On March 9, Chinese e-commerce giant JD.com released its financial results for the fourth quarter and the whole year of 2022. Although the report shows that its overall profitability has improved, its share price fell 11.28% to close at $41.68.
JD.com‘s total revenue in 2022 was 1,046.2 billion yuan ($150 billion), up 9.9% year-on-year, breaking through the trillion yuan mark for the first time. In terms of profitability, its net profit last year was 10.4 billion yuan, compared with a net loss of 3.6 billion yuan in 2021. The adjusted net profit was 28.2 billion yuan, compared with 17.2 billion yuan in 2021.
Part of the reason for the sharp drop in JD.com‘s share price may be the “10 billion yuan subsidy program” launched this month. In the conference call after the financial report, Xu Lei, CEO of JD.com, responded to this campaign.
When talking about the original intention of the subsidies, Xu said that price is an important factor in a user’s experience with e-commerce, and in the past, all e-commerce enterprises focused on providing lower prices during shopping festivals, which is not the optimal solution for the industry.
“JD.com‘s 10 billion yuan subsidy program is not just a slogan. We hope to guide users to gradually change their shopping habits by adjusting marketing strategies, from ‘buying goods during shopping festivals’ to ‘enjoying low prices every day’,” Xu said.
The program has achieved good results so far, exceeding expectations, and bringing real benefits to old users, and attracting many new users, which, in Xu’s view, is valuable to JD.com.
SEE ALSO: JD.com Begins Largest Ever Promotion to Restore Low-price Reputation
Regarding whether the program will put pressure on JD.com‘s profits, Xu Ran, CFO of the company, explained that not all discounts will be included in marketing expenses and profits, and the goal of the program is to reduce the operational pressure on shopping festivals, adding that the platform has no intention of drastically adjusting its annual marketing budget.
Xu also revealed three key issues facing JD.com last year. First, businesses that cannot achieve scale have been shut down, while investment in innovative businesses has been retained. Second, the company promoted the landing of the management platform for its supply chain in core businesses. Third, by focusing on the needs of users, it strived to reshape the image brand of the company.
In addition, weak consumption caused by the epidemic is still affecting revenues. The total company revenues in 2020 and 2021 were 745.802 billion yuan and 951.592 billion yuan respectively, with year-on-year growth rates of 29.3% and 27.6%. In contrast, the growth rate of 9.9% seen last year has obviously slowed down.
Talking about the recovery of consumer confidence, Xu said that it will take time to fully return to how things were before the epidemic. “The macro economy has shown a booming trend. The recovery of consumer confidence depends on enterprises’ production, especially on a large number of small and medium-sized enterprises. Many brands are optimistic about their performance this year, especially the second half of the year.”
The company’s financial report showed that the number of employees working at JD.com increased from 260,000 at the beginning of 2020 to over 550,000 at the end of 2022, an increase of 290,000 employees.
Join the discussion