Liu Qiangdong is not afraid of JD.com's 10 billion loss in food delivery

Author | Wang Xiaojuan

Editor | Huang Yu

This year's hottest instant retail battle in the internet industry was ignited by JD.com entering the takeaway market.

Now, months later, the impact of the battle on JD.com has been reflected in its financial report. On August 14, JD.com delivered a financial report that met expectations, revealing a loss of 10 billion in its takeaway business, which dragged down the company's overall profit. The financial report showed that JD.com's net profit in the second quarter plummeted by 50.8% year-on-year to 6.2 billion yuan.

However, the positive side is that JD.com's total revenue in the second quarter surged by 22.4% year-on-year to 356.7 billion yuan, achieving the highest growth rate in three years.

The core contradiction of this "high growth, low profit" report stems from JD.com founder Liu Qiangdong's aggressive strategy of "exchanging losses for traffic." Such short-term results were actually anticipated.

In Liu Qiangdong's view, he is focused on long-term benefits. Entering the takeaway business is a way to bind users through high-frequency takeaway orders and direct them to high-value-added businesses such as e-commerce and finance. He candidly stated in June, "The money we lose is still more cost-effective than buying traffic from Douyin or Tencent."

More importantly, JD.com is targeting the supply chain behind takeaway services. Liu Qiangdong believes that "selling meals at the front end is not profitable; it relies on the supply chain for profit."

However, after JD.com entered the market, Alibaba and Meituan intensified their competition, prompting regulatory authorities to step in, making this gamble full of uncertainty.

Beyond takeaway services, JD.com has more new directions to bet on, such as AI and overseas expansion. After five years of setbacks, JD.com is quickly pushing its cards to the market to recreate its glory, but the outcome remains uncertain.

Revenue Growth Without Profit Growth

As a well-established e-commerce platform with mature operations, JD.com's core business continues to perform steadily.

In terms of revenue, JD.com achieved 356.7 billion yuan in the second quarter of this year, a year-on-year increase of 22.4%, with both JD Retail and JD Logistics in the core business achieving double-digit growth.

Specifically, JD Retail's revenue was 310.1 billion yuan, a year-on-year increase of 20.6%, with an operating profit margin of 4.5%, reaching a new high for the promotional season, and gross profit margin increasing for 13 consecutive quarters.

In various subcategories, revenue from electronic products and home appliances was 178.982 billion yuan, a year-on-year increase of 23.4%, with over 3,000 3C digital stores, maintaining the industry's top scale and growth during the 618 shopping festival; daily necessities revenue was 103.432 billion yuan, a year-on-year increase of 16.4%, with the supermarket category achieving double-digit growth for six consecutive quarters; service revenue was 74.246 billion yuan, a year-on-year increase of 29.1%, with platform and advertising service revenue growing by 21.7%. It is evident that under the dual support of national subsidies and the 618 shopping festival, JD.com's main business has shown the best performance in recent years.

The highly anticipated revenue from new businesses such as takeaway services was 13.85 billion yuan, a year-on-year increase of 198.8%. During the JD 618 period, the daily order volume for takeaway services exceeded 25 million, with over 1.5 million quality merchants joining the platform, and by the end of the second quarter, the number of full-time delivery riders had surpassed 150,000 This also means that JD.com is releasing effects through a high-frequency strategy driving low-frequency activities.

However, from the performance of new businesses, the "cost" of JD.com diving into food delivery is becoming apparent.

In the second quarter, JD.com significantly increased its investment in food delivery. According to financial reports, the operating cost of JD.com's new business in food delivery for the second quarter was 14.41 billion yuan, and operating expenses reached 14.45 billion yuan, while in the first quarter, the operating cost and operating expenses of JD.com's new business were 4.586 billion yuan and 2.494 billion yuan, respectively.

The substantial investment in food delivery has led to huge losses. The JD.com new business segment focused on food delivery incurred an operating loss of 14.78 billion yuan in the second quarter, a multiple increase from the 1.327 billion yuan loss in the first quarter.

The losses in new businesses also prove that using high-frequency businesses to drive traffic is not an easy business. Under the impact of significant losses in new businesses, JD Group's operating loss for the second quarter of 2025 was 900 million yuan, while the operating profit for the second quarter of 2024 was 10.5 billion yuan.

Reflecting on net profit, JD.com's net profit attributable to ordinary shareholders for this quarter was 6.2 billion yuan, a decline of 50.8% compared to the second quarter of 2024.

It is evident that providing social security for delivery riders and ensuring quality food delivery can win people's hearts, but it indeed requires real money and a sustainable model to keep the business going.

In terms of cash flow, JD.com's free cash flow in the second quarter was 22 billion yuan, a significant decline of 55% compared to 49.6 billion yuan in the same period last year. The rolling 12-month free cash flow was only 10.1 billion yuan, down over 80% compared to 55.6 billion yuan in the same period last year.

However, JD.com entered the food delivery market with the intention of tapping into the retail market and instant retail. Therefore, in the face of significant losses from new businesses and their impact on cash flow, JD Group CEO Xu Ran stated at the earnings conference, "In the long run, our pursuit of the food delivery business is not for one or two months of results, but we hope to operate for 5, 10, or even 20 years, so we pursue a sustainable business model. We will continue to release the synergy potential between food delivery and core retail business to provide momentum for the long-term healthy growth of the entire group."

Morgan Stanley analysts recently predicted in a research report on food delivery that the total subsidy amount for the food delivery industry in mainland China will reach 30 billion and 50 billion yuan in the second and third quarters, respectively, or reach an investment peak with ongoing competition.

The report emphasized that Alibaba, Meituan, and JD.com have announced a joint resistance to "involutionary" competition, including resisting "zero-yuan purchases" and allowing merchants to participate in promotions autonomously. Morgan Stanley is optimistic about Alibaba, Meituan, and JD.com in that order.

In June, Liu Qiangdong, after a long absence, showcased JD.com's thoughts and business direction to the outside world, stating that he wanted to regain the lost five years of JD.com and enter more new businesses around the supply chain. Subsequently, JD.com announced its entry into the liquor and travel sectors, increased investment in fresh produce, ventured into discount supermarkets, and accelerated AI initiatives.

Liu Qiangdong believes, "JD.com can win and has come this far because our strategy is summed up in six words—experience, cost, efficiency." All new businesses are new opportunities and new investments, and JD.com's challenges continue to revolve around the capabilities in these three areas

JD.com's New Story

In addition to the new businesses that are already thriving, JD.com has also made more progress this year in AI and internationalization. Especially in AI, JD.com was previously seen as playing catch-up among major companies, but this seems to have changed.

In terms of AI, JD.com's previous layout mainly combined with specific business operations, empowering them through large models, such as reconstructing traditional multi-stage search and push processes with large models and introducing generative models to enhance system scalability.

For example, during this year's JD 618 shopping festival, the usage of large models increased by 130% compared to last year's "Double 11." Over 14,000 AI agents are operating internally at JD.com; more than 17,000 brand merchants are using JD.com's digital human live streaming for sales.

At the same time, JD.com has taken more actions in AI around its business ecosystem. In terms of overall AI business, JD.com has upgraded its large model brand to JoyAI. In addition to the aforementioned applications, JD.com has also applied AI in health, logistics, and other areas to improve business efficiency.

In JD Health, the "AI Jingyi" has launched over 500 expert doctor AI agents, providing AI diagnosis services, medical record summaries, patient medication reminders, and more.

In the industrial sector, JD Industrial has already applied large models in scenarios such as product sourcing and compliance management, including the creation of the industrial product standard library "Mercator," achieving standardization of industrial product coding and enhancing supply chain management efficiency.

Additionally, in the field of embodied intelligence, JD.com has made significant investments in multiple embodied intelligence companies within three months, such as Zhiyuan, Qianxun, and Zhongqing, covering the entire chain from robot bodies to AI brains to scene implementation. These investments fill the gap in JD.com's AI in home scenarios; furthermore, JD.com plans to provide conversational capabilities for robots through the newly launched embodied intelligence "JoyInside" system, binding dozens of hardware manufacturers.

JD.com's accelerated layout in internationalization is considered one of its new highlights for the future.

Recently, JD.com invested 18 billion yuan to acquire Germany's Ceconomy, which operates over 1,000 stores under MediaMarkt-Saturn in 11 European countries. After the acquisition, JD.com can directly access a high-end consumer group of 200 million and a mature supply chain network.

This acquisition is also a major carrier of Liu Qiangdong's previous vision for international business. He has emphasized that the future of JD.com's international business lies in localized operations, which means establishing local teams, conducting local procurement, and focusing on the sale of branded products. Now, after the acquisition, it can retain the original management team and utilize the local procurement network, with JD.com mainly enhancing operational efficiency through instant retail and other e-commerce experiences.

Xu Ran added in the earnings call, "In fact, JD.com has been deeply cultivating in Europe for several years. Since 2022, we have been innovating and piloting innovative retail businesses locally in Europe. Later this year, we will upgrade the related business to the JOYBUY brand."

Additionally, in logistics, JD.com's self-operated express brand "Joy Express" has achieved full-link coverage. Although the daily order volume is only 500,000, and logistics costs are 40% higher than domestically, its core value lies in "supply chain output," helping Chinese brands go global This is also what Liu Qiangdong mentioned before, "In the future, JD.com plans to take 1,000 brands overseas."

Like many new businesses, JD.com's AI and internationalization are also in the investment phase, and every field it enters faces intense industry competition. However, these businesses are not evaluated in isolation; they may form an ecosystem around the core e-commerce retail business, releasing incremental value in the main business.

Currently, the growth anxiety of internet companies and e-commerce companies continues, and it is often mentioned that in this battle of instant retail sparked by food delivery, JD.com's voice is already smaller than the other two.

However, Xu Ran believes that voice is meaningless. Nowadays, there is neither model innovation nor incremental value generated; it is essentially a price war aimed at suppressing competitors, which has resulted in a multi-loss situation for merchants, delivery riders, consumers, and the catering industry. JD.com did not participate in the "malicious subsidies" since July, as low-price competition does not bring long-term value.

In the business world, the investment in new businesses inevitably faces scrutiny regarding its short-term impact on profits, but the formation of an ecosystem is a longer-term matter, and more investment also requires time to reflect returns.

The food delivery battle initiated by JD.com actually points to the new e-commerce landscape of the next decade. Chinese e-commerce giants all want to attract more users through innovative business models, thereby becoming the super apps of the next era.

The landscape is still undecided, and everyone is fighting hard; JD.com will continue to play its cards