On March 6, Beijing time, JD.com Group announced its fourth-quarter and full-year earnings for 2023. Thanks to a year of steadfast strategic execution, spirited teamwork, and boundary-breaking business innovation, with user experience always at the forefront. By reducing costs and improving efficiency, JD.com has created tangible value for consumers, brands, and merchants. This not only resulted in better-than-expected performance growth but also steered brands, merchants, and JD.com itself onto a path of positive development.
In 2023, JD.com Group continued to maintain stable growth. Fourth-quarter revenue reached 306.1 billion CNY (about 43.1 billion USD), a year-over-year increase of 3.6%; annual revenue was 1,084.7 billion CNY (about 152.8 billion USD), up 3.7% year over year. The revenue from core categories such as electronics and home appliances continued to outpace the industry average in the fourth quarter, while daily necessities saw a positive growth in revenue year over year. Amid significant support for small and medium-sized businesses through commission reductions and fee waivers, service revenue still reached 59.6 billion CNY (about 8.4 billion USD) in the fourth quarter, with an annual service revenue of 213.4 billion CNY (about 30.1 billion USD), up 17.8% year over year. In 2023, revenue from external customers of JD Logistics grew by 30.8% year over year, with the average revenue per integrated supply chain customer increasing by 15.2%.
The relentless pursuit of an outstanding user experience and a thriving ecosystem of nearly one million merchants have led to an accelerated increase in JD.com's quarterly active user numbers, with the average shopping frequency of users also on the rise. In 2023, the number of third-party merchants grew by 188%, with a 4.3-fold increase in new merchants added throughout the year.
In the fourth quarter, JD.com Group reported a net profit attributable to ordinary shareholders of the listed company under non-GAAP of 84 billion CNY (about 12 billion USD) and an annual net profit of 352 billion CNY (about 50 billion USD), both exceeding market expectations.
On March 6, JD.com Group also announced that its board of directors has approved an annual cash dividend of about 12 billion USD, surpassing the 10 billion USD in 2023. At the same time, the board approved a new share repurchase program, effective after the expiration of the existing repurchase plan, to buy back shares worth up to 3 billion USD over the next 36 months until March 2027.
By the end of 2023, JD.com had created nearly 620,000 high-quality jobs. The total expenditure on human resources (including the company's own employees and external personnel) for the full year of 2023 reached 104.7 billion CNY. Starting from the beginning of 2024, JD.com has increased the compensation, incentives, and welfare benefits for employees in procurement, customer service, and other roles.
"With the increase in revenue and profitability in the fourth quarter, we are thrilled to conclude 2023 on a strong note," said Ms. Xu Ran, CEO of JD.com Group. "The proactive adjustments we've made are bearing fruit. Our clear and steadfast strategic focus on user experience, price competitiveness, and platform ecosystem has led to deeper and more frequent user engagement, as well as a healthier trend in user growth. In 2024, we will focus on enhancing user experience and market share growth, creating more value for our users, business partners, and shareholders."
JD.com's "Three Battles, Three Victories" in Procurement and Services Setting Industry Standards
User experience is the starting point and ultimate goal for JD.com, with a rich product selection, optimized pricing, and improved service at its core.
Since the launch of the "Spring Dawn Plan" at the beginning of 2023, JD.com has continuously upgraded its support for small and medium-sized merchants by simplifying the registration process, reducing fees, offering traffic incentives, and enhancing operational tools. This not only significantly increased the number of merchants but also provided consumers with a wider range of product choices. By the end of 2023, the number of third-party merchants on JD.com had nearly reached one million, with the SKU number of third-party merchants' products almost doubling since the beginning of the year.
In 2023, JD.com, leveraging its intelligent supply chain, co-created nearly a thousand C2M new products with brand partners, with 10% becoming sales champions of their respective brands and 30% achieving sales of over ten million CNY within six months. JD.com also established three major direct procurement centers in Japan, South Korea, and Europe, continuously enhancing its international supply chain capabilities through a global network of JD.com-owned buyers, meeting consumers' diverse needs for low-priced, genuine imported goods.
Since the fourth quarter, JD.com's procurement efforts have led to "Three Battles, Three Victories," recommending a massive range of extremely cost-effective products to users and deepening JD.com's image of affordability. During the 11.11 shopping festival, JD.com's live broadcasts went viral, attracting over 380 million viewers. Then, during the JD.com exclusively sponsored Hunan TV's Mango TV New Year's Eve concert, the JD.com live broadcast room attracted over 100 million viewers in 5 hours. As the exclusive interactive partner of the CCTV Spring Festival Gala 2024, JD.com's user interactions exceeded 55.2 billion during the gala, with hot items recommended in the "Spring Festival Gala Same-Item" event selling exceptionally well.
Alongside enriching product offerings and increasing high-value products, in 2023, JD.com launched several low-price initiatives, including the "Billion Subsidy," the "9.9 Free Shipping" channel, and lowering the free shipping threshold. On top of already offering free shipping for 90% of third-party products, by the end of March, the remaining nearly 10% of third-party products will enjoy a maximum free shipping threshold of 59 CNY.
JD.com's services have always been a benchmark for the industry in enhancing user experience. JD.com's own "refund without return" service, launched as early as 2014, is expanding to more third-party products. JD.com will also upgrade its "free door-to-door return and exchange" service, offering free return shipping fees for products with this service, regardless of size, weight, and quantity. This service will cover over 90% of third-party products by the end of the year. The "large item freight insurance" service for third-party products is upgraded to offer users up to 10,000 CNY in return and exchange shipping fees per year. JD Express initiated a personal parcel delivery time acceleration plan in 2023, with the "Next Morning" service now covering Beijing, Shanghai, and other 9 cities. JD Insurance's "Late Delivery Compensation" service has provided delivery time guarantees for 1.2 billion products in the fourth quarter. Inventory turnover days reduced to 30.3 days, accelerating the global supply chain network
By the end of the fourth quarter, JD's supply chain infrastructure assets reached 153.8 billion CNY, a year-on-year increase of 16%. Leveraging digital, intelligent, and large-scale supply chain infrastructure, JD has achieved a global leading level of 30.3 days in inventory turnover days for more than 10 million SKUs of self-operated goods. At the beginning of this year, JD became the only Asian company to receive the Gartner Supply Chain Technology Innovation Award for 2024.
In 2023, JD's retail technology continued to focus on the main directions of building an open ecosystem and low-price awareness. From providing high-quality goods at low prices through billions in subsidies and adjusting the traffic distribution mechanism, to simplifying the merchant onboarding process and optimizing the merchant experience, which drove an increase in the number of merchants and platform ecosystem activity, to integrating large models into numerous business scenarios, constantly exploring optimizations in cost, efficiency, and experience.
Over the past year, supply chain technology has also driven cost reduction and efficiency improvement in various logistics links. In warehousing, the combination of algorithm technology and other digital capabilities with daily operations optimized the structure of goods within the warehouse; in sorting, JD Logistics' self-developed automated sorting walls have been applied in multiple different category scenarios; in road transportation, the intelligent algorithm-based capacity resource planning and scheduling system has enhanced refined operational capabilities.
JD Cloud's advanced computing reliably supported the Spring Festival gala red packet interaction, achieving second-level resource scheduling and technical cost reduction and efficiency improvement; the AI commander, through AI large model technology, coordinated guarantees, making predictions more accurate, costs lower, and efficiency higher; intelligent services provide consultation services 24 hours a day.
By optimizing supply chain costs and efficiency, it more effectively helps brands and merchants reduce costs and increase efficiency. During the JD New Year Goods Festival in 2024, JD's intelligent supply chain had to provide more than 620,000 supply chain decision-making suggestions such as restocking and transferring goods daily, helping brands and merchants better predict demand, guide production, and arrange inventory. Yanxi Digital Person entered the live broadcast room, driving idle time live broadcast conversion to increase by more than 30%.
In advancing the construction of the global supply chain network, JD Logistics already has nearly 90 overseas warehouses, bonded warehouses, and direct mail warehouses, providing global customers with high-quality and efficient integrated supply chain logistics services. With overseas warehouses as the core, it has promoted the significant acceleration of express logistics in countries such as Europe, America, and Southeast Asia, with local express delivery achieving "1-day reach" at the fastest. JD Logistics further upgraded its Hong Kong and Macau express services, achieving the fastest 4-hour delivery for Hong Kong local express. Ochama has expanded its door-to-door delivery service to 24 European countries and launched cross-border small package products.
Providing nearly 620,000 high-quality jobs, business employees receive significant pay increases against the trend
The execution of strategy relies on the team. Over the past twenty years, JD has provided a stage for every employee to display their talents and realize their dreams, offering more development opportunities and incentives for "contributors," insisting on more contributions leading to greater rewards. By the end of 2023, JD has provided 620,000 high-quality jobs to society.
From January 1, 2024, the annual fixed salary of JD procurement and other frontline business personnel has significantly increased by nearly 100%, with an average pay raise of not less than 20% for all JD Retail employees at the beginning of 2024. Meanwhile, the investment in the year-end bonus for JD procurement in 2023 increased by 72% year-on-year, with 16 business teams receiving a total bonus amount of more than 20 times the monthly salary, and the highest business team receiving a total bonus amount of more than 50 times the monthly salary.
From February 1, 2024, more than 20,000 JD frontline customer service employees achieved an average salary increase of more than 30% throughout the year. During the Spring Festival, to ensure that the on-duty employees could enjoy the New Year peacefully, this year JD Logistics invested more than 500 million CNY, continuing through measures such as "Spending the Big Year with JD" to provide benefits and subsidies higher than the national statutory standards for employees who stayed on the front line and celebrated the New Year locally. Currently, nearly a hundred JD couriers have achieved an annual income of over one million CNY for three years.
JD is always committed to being a valuable, warm, and responsible company. When an earthquake disaster occurred in Jishishan, Gansu, in the last quarter of last year, it quickly initiated the emergency rescue plan, urgently allocated relief materials from several nearby warehouses, and transported them to the disaster area by dedicated personnel and vehicles. JD's charity initiative "Starlight Transmission, Children's Reading Together" has sent nearly 70,000 books that children love to more than 100 rural primary schools. Before this year's Spring Festival, JD, in conjunction with hundreds of brands and people from all walks of life, launched the "Sending New Year Goods to the Countryside" campaign nationwide. Mr. Liu Qiangdong, the founder and chairman of the board of JD Group, delivered the first order, sending 2,600 down jackets and 11-pound New Year gift boxes to the villagers in Suqian, "Sending New Year Goods to the Countryside" campaign has sent New Year blessings to nearly ten thousand towns and villages across the country.
Looking back on 2023, it was a year when JD condensed the entrepreneurial spirit of twenty years and bravely innovated into a healthy growth channel with a clear strategy. The future is here, as digital technology represented by artificial intelligence accelerates integration with physical scenarios, confident, innovative, and clear-strategy JD will unleash stronger growth momentum in cost, efficiency, and experience.
