And by leveraging those vendors, it’s going to be much faster and much more cost effective. And we’re going to have a wider selection for our downstream customers to choose from. So we’re going to have separate teams focusing on those different business metrics. And we believe that by focusing on both the centralized and decentralized approaches, it’s going to bring really great benefits. We have already seen that. And Q3, we had the backlog cleared. We feel pretty light, and I really look forward to reporting Q4 results to our investors, including you Tom. Thank you.
Luke Chen: Tom, regarding your second question of the gross profit. Yes, the retail pharmacy of the past Q3 declined in entire China. So the very important reason is, as just Junling mentioned the existing inventory issue, which was sold during the second half of COVID restrictions several months ago. And for example, a lot of family, including myself, will have [Indiscernible] [quite some], for example, like [indiscernible] and some Chinese [Indiscernible] [investments] like [Indiscernible] at home and which are going to be expired. And this inventory issue is across the countries, which leads to a decline in an entire pharmacy retail market. But despite all these challenges, we have managed to deliver a 9.5% year-over-year revenue growth.
The issue of our gross [segment] profit actually is a temporary challenge. And regarding the inventory, which we had managed to resolve this anti-COVID related lessons. So it’s a temporary problem. We have already resolved the inventory issue. So going forward, we will still go back to our strategy towards a much more healthy business and first to reduce our procurement costs through our direct sourcing from those pharmaceutical companies and also secondary to optimize our product assortment and structure and also to further utilize our strength, our digital technology and to promote our digital platform as well as our cloud services to all our upstream and downstream customers. All this strategy will bring us a much more healthy business and also I believe we are going to see a better margin performance moving forward.
Thank you.
Operator: The next question comes from [Jada Wu] with Arbor Group Capital.
Unidentified Analyst: This is [Indiscernible] [Jada Wu from Arbor Group Capital]. Congratulations on your success last quarter. And my following question will revolve around the company’s future outlook. First, please talk about the company’s thoughts and layout in the field of artificial intelligence? And second, what will be the company’s operational focus going forward? Thank you.
Junling Liu: Let me see if I can address your question around artificial intelligence. And I think in my script and also Dr. Luke just mentioned, there are a few things we are doing right. So first of all, in terms of customer services, we are adopting a lot of these AI elements, and we’re making a very good progress in that space. Secondly, when it comes to pricing, we have the intelligent pricing system and the AI plays a huge role. But I want to talk about a very bold approach and we have an internal project that is underway, and we’re already having very encouraging results. As you can tell, since the launch of the ChatGPT AI has swept the whole industry. And a lot of — there are more than 200 large language models that’s been built in China.
And we don’t believe that building a large language model will fit into our business. But what we do have is the 12, 13 years accumulation of industry data. So each day, we have over 1 million queries on over 1 million SKU queries on our platform. And we have our first-party supply. We have our JBP supply. We have our marketplace supply. And obviously, for a single customer, to really find the best deal is a very challenging task. Let alone outside of our platform, they have to do this manually via phone call and so on. So what we are trying to do is instead of building a large language model, they would like to build a transformer, maybe a mini transformer. It doesn’t have to be a full-fledged transformer. We can leverage the established platforms, technology to really bring the best deals to our, let’s say, downstream customers when they have those queries.
And it’s not because we are so good at AI, it’s because it so happened that we have probably the best set of industry data and it would be foolish not to really utilizing all that to bring great results to our customers. So the significance of this project and implication is not only really focused on building a better demand and supply ecosystem, and we can be centered around that. What we’re really eyeing is the future. Let’s say, we have a traditional business we call that, let’s say, the traditional commerce. And then if we move on to e-commerce. But fundamentally, that is still the old commerce except that you bring those products onto the virtual shelf. But it’s still a one-way passive kind of commerce. The transaction is basically a runway traffic.
There’s nothing much you can do apart from exhibiting their prices. But with AI capabilities, especially if it is generative, we can actually have interactive dialogues with the customers. And especially when you have promotions, especially after you accumulated so much data about a particular customer, you know their assortment, you know the deficiencies, let’s say, in their assortment, you know the seasonal changes, what kind of products they need to, let’s say, build inventory to anticipate customers’ demand and so on. So when winter comes, you know cough and catching cold, influenza would be critical for pharmacies. And by proactively approaching customers with the precise information, we can bring tremendous value because it’s going to be interactive, we can absolutely transform the traditional commerce business to a, let’s say, from e-commerce, probably — I’m just trying to name it to find awkward to AI commerce, which used to be a one way non-interactive to a two way interactive commerce.
And it’s still very early stage. We cannot claim any early results. But we’re extremely excited in this area, and we will continue to explore. And hopefully, I can update you in the near future of the progress we’ll make. So I think, Haihui, would you talk about the second question.
Haihui Wang: I think the second question on the operational focus. And actually, our focus has actually remain unchanged. I think basically, I can conclude with two key message. One is the customer experience and second is our operational efficiency. So the customer experience by — and first of all, we will further enhance our program pool in just our CEO also mentioned in his script continues to update our customer database and enhance the assortment division and also giving direction to our supply organization on real-time customer demand. And also secondary, we are setting up an omnichannel supply for pool selection by our JBP, our marketplace and also platform management. And thirdly, on the customer experience, we are launching new technology including AI.
And for example, like our smart supply chain system to make sure a much better and delivery services to our — of our orders and to our customers. And on the operational efficient part, first of all, we will continue to promote our JBP model, also to automate the transaction process and also to reduce our partners, inventory cycle. And secondarily, we will better manage our marketplace model using the platform which consists of several thousands of vendors better serve our customers. And also we are launching the new so-called version of our price intelligence system, which also will help us to manage our price in real time and much more effectively. And I think — I hope I answered your question, [Jada].
Operator: The next question comes from [Kathy Lee with SCS Capital].
Unidentified Analyst: Congratulations on the growth, and I have two more concerns. First, what are the expected outcomes of the JBP business expansion? And how will it enhance customer experience and operational efficiency? Second, regarding to the supply chain management, what actions have been taken to improve its operational efficiency and what the results are expected from this improvement? Thank you.
