We Like JD.com Prioritizing User Experience and Market Share Over Profitability in 2024

JD.com offers authentic products from its online first party (1P) business with speedy and high-quality delivery service. It adopts an asset-heavy 1P model with self-owned inventory and largely self-built logistics, complemented by an asset-light third-party (3P) model. By comparison, its competitor Alibaba relies mostly on a 3P model. Underperforming Pinduoduo and Douyin, JD’s GMV/online retail sales of goods has decreased from 30.7% in 2021 to 29.2% in 2022. To reinvigorate growth, JD wants to change customers' mindshare of JD as an everyday low-price platform and has launched a CNY 10 billion subsidy program to attract price-sensitive customers. It is removing sales of nonstrategic low-margin products from the 1P business and allowing 3P merchants and business partners to provide these products instead. JD.com is also streamlining its organization to increase its ability to respond to quickly changing market dynamics. We expect JD.com to see weaker sales growth this year amid these changes.