---
title: "JD's conference call: Focusing on price competitiveness, advancing platform ecosystem development, and cautiously piloting overseas business expansion."
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/109385579.md"
description: "JD's senior management stated that in 2024, JD will continue to focus on enhancing price competitiveness and platform ecosystem development, with confidence in outperforming the social zero growth rate. In addition, JD has been paying attention to international opportunities and cautiously piloting overseas business expansion."
datetime: "2024-03-06T20:21:15.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/109385579.md)
  - [en](https://longbridge.com/en/news/109385579.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/109385579.md)
---

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# JD's conference call: Focusing on price competitiveness, advancing platform ecosystem development, and cautiously piloting overseas business expansion.

On the evening of Wednesday, March 6th, after the Hong Kong stock market closed and before the US stock market opened, JD released its fourth-quarter earnings report as of the end of last year. The financial report shows that JD's revenue and adjusted EBITDA for the quarter both exceeded market expectations, leading to a pre-market surge of over 15% in JD's stock price.

During the earnings call, JD-SWR CEO Xu Ran stated that in 2023, the focus will be on accelerating the development of the platform ecosystem and cultivating a mindset of affordability throughout the year. The overall performance currently aligns with expectations. In 2024, the emphasis will continue to be on enhancing price competitiveness and platform ecosystem development, with confidence in outperforming the zero-growth rate in the industry. While enhancing user experience, optimizing procurement costs, strengthening the supply of affordable products, and further expanding the merchant base.

Furthermore, JD has always viewed the platform ecosystem as a long-term strategic direction and is in the early stages of building a unique platform ecosystem. Therefore, rapid monetization is not JD's top priority in the short term. The focus for JD in 2024 is to continue attracting more merchants, especially small and medium-sized businesses in industrial belts, to enrich product offerings and optimize the platform ecosystem.

In addition, JD has been exploring international opportunities and cautiously testing overseas operations. The supply chain infrastructure is the cornerstone of JD's international business development, and the company will continue to leverage this advantage to expand its influence in global markets. JD LOGISTICS has established nearly 90 bonded warehouses, overseas warehouses, and postal warehouses worldwide, covering a management area of 900,000 square meters, providing services to numerous overseas customers and Chinese brands expanding internationally.

The following is a summary of the Q&A session during the analyst conference call:

## Q1: In the context of slowing e-commerce market growth, how does JD balance between growth and profitability?

Firstly, JD's strategic focus in 2023 is to maintain a healthy business while promoting growth through enhancing user experience and services. For example, JD has implemented a series of measures including price protection services, free doorstep returns and exchanges, and refund without return services. These measures have effectively enhanced the shopping experience and service levels for users, while strengthening JD's differentiation and competitive advantage in the e-commerce market.

With the introduction of these services, JD saw a significant increase in quarterly shopping users in the fourth quarter, especially new users. We expect this growth trend to continue into the first quarter of 2024. By continuously improving services and user experience, JD has successfully maintained stable profits, demonstrating the company's efforts to seek a balance between growth and profitability.

Secondly, JD continues to optimize procurement costs and expand the range of affordable products. For instance, JD has launched a 10 billion yuan subsidy plan, a 9.9 yuan free shipping channel, and reduced free shipping thresholds. These initiatives aim to provide users with high-quality and affordable products, thereby increasing the frequency of user purchases.

Moreover, the platform ecosystem is crucial. Currently, we are seeing more new merchants joining our platform, while the number of active merchants continues to grow. This has brought a richer supply of goods to the platform, driving growth in the number of third-party business users and order volume. Looking ahead to 2024, we will continue to focus on user experience, price competitiveness, and the development of the platform ecosystem. The company will steadfastly execute strategies in these key areas and is confident in expanding market share.

## Q2: With a strong free cash flow, does the company have room to further increase shareholder returns?

JD's core business model logic is to enhance operational efficiency and generate more revenue by increasing business scale and technological capabilities. Subsequently, these increased revenues are reinvested in improving user experience, enhancing user stickiness, and increasing shopping frequency, further driving business scale growth and forming a sustainable positive cycle. This growth model may not necessarily have a significant impact on profits.

We believe that maintaining good shareholder returns and continuous investment in the business are our priorities. Profit growth is a natural result of expanding market share and creating value for users. The management team will continue to balance the pace of investment and growth to ensure good returns for shareholders.

JD focuses on the long-term healthy development of the business, including healthy expansion of business scale, as well as long-term stable growth in profit and cash flow. Based on this foundation, we are committed to providing long-term returns to shareholders. As part of this commitment, JD plans to reward shareholders in various ways.

Over the past three years, JD has paid out a total of $4.2 billion in dividends. Furthermore, we have just announced the distribution of an annual dividend totaling $1.2 billion this year, with the increase in this amount attributed to the rapid growth in profits last year, creating tangible operational benefits for shareholders. We plan to continue annual dividends to share the value creation of the company with shareholders.

In addition, JD's board of directors has approved a new share repurchase plan to repurchase $3 billion worth of company shares over the next three years. We will firmly execute the repurchase and regularly communicate with investors to demonstrate the company's tangible efforts in shareholder returns.

## Q3: Are there any changes or updates to JD's platform ecosystem strategy?

JD's platform ecosystem includes both self-operated and third-party (3P) business models, which complement each other to provide users with a good shopping experience. JD has always viewed the platform ecosystem as a long-term strategic direction and continuously invests to promote its development. Data shows that JD's Net Promoter Score (NPS) significantly improved in the fourth quarter, reflecting the enhancement of the platform ecosystem.

However, there are still areas where we need to improve. The first step in enhancement is to increase the number of merchants and product supply, attract more merchants to join, and assist them in successfully operating on the platform. This not only provides users with a wider range of product choices but also fosters healthy competition on the platform.

Over the past year, JD has increased its efforts in merchant recruitment, streamlined the merchant onboarding process, and provided more support and fee reduction measures for small and medium-sized merchants. These measures have driven rapid growth in the scale of platform merchants. As of now, the number of effective merchants on the JD platform is close to 1 million, reaching the target set at the beginning of last year. Moreover, the number of active merchants is growing rapidly, with more and more new merchants finding effective ways to operate on the JD platform and continuing to grow and expand. In the second step, the company has received positive feedback from users, and the number of shopping users and order volume on third-party platforms continues to grow, with an increase in user satisfaction. At the same time, third-party business and overall Gross Merchandise Volume (GMV) have gradually entered a track of healthy growth.

It is worth noting that building a unique platform ecosystem is a long-term project, and JD is in the early stages of constructing a unique platform ecosystem, so rapid monetization is not our top priority in the short term. The focus in 2024 is on continuously attracting more merchants, especially small and medium-sized businesses in industrial belts, to enrich product supply and optimize the platform ecosystem.

Furthermore, JD will further optimize the traffic distribution mechanism to create a clear growth path and a fair operating environment for merchants, enhance the user experience in third-party businesses, and promote the mutual prosperity of self-operated and third-party businesses.

We believe that through a more prosperous platform ecosystem, a richer supply of high-quality products, combined with more accurate user matching, we will attract more users, meet diverse needs of different users, and form a virtuous cycle to help merchants expand and improve their businesses. Over time, monetization of third-party businesses will naturally increase, becoming an important driver of long-term revenue and profit growth for the company.

Looking at the platform performance, there has been a slight short-term fluctuation in platform and advertising service revenue in the fourth quarter. This is mainly due to the company's strong development of the platform ecosystem in 2023, introducing a series of support measures, including providing commission-free services for new merchants and actively reducing commissions in certain categories and marketing scenarios, leading to a slight slowdown in commission revenue growth in the fourth quarter.

Moreover, advertising revenue growth also showed a slight slowdown in the fourth quarter, mainly due to staggered comparisons with the previous year's Spring Festival and the high base effect caused by people hoarding behavior during the epidemic. However, with seasonal factors eliminated in the first quarter, advertising revenue will return to a healthy growth track.

In the short term, the company's overall operating conditions are good, without the pressure to increase monetization rates urgently, but the long-term trend of steady growth will remain unchanged.

## Q4: Have there been any changes or updates to JD's overseas expansion strategy?

JD has been paying attention to international opportunities and steadily advancing global business in a pilot manner. Due to the difference in JD's business model and competitive advantages from other platforms, the company's international expansion strategy also differs.

JD's business model is based on the supply chain and centered on user experience. The supply chain infrastructure is the cornerstone of JD's international business development, and the company will continue to leverage this advantage to expand its influence in global markets.

In terms of JD's retail business, the company's Global Selling platform is dedicated to helping Chinese enterprises expand into overseas markets and promoting more brands to go global. Although still in the early stages, JD is actively optimizing the shopping experience to provide more high-quality products and services to global users.

Furthermore, JD has made progress in cross-border business. The company has established three major direct procurement centers globally to enhance international supply chain capabilities, increase efficiency and product diversity, reduce product costs, and ensure product safety.

Among them, JD Logistics and JD Property are important pillars for the company's overseas expansion. JD Logistics has established nearly 90 bonded warehouses, overseas warehouses, and postal warehouses worldwide, with a total management area of 900,000 square meters. This robust overseas supply chain network enables JD Logistics to serve numerous overseas customers and Chinese brands going global.

JD Industrial Development focuses on deepening its presence in the Southeast Asian and European markets, with operations expanded to countries such as Vietnam, Indonesia, Singapore, the UK, and the Netherlands. Its clients include international logistics and fast-moving consumer goods giants, as well as emerging Chinese enterprises going global. JD Logistics and JD Industrial Development primarily target corporate clients, providing them with professional services, thus the impact on end-users is limited.

Moreover, JD has launched the omnichannel retail platform "Ochama" in Europe, utilizing advanced automated logistics technology and global supply chain capabilities to offer a high-quality shopping experience to consumers in 24 European countries. Ochama serves not only local European brands and merchants but also provides a reliable path for Chinese brands and merchants going global. Currently, Ochama is still in the incubation stage.

We will continue to leverage our supply chain and user experience advantages, continuously deepen our international business layout, to achieve long-term growth and success in overseas operations.

## Q5: How does JD adjust its strategies to meet the changing user demands against the backdrop of macroeconomic weakness and consumers shifting towards rational consumption?

JD has already predicted consumer trends by the end of 2022 and will accelerate the construction of the platform ecosystem throughout 2023, promoting a low-price strategy while continuously enhancing user shopping experience and service levels to differentiate our services. By analyzing the latest consumption trends and insights, JD collaborates with brand and merchant partners to create new products that better meet consumer demands, overall performance aligns with company expectations.

Looking ahead to 2024, JD will adhere to existing strategies and optimize execution without major adjustments. The company will continue to strengthen user experience and services to consolidate core competitiveness. Additionally, JD will advance the low-price strategy, reduce procurement costs, offer more low-priced goods, improve the efficiency of low-price subsidies, allowing users to feel the advantages of saving money more acutely. Furthermore, JD will expand the scale of merchants, help them grow, enrich the platform's product supply to increase the diversity of user experience.

With the expected macroeconomic stimulus and consumption promotion policies in 2024, JD anticipates a further consolidation of the recovery trend in consumption, which will benefit certain categories of the company. JD estimates healthy growth in total transaction volume for the year and is confident in maintaining growth exceeding the social zero growth rate, continuously gaining market share.

## Q6: Does JD plan to actively attract new users in lower-tier markets, and what are the related growth strategies and goals?

JD has always been focused on promoting user growth and increasing user purchase frequency. We mainly concentrate on enhancing user experience as we believe it is a key way to achieve high-quality user growth. We will continue to increase the diversity of product supply, advance the low-price strategy, and build a product pool that better suits the lower-tier markets and user consumption habits. In addition, JD is committed to improving its service level, including enhancing pre-sale and after-sale services, as well as providing more shopping security measures, such as free doorstep returns and lowering the free shipping threshold.

At the same time, we believe that marketing and subsidies are tools for managing users, and the company will use these tools in a targeted and disciplined manner to achieve specific goals.

In the fourth quarter, JD saw a healthy growth in the number of quarterly shopping users, with a significant increase in new users and a stable growth rate among existing users. User growth in lower-tier markets accelerated in the fourth quarter, with overall shopping frequency showing a healthy growth trend, especially a significant increase in purchase frequency among existing users. Meanwhile, user satisfaction continues to rise, and the Net Promoter Scores (NPS) for both self-operated and third-party platforms (POP) have increased year-on-year.

Looking ahead, user growth in Q1 is expected to maintain this trend. This year, as the exclusive interactive platform for the CCTV Spring Festival Gala, JD has offered gifts to audiences at home and abroad, reaching more new users. Looking at the whole year, JD remains confident in user growth.

## Q7: What are the industry trends and growth prospects for different categories in 2024?

In 2023, as society fully returned to normal operations, the consumer market showed a continuous recovery throughout the year. However, there is still room for improvement in consumer purchasing power and confidence.

Entering 2024, data from the first two months shows a stable and positive trend in consumption, while the macroeconomy continues to improve. JD-SWR is looking forward to future macroeconomic stimulus and policies to promote consumption, believing that this will further strengthen the momentum of consumption recovery and expansion.

In 2024, our strategic direction will remain relatively stable, and we are confident in achieving goals that surpass overall market growth. In the long run, we believe that the goal of users pursuing a better life remains unchanged. JD will continue to provide high-quality services and cost-effective products to meet the diverse needs of different types of users in various shopping scenarios.

Looking at the industry as a whole, the proportion of online retail sales has gradually increased in recent years, with some industries achieving high penetration rates. However, there is still significant room for improvement in online penetration rates in sectors such as supermarkets, sports, furniture, home decor, automobiles, and services.

From a category perspective, JD's dominant categories like electronics grew faster than the overall market in 2023. Despite industry challenges, with government encouragement for consumption and the promotion of bulk consumer goods like electronics, JD is confident in the healthy growth of these categories in 2024.

For the supermarket category, management expects intense competition in 2024. JD's supermarket business underwent adjustments in the past year, focusing on core tracks, enhancing supply chain capabilities, and improving fulfillment efficiency through warehouse network transformation. Currently, the business has shown a good recovery trend.

In the fashion and home categories, as these rely more on third-party merchants, JD's open ecosystem strategy showed initial success in 2023, with increasing user awareness of JD's fashion and home categories. JD remains confident in the healthy growth of these two categories in 2024.

## Q8: What is the competitive landscape in the domestic retail market and the company's response strategy?

The retail consumer market in China is enormous and will accommodate various platforms and business models. JD positions itself as a retailer. In the face of the market's decentralization and the continuous changes in the competitive landscape, the company believes that the key is to establish the ability to meet user needs, achieve win-win cooperation with partners, and operate more efficiently.

In 2023, JD made some strategic focus adjustments. Despite the short-term impact on performance, the company continues to gain market share and user recognition in many categories. The JD team has innovated in improving conversion efficiency and reducing operating costs, and these efforts are expected to yield corresponding results in 2024.

JD will continue to firmly advance around its established strategic direction, believing that a business model based on the supply chain can help the company navigate through different economic cycles and achieve sustainable growth. JD is confident in its ability to sustainably gain market share in the business in the long term.

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