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After Liu Qiangdong returns, he hands over his first annual report card. In 2024, JD.com will continue to promote its "low price" strategy

Ronan62054
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2023 has special significance for JD.com. Strategically, this is the entire year that Liu Qiangdong proposed and implemented "JD is the only competitive weapon" after returning to JD; In terms of organizational structure, Xu Ran, the CFO of Zhongyuan, took over as the CEO of the group and also took on the role of CEO of JD Retail in November, launching a new round of cost reduction and efficiency improvement strategies.
On March 6th, JD Group released its Q4 and full year results for 2023, which can be seen as a year-end report of JD's performance in the face of external low price wars and internal organizational changes.
According to the financial report, JD's revenue in the fourth quarter reached 306.1 billion yuan, a year-on-year increase of 3.6%. In 2023, its revenue for the whole year was 1084.7 billion yuan, a year-on-year increase of 3.7%. In terms of operating profit, the operating profit for the fourth quarter was 2 billion yuan, compared to 4.8 billion yuan in the same period last year. However, this part actually confirmed a total of 5.2 billion yuan in goodwill and asset impairment for Dada and JD.com. The operating profit for the full year of 2023 was 26 billion yuan, compared to 19.7 billion yuan in the same period last year, a year-on-year increase of 31%.
Specifically, taking Q4, which includes the 2023 Double 11 shopping festival, as an example, in terms of categories, the revenue from electronic products and household appliances in the fourth quarter was 150.35 billion yuan, and the revenue from daily necessities was 96.14 billion yuan, achieving growth of 6.1% and 0.2% respectively. This proves that 3C products are still the largest competitive category of JD, while daily goods are more vulnerable to the impact of competitors such as Taobao, Pinduoduo and Tiktok E-commerce.
In addition, the fourth quarter service revenue, including platform and advertising, logistics, and other two items, still reached 59.6 billion yuan, a year-on-year increase of 3%. However, the platform and advertising service revenue was 23.6 billion yuan, a year-on-year decrease of 4%. The platform and advertising service revenue mainly relies on the commission and advertising fees of third-party merchants, which means that JD.com has reduced the revenue source for the platform while vigorously attracting third-party merchants to provide low-priced supply.
At the subsequent financial report conference call, the management stated that "the short-term slight fluctuations in platform and advertising service revenue in the fourth quarter were mainly due to the company's strong development of the platform ecosystem in 2023, and the launch of a series of support measures, including providing free commission services for new merchants and actively reducing commission rates in certain categories and marketing scenarios, which led to a slight slowdown in commission revenue growth in the fourth quarter.". And emphasize that there is no pressure to urgently increase the monetization rate.
The "low price" strategy of thriving self operated and third-party merchants coexisting will continue in 2024.
JD CEO Xu Ran said in a conference call, "Looking ahead to 2024, JD will adhere to its existing strategy and optimize its execution without making significant adjustments. At the same time, JD will promote a low price strategy, reduce procurement costs, and provide more low-priced products to improve the efficiency of low price subsidies."
During the financial report conference call, JD.com was asked how it views its overseas expansion and internationalization strategy.
Xu Ran stated that JD.com has always been concerned about internationalization opportunities, but its business model determines that it has significant differences from other platforms in terms of overseas operations, but it is still in its early stages. Previously, JD.com had once cut off its overseas business in Southeast Asia, and its omnichannel retail business Ochama launched in Europe was also in the early stages of incubation. Recently, there have been rumors that JD.com is bidding for British electronics retailer Curries.
In the field of going global, JD is still ahead in logistics business. Since entering the accelerated construction period of overseas warehouses in 2020, JD Logistics currently has nearly 90 overseas warehouses, bonded warehouses, and direct mail warehouses worldwide, with a total cross-border network storage area of over 900000 square meters. This part was still mentioned by CEO Xu Ran during the financial report conference call.
"Our strategic direction will remain relatively stable in 2024," said Xu Ran. There are still industry opportunities in the specific development of the retail industry, and there is still significant room for improvement in online penetration rates in areas such as supermarkets, sports, furniture, home decoration, automobiles, and service industries.
At the same time as releasing its financial report, JD.com Group also announced that the company's board of directors has approved annual cash dividends, with a total dividend amount of approximately $1.2 billion, exceeding the previous year's $1 billion. In addition, the board of directors of JD Group has also approved a new share repurchase plan, which can repurchase shares worth no more than $3 billion within the next 36 months up to March 2027, after the existing share repurchase plan expires and takes effect.
This represents that when Tencent, Alibaba, and Meituan conducted large-scale stock repurchase plans within this year, JD.com also joined this sequence.
Affected by various factors, on the first trading day after the release of JD's financial report, JD. com's US stock market surged by more than 15% before the opening, and the increase once expanded to nearly 20% after the opening.
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