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JD.com recorded a jump in first-quarter revenue Tuesday, as the Chinese e-commerce giant makes a costly push to establish itself in the country’s highly competitive food delivery sector.
The Beijing-based shopping platform has faced pressure in recent years from a persistent domestic spending slump and heightened competition with its primary rival, Alibaba.
Investors are now closely watching for signs of how JD.com will fare in its bid to challenge dominant food delivery provider Meituan, after launching its own meal service in February.
JD.com achieved net revenue of 301.1 billion yuan ($41.8 billion) in the three-month period ended March 31, according to results published to the Hong Kong Stock Exchange.
The figure represented a 15.8% year-on-year leap, outpacing a Bloomberg forecast of 12% and more than twice as fast as last year’s first-quarter growth of 7%.
Net income, meanwhile, came in at 10.9 billion yuan during the first quarter, improving from 7.1 billion yuan during the same period last year.
The profit rise came despite a costly initiative to waive delivery fees this year for eateries that registered before May 1, in an attempt to grab market share from Meituan and Alibaba’s Ele.me.
The company on Tuesday hailed “substantial progress in a very brief time” for its expansion into food delivery.
JD.com’s foray into the food sector comes as Beijing increasingly embraces online service platforms as a useful driver of employment and domestic consumption in the face of broader pressures on growth.
But fiercer competition has also raised concerns of unfair practices.
China’s top market supervisor said Tuesday evening that it has in recent days summoned top food delivery providers including JD.com, Meituan and Ele.me for talks, urging them to abide by e-commerce laws.
Citing “outstanding problems in the current competition in the food delivery industry”, the State Administration for Market Regulation said that it and several other government departments had required the firms to “promote the standardized, healthy and orderly development of the platform economy”.
JD.com CEO Sandy Xu said on Tuesday that the company’s earnings were boosted by “improving consumer sentiment and continued enhancements to JD’s supply chain capabilities and user experience”.
This contrasts with official data released over the weekend showing that spending in the world’s number two economy remains mired in a slump.
On Monday China and the United States announced a substantial—if temporary—reduction on mutual import tariffs following talks in Geneva aimed at easing their trade war.
This story was originally featured on Fortune.com
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AFP
