JD.com, Inc. (NASDAQ:JD) Q4 2022 Earnings Call Transcript

Lei Xu: And let me — don’t go to too much detail with the algorithm. I want to share with you, where are our traffic fields €“ that our traffic field includes our main site of our JD app and our Weixin app and our channels on WeChat and a lot of our offline sales networks and all these different fields are facing different kinds of our customers. The structures are different. And secondly, I want to say that, on our site, on our main site there are different channels and different programs and providing price treatment or category-driven or diversified offerings to different groups of consumers. So this program is also targeted to meet the demand of users, who are more sensitive with crisis and definitely for our existing high volume users in the first tier and second tier cities they can also navigate their way to go to the other channels and pages.

So at the same time, I think the search suggestion function is playing a big role in these aspects. And for now, we are doing to revamp our algorithm to make sure, it’s in a fair way, and then to target different groups of customers with their different preferences to recommend them with the product. Some may prefer price, some may prefer other things. So the algorithm will be more targeted. Of course, there are some challenging internally for us to do all this overhaul. But through the years of our accumulation technically and technologically we are ready for that. And what’s more important for our shift on this move is to shape our contact to double down our — our ideas to serve the consumers, especially given the size of JD.com with nearly 600 million users on our platform we would like to shift our attention more to better serve our consumers.

Thank you.

Sean Zhang: Our next question please operator?

Operator: The next question is from Alicia Yap of Citigroup. Please go ahead.

Alicia Yap: Thanks for taking my questions. My question is related to the on-demand retail business. If this business actually continued to grow very quickly, can management share a little bit in terms of the current GMV contribution, because if it’s growing faster would that actually be diluted our 1P revenue growth to some extent? Thank you.

Lei Xu: Thanks Alicia for your question. I believe, at this stage, the intra-city on-demand sales, is still a very small percentage of our total GMV for JD Group. If we look at a longer time period I wouldn’t think this business will dilute the impact of our 1P business, because really they are providing our customers very different shopping experiences. So the reason for us to expand to this business model was, because we realized that some of our customers they do have the on-demand shopping requirements, even though this business model may not be as efficient as our traditional B2C e-commerce business model in terms of financial model. That means, once comparing the price the value for many products so the pricing may not be as great as our B2C business model.

But, when the users they do have this immediate purchase request, then we can also satisfy their shopping demand. So really it’s to improve our customers’ shopping experience. So in terms of competitiveness of our 1P business is now, I still believe, our 1P business model because of the scale of the economy we have very unique and very strong competitive advantage in terms of the lower cost lower fulfillment cost. Thank you.