold at the end of August 2023—from RMB 99 (USD 13.7) to RMB 59 (USD 8.1) for non-JD Plus members—the company witnessed robust order volume growth in September, with shopping frequency outpacing the growth in average revenue per user (ARPU), a trend that continued into Q4 2023.

Revenue from electronic products and home appliances also rebounded, reaching RMB 150.3 billion (USD 20.8 billion) in the quarter, marking a 6.1% year-on-year increase compared to zero growth in the third quarter. Following the launch of its RMB 10 billion (USD 1.39 billion) subsidy program, narrowed the price gap in electronic product categories, where it ostensibly holds an advantage over its peers, potentially regaining market share. Multiple insiders also told 36Kr that computer, communication, and consumer electronic products (3C) were among the best-performing categories during last year’s Singles’ Day, with GMV growth approaching double digits year-on-year.

Carefully spending every penny’s appointment of Xu, who brings a financial background, as CEO, seemingly signals its intent to spend money more efficiently. For, efficiency entails benefiting merchants while exercising fiscal restraint in investments. But how does this align with its low-price strategy?

According to Liu, it involves not merely offering subsidies to keep prices low but optimizing fulfillment costs to allocate funds for subsidies, thereby maximizing benefits for merchants while leveraging economies of scale to lower prices.

The advantage of this approach is that can maintain a healthy profit margin even amid slowing growth. This was evident in Q4 2023, where it achieved a non-GAAP operating profit of RMB 7.8 billion, marking a 6.8% year-on-year improvement.

To sustain its profit performance, reduced general and administrative expenses by RMB 1.2 billion (USD 166.7 million) in Q4 2023, primarily stemming from a reduction in equity incentives. Additionally,’s logistics business witnessed a substantial nearly 50% increase in operating profit, reaching RMB 1.33 billion (USD 184.7 million) despite a growth slowdown. Following the reduction in the free shipping threshold, its profits not only remained intact but surged significantly, underscoring the significant role of cost reduction and efficiency enhancement.

A JD logistics courier in Hong Kong. Photo courtesy of

Addressing market concerns regarding balancing market share and profit margin, Xu expressed confidence that, as scale expands and supply chain technology advances, profitability will inevitably improve.

To expand its market share, allocated an additional RMB 1.2 billion to sales expenses in Q4 2023. However, having completed its initial scaling phase, is poised to scrutinize its subsidy distribution more rigorously in the future, several sources told 36Kr.

While Alibaba, with a refreshed management team, is exploring new avenues to compete with Pinduoduo,’s dedication to its low-price strategy is unlikely to waver in the short term. Though greater challenges may loom on the horizon,’s latest quarterly performance has shown the potential feasibility of its business model in the long run.

This article was written by Dong Jie in Chinese language and originally published on

KrASIA Connection
KrASIA Connection
KrASIA Connection features translated and adapted high-quality insights published on, the largest and most influential technology portal in Chinese language with over 150 million readers across the globe.

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