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JD.com’s shares declined sharply after the Chinese e-commerce giant announced that its third-quarter profits more than halved, primarily due to substantial investments in new ventures, notably its food delivery service launched earlier this year.
The company’s stock in Hong Kong closed down 6 percent at HKD116.90 (approximately USD15.20) per share, while its New York-listed shares fell 1.7 percent to USD30.71 yesterday.
Net profit plummeted 55 percent to CNY5.3 billion (around USD745.1 million) for the quarter ending September 30, compared to the previous year, according to an earnings report released yesterday. Meanwhile, revenue increased by 15 percent to CNY299.1 billion (roughly USD42 billion), with merchandise sales up 11 percent and service revenue soaring by 31 percent.
JD reported a quarterly operating loss of CNY1.1 billion, a stark contrast to the CNY12 billion operating profit recorded a year earlier. The loss was mainly attributed to increased investments in new business areas. Marketing expenses more than doubled to CNY21.1 billion, largely dedicated to promoting these new initiatives.
“JD Food Delivery continued to make healthy progress,” said the CEO. “It also continued to generate synergies with our core retail operations, especially in driving user growth, increasing shopping frequency, and encouraging cross-category purchases.”
Revenue from new ventures, including JD Food Delivery—which was launched in February—JD Property Development, the social e-commerce platform Jingxi, and overseas operations, more than tripled to CNY15.6 billion (USD2.2 billion). While food delivery experienced steady growth in gross merchandise value and order volume, overall quarterly investments decreased sequentially.
High-level competition in the food delivery market has not led to innovative business models or added value to the industry. Instead, it has disrupted pricing systems and created challenges for merchants, making the current model unsustainable, according to the CEO. The company’s primary focus remains on refining platform systems and improving the experience for users, merchants, and delivery personnel.
JD Retail, which encompasses JD Health, JD Industrials, and other divisions, generated revenue of CNY250.6 billion—an 11 percent increase from the previous year. The nationwide subsidy program has boosted consumption since last year, particularly for appliances and electronics, according to the company. This program has not only increased short-term demand but also spurred innovation, digitalization, and environmentally friendly upgrades.
Revenue from general merchandise grew 19 percent year-over-year in the third quarter, with electronics and home appliances increasing by 4.9 percent, and platform and advertising revenue up 24 percent. The number of annual active users surpassed 700 million last month.
JD plans to sustain its growth by leveraging its strengths in merchandise selection, competitive pricing, and service quality. It will collaborate with brands on more personalized products, maintain competitive prices through economies of scale and supply chain efficiencies, and enhance the shopping experience across multiple channels.
By the end of the third quarter, JD operated over 20 JD Mall outlets nationwide and more than 100 JD Appliance City flagship stores. Additionally, orders from the JD Merchandising Manager livestream studio surged more than 150 percent during the recent Double 11 shopping festival compared to the previous year.
JD Logistics reported revenue of CNY55.1 billion, a 24 percent increase—the fastest growth rate in two years—as the company accelerated its global expansion, similar to other Chinese peers. On October 9, the logistics subsidiary announced plans to acquire a local instant delivery business for USD270 million.
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