JD.com's Takeout Breakthrough Battle: Seeking Market Share, but More Focused on Profitability!

JP Morgan believes that JD.com’s profit path is becoming clearer, as it positions its delivery business as a strategic extension of its e-commerce platform rather than merely a tool for market share competition. According to news from the Chasing Wind Trading Desk, the latest investor meeting minutes from JP Morgan indicate that JD.com’s management emphasized that the core goal of the delivery business is to achieve synergy with traditional e-commerce, enhance user engagement, and drive cross-selling. According to JP Morgan analysts, JD.com’s management stated that they will not engage in a cost-ineffective battle for delivery market share, and the short-term aggressive behavior of competitors will not affect JD.com’s own pace. The company focuses on healthy growth in order volume and user base, as well as improving the economic benefits per order. Management data shows that among new users acquired through delivery in March 2025, 40% converted to e-commerce users by July. Cross-selling mainly focuses on categories such as supermarkets, electronic accessories, and life service coupons. JD.com has made it clear that it will not view any business as a permanent cost center, and the delivery business has a clear profit path. Management expects that fulfillment revenue will offset rider costs, while commission and advertising revenue will cover subsidies and other operating expenses. Rational Competition Strategy: No Longer Blindly Burning Money to Capture Market JD.com’s management has clearly stated that the company does not intend to engage in a cost-ineffective battle for delivery market share and will not be influenced by the short-term aggressive behavior of competitors. Instead, JD.com positions its delivery business as an important tool for achieving strategic synergy with traditional e-commerce, focusing on healthy growth in order volume and user base, as well as improving the economic benefits per order. The core data behind this strategic shift is striking: among new users acquired through delivery in March 2025 (users who have been inactive for the past 12 months), 40% became e-commerce users by July. The main categories for cross-selling include supermarkets, electronic accessories, and life service coupons. Due to the generally low average order value of these categories, management expects that it will take another 1-2 years for new users to make a significant contribution to GMV/revenue. Profit Path Gradually Clarified: Fulfillment + Commission + Advertising as Three Pillars Management emphasizes that JD.com will not view any business as a permanent cost center, and each business unit should have a clear path to profitability. For the delivery business, although the company may incur losses in the short term, the long-term profit path relies on three revenue pillars: fulfillment revenue will offset rider costs, and commission and advertising revenue will be sufficient to cover subsidies and other operating expenses. In terms of fulfillment, all market participants, including JD.com, have suffered fulfillment losses due to rider costs exceeding fulfillment fees. Management expects that as the market normalizes and becomes more rational, fulfillment revenue should be able to cover rider costs. Investors should note that management believes it is more challenging for delivery business operators to achieve breakeven than before. This is because the economic benefits per order at the industry level may change due to intense competition: the overall commission rate in the industry may decline, while inflation and social security benefits may lead to increased rider costs This means that the future breakeven order volume will be higher than in previous years, when food delivery operators typically reached breakeven at an average daily order volume of about 20 million orders. In the short term, management believes that JD.com will continue to make necessary investments to maintain market positioning. This year's main focus includes: 1) improving subsidy efficiency, focusing on high-value products, and potentially sharing subsidies with merchants; 2) gradually achieving breakeven through higher operational efficiency; 3) increasing monetization efforts (such as advertising revenue, etc.). In addition, regarding the online travel business, JD.com believes that this is entirely an incremental product to meet user demand. Compared to food delivery and e-commerce, the online travel business naturally has a very low frequency, and JD.com believes there is no urgency in this area, planning to build its capabilities and supply over a relatively long period