"Big Banks" JP Morgan: JD.com has no intention of aggressively competing for market share in the food delivery market, hoping to collaborate with its e-commerce business

JP Morgan published a report stating that JD.com (09618.HK) expressed no intention to spare costs in competing for market share in the food delivery sector during an investor meeting. This reflects that the short-term actions of competitors will not affect the group's pace, with the fundamental goal being to achieve synergy with traditional e-commerce operations, promote cross-selling through food delivery services, and enhance user stickiness. Management emphasized that the company focuses on healthy growth in order volume and user base, as well as improvements in unit economics (UE).

Management also revealed that among the new users acquired through food delivery services in March this year, 40% converted to e-commerce users by July. The main product categories for cross-selling include supermarket goods, electronic accessories, and lifestyle service coupons. Due to the lower order amounts in these categories, management expects it will take an additional 1 to 2 years for new users to make a tangible contribution to gross merchandise volume (GMV) and revenue.

Management believes that while the food delivery business may incur losses in the short term, it will be profitable in the long run, as fulfillment revenue can cover rider costs, and commission and advertising revenue will exceed the subsidies and other operating expenses provided by the group.

As for the travel platform business, the group views it as a value-added service to meet user needs. Essentially, the frequency of travel business orders is much lower than that of food delivery and e-commerce, and the group is not in a hurry to develop it, opting to gradually build capacity and supply over a relatively longer period