JD.com, Inc. (NASDAQ:JD) Q2 2023 Earnings Call Transcript

Secondly, in terms of our open ecosystem, we placed significant emphasis on the diversity of merchants and products, as well as merchants operating efficiency on our platform. Since the start of the year, we have simplified the joining procedures for merchants and increased our supporting measures for them such as lowering their operating costs, providing more operating tools and setting up clear guidelines for merchants, et cetera. As a result, we have witnessed rapid growth in the number of new merchants joining our platform and recorded a three-digit year-on-year increase in merchant space in Q2. By enriching our pool of merchants and expanding our product offerings, we’re better able to meet the diverse shopping demands of our users. This will serve as a key driver for our future revenue and profit growth.

Thirdly, we’ve been taking efforts to enhance supply chain capabilities. A direct reflection is that we are able to continue to provide high-quality services to our users, while promoting the strategy for price competitiveness. This is also demonstrated by our further market share gain in our core categories. At the same time, our supply chain capabilities also help us to deliver consistent growth in our fulfillment gross margin. So, I just want to add that, as we previously shared, so for this year, our focused KPIs will be focused on our GMV, profitability and cash flow. Thanks. And your last question regarding the outlook of second half of the year, as Sandy shared earlier, despite of uncertainties from the macroeconomic and industrial environment, our business has continued to demonstrate healthy improvement.

We will remain committed to our long-term strategies and are confident that our core business growth will maintain robust momentum. Thank you.

Sean Zhang: Thank you, Ronald. Next question, please.

Operator: The next question comes from Thomas Chong with Jefferies. Please go ahead.

Thomas Chong: [Foreign Language] Thanks management for taking my questions. My first question is about our 3P strategy as well as the GMV contribution in future. And my second question is about our category expansion strategy. Can management share the latest updates given we are seeing a very fast growth in the number of merchants? Thank you.

Ian Shan: [Foreign Language] [Interpreted] So, first I will share — answer your questions on the user recruitment. So, there are several measures. So, first of all, we will expand our efforts in attracting merchants and also lower the barriers and making it more streamlined to welcome our platform and streamline the processes and also bring down the fixed cost for the merchants to operate on our platform. And secondly, on the merchants’ operating side, we will foster a fair environment for everyone to compete on our platform. This competition is not only within our 1P and our 3P merchants, but also among our POP merchants. So, we will make a very clear growth path for the merchants to grow their business on our platform, which is in line with our value proposition and do adequate publicities and the promotions among our merchants.

And also, we will provide sufficient tools to support our merchants to operate on our platform, including the data support and also the cultivation of our — their skills to operate at JD’s platform to improve their operating efficiency. Yes. As to the achievements for this quarter, I just mentioned earlier that the overall number of merchants in Q2 grew by three digits. And especially, we see the increasing number of merchants from the categories of supermarket, fashion, home goods, et cetera. And their 3P revenues also grew at double-digit rate, which are all higher than the 1P revenue. So, for the outlook of our 3P business, so overall, we want — also want to reiterate that both 1P and the 3P, we’re developing to be aligned with our consumer-centric value proposition, which is superior selection, speed, quality and value and with the ultimate goal to increase their wallet share on JD.com.