The more complex the market environment, the more it tests a company's resilience and expansion potential. JD.com's commitment to efficient operations and infrastructure development bore fruit this quarter.

In the third quarter of 2024, JD.com's revenue increased by 5.1% year-on-year to RMB 260.4 billion, with an operating profit of RMB 12 billion, up 29.5% from the same period last year. Net profit attributable to ordinary shareholders of the company was RMB 11.7 billion, up 47.8% year-on-year.

By business segment, JD.com's retail revenue was RMB 224.99 billion, up 6.1% year-on-year, while its logistics revenue was RMB 44.4 billion, up 6.6% year-on-year. The retail business, which accounts for the largest share of revenue, saw a notable increase in growth rate compared to the previous quarter. With the support of government subsidies, JD.com's supply chain and logistics infrastructure strengths have even greater room for development.

Over the past year, the e-commerce industry has shifted from collectively promoting price competitiveness to opposing the "low-price competition trap". The challenge of balancing quality and price has persisted. The market's sudden shift in direction has been abrupt, but JD.com's financial reports reflect more strategic consistency in the data. For example, JD.com has maintained double-digit year-on-year growth in active users and shopping frequency for three consecutive quarters.

The rapidly changing market demands both solid fundamentals and the ability to seize opportunities. Balancing full-speed sprints with steady accumulation tests a company's grasp of its operational pace. JD.com's Q3 report demonstrates the possibility of achieving the "impossible triangle" of product, price, and service, with the actual implementation lying in the balance between the pace of business advancement.

01. High-pressure competition requires speed

Companies that have accumulated strengths over time are better at seizing opportunities and gaining the upper hand. Speed is both an advantage and a capability.

Starting in September, the national subsidy policy for replacing old home appliances with new ones began to be implemented on a large scale, offering subsidies of 15%-20% for individual consumers purchasing products with different energy efficiency or water efficiency ratings. Major e-commerce platforms have aligned their promotional activities with the subsidy policy, with JD.com having the most solid supply chain foundation in the home appliances sector.

This is partly because home appliances are a strong category for JD.com. As the main platform for implementing the national subsidy policy, JD.com has launched special pages for home appliance replacement activities in over 20 provinces and cities, increasing inventory, expanding product categories, and offering combined discounts based on specific policies in different regions. Coupled with JD.com's long-standing self-operated sales experience and the full support of over 100,000 JD.com employees, it can provide integrated services that distinguish it from other platforms. JD.com's logistics and delivery, supply chain management, and after-sales services for home appliances are already very mature. Consumers naturally view JD.com as the first port of call for accessing policy subsidies.

In the earnings call, JD.com CEO Xu Ran mentioned that "demand for home appliances and computers in September showed a significant increase compared to July and August. The overall sales growth rate for the entire third quarter showed a month-on-month increase."

Data shows that JD.com's electronics and household appliance revenue reached RMB 122.56 billion in the third quarter, up 2.7% year-on-year, compared to a 4.6% year-on-year decline in the previous quarter, marking a return to growth. Meanwhile, the daily necessities category maintained its growth trend, with a year-on-year growth rate of 8%.

While capturing the bonus period, JD.com has also focused on squeezing out inefficiencies in the supply chain and implementing systematic low pricing in recent quarters. Its core logic is to attract stable demand with high-quality products and services, stimulate supply chain efficiency improvements and product innovation, and leverage economies of scale to achieve a virtuous cycle of simultaneous quality and price improvements. As the industry's low-price trend reverses, JD.com's approach remains unchanged, emphasizing speed, quality, affordability, and efficiency, combined with national subsidies and promotional events like Singles' Day, ultimately leading to accelerated revenue growth this quarter.

According to a press conference held by the State Council Information Office on November 15, retail sales of consumer goods in October increased by 4.8% year-on-year, with retail sales of household appliances surging by 39.2%. Xu Ran also mentioned in the earnings call that due to the time consumers need to understand the policy and insufficient brand capacity, the full effects of the national subsidies in the third quarter had not yet been realized. Industry data shows that during the recent Singles' Day, JD.com had the largest sales share in traditional strength areas such as 3C digital products and household appliances, reaching 42.8% and 39.1% respectively, indicating that the current "fast-paced" growth will continue into the fourth quarter.

The platform's pursuit of speed at the macro level is also reflected in the consumer experience, such as the most intuitive "fast" aspect of express delivery. Logistics is another differentiating factor for JD.com. In recent quarters, JD.com has focused on integrating cutting-edge technology to improve resource utilization efficiency in logistics. In September, JD Logistics launched logistics driverless vehicle technology equipped with a perception large model and announced the large-scale deployment of the sixth-generation intelligent delivery vehicle.

Financial report data shows that JD Logistics' total revenue increased to RMB 44.4 billion in the third quarter, up 6.6% year-on-year. Revenue from external customers reached RMB 31.6 billion, accounting for over 70% of total revenue.

Over the past decade, JD.com's workforce has grown tenfold. A company that excels in technology and infrastructure needs to quickly expand its personnel to maintain efficient market demand satisfaction and prevent service or innovation bottlenecks due to insufficient manpower. JD.com's overall organizational structure is designed for high-speed operation. This year, the company has continuously introduced employee incentive and expansion policies to increase team size and compensation.

For example, in July this year, it was announced that within a year and a half, the annual fixed salary of JD.com's procurement and sales employees would be increased from 16 salaries to 20 salaries, with no cap on performance incentives. Additionally, during the Singles' Day press conference in October, it was revealed that the group would recruit at least 10,000 additional procurement and sales personnel over the next three years.

Having tasted the benefits of long-term accumulation, JD.com is only accelerating further.

02. Infrastructure support and meticulous "slow" work

In debates about operational pace, "speed" dominates most of the attention, as the growth rate of various business indicators is the absolute focus. The anxiety about deceleration accompanies many internet companies. However, "slow" implies steady development and deep accumulation in key areas. Similarly, JD.com's performance needs to be evaluated over a longer timeframe to assess cause and effect, observing the long-term sustainability and stability of the platform's strategy. A typical example is the platform's attitude towards traffic.

Shelf e-commerce's need to improve content construction is a well-known topic. Due to the rise of content e-commerce in recent years, the model of driving traffic through content and attracting consumers through strong interactivity and entertainment has gained much attention. The core model of shelf e-commerce is primarily based on search and display, which is more efficient in scenarios with clear demand but lacks emotional connection and interaction with consumers.

However, due to users' clear needs, they are more inclined to obtain an efficient shopping experience on shelf platforms rather than consuming content for extended periods. Simply integrating image and video sections into apps to attract traffic often yields poor results.

Against this backdrop, compared to peers who invest aggressively, JD.com's attitude appears somewhat cautious. It aims to create content but not solely for traffic; content construction must be deeply integrated with the platform's shopping process. During last year's Singles' Day, JD.com's procurement and sales live streams became a hit, with this platform-customized live streaming format combining the precise purchasing needs of shelf e-commerce with the emotional connection and scenario-based experience of content e-commerce being pushed to the forefront.

Procurement and sales live streams are difficult to quickly develop. On the one hand, live stream procurement and sales personnel must possess high professional quality and be able to provide more professional product interpretations than ordinary anchors. On the other hand, procurement and sales live streams transparently display the supply chain operation process to viewers, achieving low-price "traceability," which requires the platform to have sufficient supply chain control capabilities.

As of 11 p.m. on November 11 this year, the number of JD.com users participating in Singles' Day shopping increased by over 20% year-on-year, with procurement and sales live stream order volume increasing by 3.8 times year-on-year. This year's special background is that the growth rate of content e-commerce has begun to slow down, and live streaming is no longer a panacea for driving traffic. However, JD.com's content section has not been significantly impacted by shifts in trends. Procurement and sales live streams have refined the most essential part of the content model, interactivity, and added elements of professional presentation. In the future, it has more room for refinement and potential for release.

One of the best-known long-term business plans to the outside world is probably JD.com's self-built logistics system. As a heavy asset, heavy investment, and long-term business, JD.com has been building logistics infrastructure almost since its inception because there are no shortcuts; it needs to overcome thresholds such as network construction, supply coordination, and scalable profitability. However, similarly, the competitive barriers provided by self-built logistics are also unique, ranging from basic service quality and controllability to long-term cost optimization and supply chain transparency at a higher level.

Currently, JD.com has ample patience to improve its logistics system, including coordinating with national subsidy promotion activities mentioned earlier to provide high-quality services for trade-ins and integrated delivery and installation. As mentioned in the third-quarter financial report, it has introduced map and route planning technology to optimize last-mile logistics in combination with regional characteristics.

As of September 30 this year, including cloud warehouses operated by third-party owners, JD Logistics has over 3,600 warehouses with a total managed area exceeding 32 million square meters, and its warehousing network covers almost all counties and districts nationwide.

A company's patience also lies in the finer details of customer service. The third-quarter financial report specifically mentions that JD.com performed well in the 2024 S&P Global Corporate Sustainability Assessment, leading the global retail industry. JD.com is also optimizing some service items that receive less public attention. For example, the JD.com customer service "Life Channel" team, launched in 2020, has been on duty in shifts and providing continuous service for four years. Additionally, this year's Singles' Day featured the industry's first "exclusive customer service interaction and companionship live stream" for seniors, focusing on their emotional needs.

Focusing on long-term responsibilities and commitments while rapidly developing is also an indispensable part of brand building.

03. Final thoughts

E-commerce "involution" has been a hot topic in recent years, but this extreme competition seems to inevitably harm one party, whether it's consumers fatigued by complex discounts or merchants under multiple pressures. However, an imbalanced three-way relationship is difficult to sustain in the long run. Therefore, we now see platforms no longer pursuing extreme promotional measures, either simplifying promotion rules or "unbinding" merchant regulations.

After the tide recedes, a company's grasp of operational stability and pace becomes even more crucial. Relying solely on external environments and windfall bonuses to drive growth is no longer feasible, and internal drive naturally becomes the key to coping with the new competitive landscape. Therefore, the combination of speed and pace discussed earlier essentially seeks a balance between short-term and long-term return expectations, meeting immediate growth needs while paving the way and reserving space for future development.

Retail is a dynamic industry, but its fundamental purpose has always been to meet consumers' demand for products and services. After the era of flooding traffic and brutal low pricing, the focus eventually returns to refining experience, cost, and efficiency. JD.com can maintain resilience amidst fluctuations because it adheres to adjusting its strategic pace from the essence of retail and does not deviate from its course due to external noise.

Similarly, JD.com's third-quarter performance should also be placed on a longer timeline, providing a perspective for observing how enterprises achieve a dynamic balance between operational speed and pace.

*The lead image and illustrations in the text are sourced from the internet.