China E-Commerce Price War: JD.com Excelled During 618 Sales Event

China's E-Commerce Price War Intensifies

JD.com, the Chinese online shopping giant, is at the forefront of China's intense e-commerce price war, reporting a remarkable 92% year-on-year jump in quarterly net income to 12.6 billion yuan (US$1.7 billion). This surge in profit came despite a flattish revenue, attributed to the company's improved operational efficiencies. According to CEO Sandy Xu Ran, JD.com successfully leveraged its growing economies of scale to provide everyday low prices without compromising on quality.

Performance During the 618 Sales Event

During the quarter ending June 30, JD.com recorded net revenues of 291.4 billion yuan, marking a 1.2% increase from a year earlier. The company engaged in fierce competition with rivals such as Pinduoduo and Alibaba Group Holding, resorting to price cuts to attract budget-conscious consumers amidst a sluggish economy.

• JD.com’s Hong Kong-listed shares recently closed 1.44% lower at HK$99.35.
• JD Retail, comprising both e-commerce and JD Health, achieved a revenue of 257 billion yuan.
• Records showed that over 500 million customers participated in the recent mid-year 618 sales event.
• Sales promotion contributed to over 1 billion yuan in sales across 83 brands, signifying a growth of 50% for over 150,000 small merchants.

Government Initiatives Boosting E-Commerce

Despite a noted slowdown in China's retail sales growth from 3.7% in May to 2% in June, online retail thrived, expanding nearly 10% in the first half of the year. The National Bureau of Statistics reported that online retail sales reached 7.1 trillion yuan. This growth has been partially attributed to a government-organized trade-in programme that incentivizes consumer spending by subsidizing the trade-in of home appliances and electronics.

JD.com has committed more than 6.5 billion yuan to this programme, aiming to facilitate the trade-in of over 30 million items this year. Additionally, JD Logistics, responsible for both internal and external logistics, saw revenue increase by 7.7% to 44.2 billion yuan in the June quarter.