On the evening of November 15th, JD Group delivered a good performance report: in the third quarter of 2023, JD Group's operating revenue reached 247.7 billion yuan, and the net profit attributable to ordinary shareholders of listed companies under non US GAAP was 10.6 billion yuan, exceeding market expectations; Under non US GAAP, the net profit margin attributable to common shareholders of listed companies is 4.3%, and the retail operating profit margin is 5.2%.
In the third quarter, we achieved stable revenue performance and reached a historic high in profit levels, mainly due to our efforts in price competitiveness and platform ecological construction, as well as our advantages in the supply chain. "Xu Ran, CEO of JD Group, said," I believe JD is in a favorable position to achieve long-term sustainable growth
Under the low-priced strategy
Revenue remains stable
In March of this year, JD's 10 billion yuan subsidy was officially launched, which immediately sparked heated discussions and concerns. The external concern is whether the low price strategy will affect JD's performance and stock price. In response, an employee in a JD retail technology position told Securities Daily, "After implementing a 10 billion yuan subsidy, we have lowered prices to the lowest in some categories and promised to compensate for expensive purchases. This has significantly increased platform sales and significantly boosted performance
On the JD Double 11 Media Open Day, JD retail executives also stated that the number of products on JD's 10 billion yuan subsidy channel has increased by two times compared to 618, and the user base has increased by nearly five times. The massive sales of high-quality products from hundreds of industry belts on the 9.9 package channel have exceeded one million units.
From the third quarter financial report data of JD Group, it can also be seen that under the low-priced strategy, although JD's revenue has slowed down, it still maintains stability.
In the third quarter of 2023, JD Group's revenue reached 247.7 billion yuan, and as a core category, electronic products and household appliances continued to maintain a year-on-year growth rate of revenue higher than the industry average; The service revenue reached 52.4 billion yuan, accounting for over 20% of the overall revenue for the first time, reaching 21.2%, with logistics and other service revenue increasing by 19.3% year-on-year.
It is understandable that JD's revenue growth rate has slowed down. According to data from the Bureau of Statistics, in September 2023, the total retail sales of consumer goods above the designated size for household appliances and audiovisual equipment decreased by 2.3% year-on-year, and the cumulative year-on-year decline from January to September was 0.6%. In response, insiders of JD Group told Securities Daily: "Home appliances account for a relatively high proportion of JD's product sales. Overall, the retail sales of the entire home appliance category have declined, and we will definitely be affected. However, this category still maintains a year-on-year growth rate of revenue higher than the industry average
In addition, our self operated model's price reduction promotion will directly affect the performance of financial reporting revenue, but not profit. In other platform models, price reductions on the merchant side will not affect the platform's direct revenue. Moreover, our self operated model needs to allow some traffic space for third-party merchants, and the merchant side's revenue will not be directly included in JD's financial reporting revenue According to the above-mentioned insider of JD Group.
This year is the year when JD.com has helped merchants increase their presence and invested the most in costs. It is reported that the "Spring Dawn Plan" released at the beginning of the year once again upgraded 20 measures to support businesses in the third quarter, driving the number of new merchants to reach a new high and maintaining a three-digit year-on-year growth in the number of merchants in the third quarter. JD's low-priced model is a model that benefits consumers, brands, merchants, and JD. As of November 11th this year, the platform's transaction volume, order volume, and user count reached new highs.
Continuous optimization of the supply chain
Ensuring profitability
In the third quarter, the net profit attributable to common shareholders of listed companies under non US GAAP was 10.6 billion yuan, exceeding market expectations. This is mainly due to supply chain cost reduction and efficiency increase, which has led to continuous improvement in retail operating profit margins. Squeezing water from efficiency has led to a further increase in supply chain efficiency, "said an insider at JD.com.
From the financial report data of the third quarter, it can be seen that the company's gross profit margin still increased year-on-year despite last year's high base. In the third quarter, the company achieved a gross profit of 38.75 billion yuan, a gross profit margin of 15.6%, a year-on-year increase of 0.7%. JD Retail achieved an operating profit of 11 billion yuan, a retail operating profit margin of 5.19%, and still had a year-on-year growth of 0.03% under last year's high base. This is mainly due to the continuous enhancement of the company's supply chain capability and the continuous optimization of business structure, which has impacted costs Improvement Ding Zhechuan, an analyst at China Merchants Securities, stated in a research report.
As of the end of the third quarter, JD's supply chain infrastructure asset scale increased by 17% year-on-year, reaching 148.6 billion yuan. JD Logistics operates over 1600 warehouses, including the management area of the cloud warehouse ecological platform. The total management area of JD Logistics warehousing network exceeds 32 million square meters.
It is worth noting in the third quarter report that JD Group's human resources expenditure continued to increase, with a total expenditure of 25.9 billion yuan in the third quarter. The total expenditure on human resources in the first three quarters was 76.3 billion yuan, which is 3.7 times the net profit in the first three quarters. JD has over 400000 frontline grassroots employees, most of whom are couriers. According to the financial report released by JD Logistics, the total human resources expenditure of JD Logistics in the first three quarters reached 59.3 billion yuan.
In the business ecosystem, consumers, brands, and merchants are not a zero sum game. JD constantly optimizes and pursues the ultimate in the five factors that affect consumer experience and merchant supply, including product, price, service, cost, and efficiency. By continuously optimizing the supply chain, the saved money can be given to consumers, brands, and merchants, thereby stimulating market vitality with true low prices The above-mentioned insiders of JD Group stated.