On 15 August, both Alibaba and JD.com released their financial report for Q2 2024 (Q1 FY2025) on the same day. As the “big two” in e-commerce, both groups are being closely watched by pundits and consumers alike. And it seems JD.com has just won this round.
Alibaba’s revenue reached 243.24 billion RMB (34.08 billion USD) during the quarter, up 4% year-on-year (YoY). Its non-GAAP net profit was 40.69 billion RMB (5.70 billion USD) down 9.4% YoY. Meanwhile, JD.com has a total income of 291.4 billion RMB (33.96 billion USD), increasing 1.2% from last year, while its profit reached 14.5 billion RMB (2.03 billion USD), up 69% YoY, exceeding market expectations. It is also the first time its profit margin reached 5%.
By sector, Alibaba saw growth across the board apart from the Taobao and Tmall Group, whose revenue dropped 1% YoY to 113.37 billion RMB (15.89 billion USD). Meanwhile, JD.com also saw growth in revenue in all sectors apart from new business, which is 4.64 billion RMB (649.86 million USD), lower than the 7.13 billion RMB (999.04 million USD) in Q2 2023.
However, there is also a difference in the strategy and pace between the two platforms. Taobao and Tmall Group, the mail e-commerce group within Alibaba, underwent several reforms during the past quarter including switching from a low-price strategy to a GMV-focus and upgrading its 88VIP membership. Member numbers grew from 35 million to 42 million during the past quarter. Many of the service upgrades raised the cost and resulted in a lower profit. However, with higher member numbers and a move to becoming more merchant-friendly, Taobao and Tmall are aiming for longer-term growth.
JD.com, on the other hand, is also upgrading its services to include return collections and price matching with Douyin, TikTok’s Chinese sister app. It is also one of the few platforms still insisting on lower prices as it expands in lower-tiered cities and towns.
As the e-commerce competition gets even more heated, Alibaba seems to be winning on “going overseas” (出海) with its logistics wing Cainiao expanding in Europe and its overseas platform Lazada turning a profit, the international retail branch grew 38% in Q2. JD.com, on the other hand, is still building its logistics network. With both e-commerce giants posting healthy growth, there seems to be a recovery in “China Concept Stock”. It is exciting to see if it will translate into more growth in China-related business and investment.
