Why JD doubles down on direct retail strategy
Jingdong (JD)’s direct retail model, spanning food delivery, auto care, and hard discounts, seeks resilience amid China’s subsidy wars.
Relaunch community group-buying in August 2025 to push private labels via pickup nodes.
Subsidy war squeezes margins: Meituan’s Q2 profit fell 89%, JD’s halved to RMB 6.2bn.
Regulators summoned platforms in May 2025 to enforce fair competition and rider protections.
JD extends vertically into auto care, housekeeping, and clinics, while eyeing Argos abroad.
China's "value-for-money" turn and one-hour delivery race now press margins and invite scrutiny from the State Administration for Market Regulation (SAMR). Unlike platform rivals that act mainly as marketplaces—taking commissions and ad fees from third-party sellers—JD has doubled down on a direct retail model.
That means JD itself procures goods, manages inventory, sets prices, and handles delivery, much like a digital-era Walmart or Costco. By owning the entire supply chain rather than just brokering transactions, JD seeks to capture more margin vertically. This strategy now extends beyond e-commerce into group-buying, hard-discount stores, home services, and even clinics.
Instant retail’s math breaks; vertical integration offers oxygen
China's price war escalates costs. Meituan’s adjusted net profit fell 89% in Q2 2025 as rivals raised subsidies, according to Reuters.
Regulators stepped in. SCMP reported that SAMR and other ministries “summoned” JD, Meituan, and Ele.me on May 14, 2025 to enforce fair competition and rider protections.
JD's filing shows RMB 6.2bn net income in Q2 2025, versus RMB 12.6bn a year earlier, as instant delivery weighed on profit.
The sector still burns cash. Reuters wrote e-commerce firms are "getting singed by a price war" with losses set to linger.
JD’s response is structural: own procurement, brands, logistics nodes, riders, and services to capture margin layers beyond subsidies.
Group-buying returns; this time as a private-label engine
In August 2025, JD relaunched “JD Pinpin” in Beijing, Hebei, Anhui, and Jiangsu. Local media described cold cabinets and pickup shelves colocated with courier depots.
A store operator said a viable site needs ≥600 households, with merchants earning 5% commission or using a direct-buy model.
Pinpin showcases JD private labels such as Qixian, Jingxianfang, and Jingzao, while procurement is linked directly to industrial belts to “compress middle costs.”
Meituan recently trimmed its own group-buying footprint, citing losses; Pinduoduo’s leaders have called the category complex and investment-heavy.
Why it matters: private labels raise margins, and dense pickup nodes cut last-mile cost.
Takeout is a funnel: 40% cross-buy resets CAC
JD entered food delivery in February 2025, wooing merchants with “zero commissions” until May.
At midyear, Liu Qiangdong said "around 40%" of delivery users cross-purchased retail, adding "losses are smaller than buying traffic on Douyin or Tencent".
Reuters noted the market is still subsidy-heavy, but JD’s daily order growth and user activity improved.
The bet: high-frequency meals seed low-frequency durables, with a lower blended CAC if the 40% cross-buy rate endures.
Hard-discount stores: ground game for “value for money”
JD opened its first discount supermarket in Hebei in August 2025, a 5,000 m² flagship with 5,000+ SKUs priced below market.