This year's most heated instant retail battle in the internet industry was ignited by JD.com's entry into the food delivery market.

Now, months later, the impact of this battle on JD.com has been reflected in its financial results. On August 14, JD.com delivered an expected earnings report, with food delivery business losses reaching billions and dragging down the company's overall profitability. Financial data shows that JD.com's net profit plummeted 50.8% year-over-year to 6.2 billion yuan in the second quarter.

On the positive side, JD.com's total revenue surged 22.4% year-over-year to 356.7 billion yuan in Q2, marking the highest growth rate in three years.

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

From Liu Qiangdong's perspective, he is focusing on long-term benefits. The food delivery business aims to bind users through high-frequency food delivery services and drive traffic to e-commerce, finance, and other high-value-added businesses. He stated frankly in a June sharing session, "The money we're losing is still more cost-effective compared to buying traffic from Douyin and Tencent."

More importantly, JD.com is targeting the supply chain behind food delivery. Liu Qiangdong believes that "the front-end food sales don't make money; profitability must come from the supply chain."

However, after JD.com's entry, Alibaba and Meituan have intensified their competition, triggering regulatory intervention. This high-stakes gamble is full of uncertainties.

Beyond food delivery, JD.com has more bets on new directions, such as AI and overseas expansion. After five years of setbacks, JD.com is rapidly pushing its cards to market as it seeks to recreate its glory days, though the outcome remains unpredictable.

**Revenue Growth Without Profit Increase**

As an established e-commerce platform with mature businesses, JD.com's core operations remain robust.

In terms of revenue, JD.com achieved 356.7 billion yuan in Q2 this year, up 22.4% year-over-year, with both JD Retail and JD Logistics achieving double-digit growth.

Specifically, JD Retail revenue reached 310.1 billion yuan, up 20.6% year-over-year, with an operating margin of 4.5% hitting a new high for promotional seasons, and gross margin growing for 13 consecutive quarters.

Across various categories, electronics and home appliances revenue was 178.982 billion yuan, up 23.4% year-over-year, with 3C digital stores exceeding 3,000 locations and maintaining industry leadership in scale and growth during the 618 period; general merchandise revenue was 103.432 billion yuan, up 16.4% year-over-year, with supermarket categories achieving double-digit growth for six consecutive quarters; service revenue was 74.246 billion yuan, up 29.1% year-over-year, with platform and advertising service revenue growing 21.7%. This demonstrates JD.com's main business achieving its best performance in recent years under the dual boost of government subsidies and 618 promotions.

The closely watched new businesses including food delivery generated revenue of 13.85 billion yuan, up 198.8% year-over-year. During JD.com's 618 period, food delivery business daily orders exceeded 25 million, with over 1.5 million quality merchants joining the platform, and full-time delivery personnel exceeding 150,000 by the end of Q2.

This indicates that JD.com's strategy of using high-frequency services to drive low-frequency ones is showing results.

However, from the new business performance perspective, the "cost" of JD.com's dive into food delivery is becoming apparent.

In Q2, JD.com's investment in food delivery increased significantly. Financial data shows that the operating costs of new businesses including food delivery reached 14.41 billion yuan in Q2, with operating expenses reaching 14.45 billion yuan, compared to 4.586 billion yuan and 2.494 billion yuan respectively in Q1.

The massive investment in food delivery has resulted in huge losses. JD.com's new business segment, primarily food delivery, generated operating losses of 14.78 billion yuan in Q2, growing several-fold from Q1's loss of 1.327 billion yuan.

The losses from new businesses prove that using high-frequency services to gain traffic is not an easy business. Under the impact of new business losses, JD.com Group's Q2 2025 operating loss was 900 million yuan, compared to an operating profit of 10.5 billion yuan in Q2 2024.

Reflected in net profit, JD.com's net profit attributable to ordinary shareholders was 6.2 billion yuan this quarter, down 50.8% compared to Q2 2024.

Clearly, paying social insurance for delivery workers and providing quality food delivery can win hearts, but it indeed requires real investment and sustainable models to keep the business going.

In terms of cash flow, JD.com's Q2 free cash flow was 22 billion yuan, down 55% significantly from 49.6 billion yuan in the same period last year. The 12-month rolling free cash flow was only 10.1 billion yuan, down over 80% from 55.6 billion yuan in the same period last year.

However, JD.com's entry into food delivery was aimed at the broader retail market and instant retail from the beginning. Facing the significant losses from new businesses and their impact on cash flow, JD.com Group CEO Xu Ran stated during the earnings call, "In the long term, we're not pursuing one or two months' results in the food delivery business, but hope to sustain it for 5, 10, or 20 years, so we pursue a sustainable business model. We will continue to unlock synergy potential between food delivery and core retail business to provide momentum for the group's long-term healthy growth."

Morgan Stanley analysts recently predicted in a food delivery research report that total subsidies in China's mainland food delivery industry will reach 30 billion and 50 billion yuan respectively in Q2 and Q3, potentially reaching peak investment with continued competition.

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

In June, Liu Qiangdong rarely shared JD.com's thinking and business developments with the outside world, saying he wanted to recover JD.com's lost five years and enter more new businesses around the supply chain. Subsequently, JD.com officially announced hotel and travel services, increased investment in fresh goods, entered discount supermarkets, and accelerated AI development.

Liu Qiangdong believes: "JD.com's ability to win and reach today lies in our six-word strategy: experience, cost, efficiency." All new businesses represent new opportunities and new investments. Around these three capabilities, JD.com's challenges continue.

**JD.com's New Story**

Beyond the already heated new businesses mentioned above, JD.com has shown more performance in AI and internationalization this year. Particularly in AI, JD.com was previously considered a latecomer among major tech companies, but now seems to be changing.

In AI, JD.com's previous layout mainly combined with specific businesses, using large models to empower and assist operations, such as reconstructing traditional multi-stage search and recommendation processes through large models and introducing generative models to improve system scalability.

For instance, during this year's JD.com 618 period, large model usage increased 130% compared to last year's "Double 11." Over 14,000 AI agents operated within JD.com; over 17,000 brand merchants used JD.com's digital human live streaming.

Meanwhile, around its business ecosystem, JD.com has more AI initiatives. For overall AI business, JD.com upgraded its large model brand to JoyAI. Beyond the above applications, JD.com also applies AI in health and logistics to improve business efficiency.

For JD Health, the "AI Jingyi" platform launched over 500 expert doctor intelligent agents, providing AI diagnostic services, medical record summaries, and patient medication reminders.

In the industrial sector, JD Industrial has applied large models to product sourcing and compliance management scenarios, including creating the industrial product standard library "Mercator" to achieve standardized industrial product coding and improve supply chain management efficiency.

Additionally, regarding JD.com's embodied intelligence layout, JD.com densely invested in multiple embodied intelligence companies within 3 months, such as Zhiyuan, Qianxun, and Zhongqing, covering the full chain from robot bodies to AI brains to scenario implementation. These investments filled JD.com AI's gaps in home and other scenarios. Furthermore, JD.com plans to provide conversational capabilities for robots through its newly released embodied intelligence "JoyInside" system, binding dozens of hardware manufacturers.

JD.com's accelerated internationalization layout is considered one of its future highlights.

Recently, JD.com spent 18 billion yuan to acquire German company Ceconomy, whose MediaMarkt-Saturn operates over 1,000 stores across 11 European countries. After the acquisition, JD.com can directly access 200 million high-end consumers and mature supply chain networks.

This acquisition is also the main vehicle for Liu Qiangdong's previous vision for international business. He emphasized that JD.com's international business future lies in localized operations, namely establishing local teams, conducting local procurement, and focusing on branded product sales. Now, after the acquisition, the original management team can be retained, local procurement networks utilized, with JD.com mainly using instant retail and other e-commerce experience to improve operational efficiency.

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

Additionally, in logistics, JD.com's self-operated express brand "Joy Express" achieves full-chain coverage. Although daily order volume is only 500,000 orders with logistics costs 40% higher than domestic, its core value lies in "supply chain export," bringing Chinese brands overseas together. This aligns with Liu Qiangdong's previous statement: "In the future, JD.com plans to bring all 1,000 brands overseas."

Like many new businesses, JD.com's AI and internationalization are both in investment phases, and each field it enters faces intense industry competition. However, these businesses are not measured independently. Around the core e-commerce retail business, JD.com's businesses may form an ecosystem and release incremental value for the main business.

Currently, growth anxiety among internet and e-commerce companies continues. The outside world often mentions that in this battle of instant retail sparked by food delivery, JD.com's voice has become smaller than the other two companies.

However, Xu Ran believes voice doesn't matter. Currently, there's neither model innovation nor incremental value creation. Essentially, it's still a price war aimed at suppressing competitors, creating a lose-lose situation for merchants, delivery workers, consumers, and the catering industry. JD.com hasn't participated in the "malicious subsidies" since July, as low-price competition cannot bring long-term value.

In the business world, investments in various new businesses inevitably face questions about short-term profit impact, but ecosystem formation is a longer-term matter, and more investments need time to show 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 business model innovation and become the next era's super app.

The current landscape remains undetermined, with all parties fighting vigorously, and JD.com will continue to play its cards.