JD.com's efforts to fend off Alibaba led to losses in Q4 (JD, BABA)

pulse

March 5, 2018 5:47 PM

JD.com reported its Q4 2017 results, with net revenue growing 38.7% year-over-year (YoY) to 110 billion yuan ($16.9 billion) for the quarter, while GMV grew to 403.4 billion yuan ($63.6 billion), a 33% YoY increase.

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JD.comreportedits Q4 2017 results, with net revenue growing 38.7% year-over-year (YoY) to 110 billion yuan ($16.9 billion) for the quarter, while GMV grew to 403.4 billion yuan ($63.6 billion), a 33% YoY increase.

The revenue growth, while impressive, marked a deceleration from 39% YoY revenue growth inQ3 2017. Growth in revenue also failed to outpace mounting expenses in fulfillment, marketing, and most notably, in retail investments designed to head off Alibaba — the company posted a net loss for Q4 of 909 million yuan ($140 million).

The company’s domestic and international growth efforts came at a heavy price:

Alibaba, Tencent, and JD.com spent billions to carve up China.
hundreds of millions
billions
Fulfillment costs are swelling in China and overseas.
2016
announced
Marketing costs to compete on Singles' Day are rising.
paid off

International growth plans are key to JD.com's success in 2018. Outside of China, JD.com’s war against Alibaba is fiercest in Southeast Asia. The region is critical because it will see its internet economy grow to $200 billion by 2025, according to Google estimates cited by TechCrunch. In 2017, JD.com’s investments in Southeast Asia expanded beyond its beachhead in Indonesia, for example, through large investments in e-commerce companies in Thailand and Vietnam. A key factor behind JD.com’s overall success in 2018 will be whether the firm can grow its volume in Southeast Asia against mounting competitive pressure form Alibaba and others.

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