JD.com has transformed food delivery into what appears to be a "losing" business proposition.

On August 14, JD-SW (09618.HK) released its Q2 2025 financial results, reporting revenue of approximately 356.7 billion yuan while showing a significant shift in operational investment structure.

Specifically, the company's fulfillment costs (primarily including procurement, warehousing, delivery, and customer service) reached approximately 22.1 billion yuan, up 28.6% year-over-year. Marketing investments surged to 27 billion yuan, representing a 127.6% increase, with marketing expense ratio rising from 4.1% to 7.6%. This substantial growth was primarily driven by increased promotional spending on new businesses, led by JD.com's food delivery operations.

By leveraging high-frequency, essential food delivery services as an entry point, JD.com has rapidly extended its reach into lifestyle services including hotels/travel and discount supermarkets. Data shows that in Q2 2025, JD.com's core metrics including user activity, user count, and shopping frequency all experienced significant growth: daily active users jumped from approximately 100 million to 169 million, peaking at 212 million during the 618 shopping festival. Order-placing users increased by over 100% year-over-year, with food delivery business achieving a historic high of 25 million daily orders. During the August 14 earnings call, JD.com CEO Xu Ran stated that the food delivery business has brought obvious traffic and user growth to the platform.

However, this path is crowded with giants and filled with challenges. JD.com is attempting to exchange phased focused investments for long-term enterprise value construction, with its strategic approach of entering lifestyle services through supply chain advantages becoming increasingly clear.

**Dual-Track Layout: Food Delivery + Hotels/Travel** **The Strategic Calculation Behind JD.com's "Three-Pronged Approach"**

JD.com excels at making businesses "asset-heavy," taking on the "tough and demanding work" that other companies are reluctant to do. In both food delivery and hotels/travel sectors, JD.com continues to start from the supply chain, deploying its "three-pronged approach."

The first prong targets quality merchant recruitment and restaurant supply chain innovation. On February 11, JD.com's food delivery platform launched a "Quality Dine-in Restaurant Merchant" recruitment program, promising zero commission fees for the entire year for quality dine-in merchants joining before May 1. As of August 14, over 1.5 million quality merchants have joined the platform. During an internal sharing session before 618, Liu Qiangdong revealed this core logic: "We can afford to never make money from selling meals at the front end, making money through the supply chain is feasible."

On July 20, Beijing's first "Seven Fresh Kitchen" self-operated store officially opened, focusing on "delivery + pickup" affordable stir-fried dishes priced between 10-30 yuan. Within the first week of opening, daily average orders exceeded 1,000 with a repeat purchase rate 220% higher than industry average. On July 22, JD.com officially launched its "Dish Partner" recruitment program, announcing plans to invest over 10 billion yuan over the next three years to build 10,000 Seven Fresh Kitchen locations, alongside investing 1 billion yuan in cash to recruit 1,000 signature dish partners.

The core of Seven Fresh Kitchen lies in supply chain restructuring. Restaurant brands or chefs only provide recipes and participate in R&D, while JD.com handles site selection, store construction, supply chain, and operations across the entire chain. Ingredients undergo standardized processing from source procurement to in-store preparation, combined with transparent kitchens and robotic cooking technology, emphasizing fresh cooking without pre-made dishes. Business head Liu Bin stated: "This may be the biggest supply chain model innovation in the food delivery market in 15 years."

The second prong focuses on full-time delivery rider benefit policies. On February 19, JD.com announced that starting March 1, it would provide five social insurances and housing fund for full-time riders, with part-time riders also covered by accident and medical insurance. By the end of Q2, full-time rider numbers exceeded 150,000. Calculating at 2,000 yuan per person per month in social insurance contributions, JD.com faces over 300 million yuan in monthly costs for social insurance alone. Liu Qiangdong disclosed in a sharing session: "When we hired our first delivery person in 2007, we provided full social insurance coverage. From 2007 to now, over 18 years, we've paid over 100 billion yuan in social insurance."

In the intensely competitive food delivery market, any major policy adjustment by leading players inevitably creates ripple effects. JD.com rider Mr. He commented: "When JD.com entered the food delivery field, it made high-profile announcements about providing social insurance for delivery riders. The public pressure from this move first affected Meituan and Ele.me. This 'catfish effect' indeed drove some changes in the industry."

JD.com's third prong directly targets hotels/travel. On June 18, JD.com launched the "JD Hotel PLUS Membership Program" with up to 3 years of "zero commission" just before the summer peak season. Liu Qiangdong explained: "Hotels also have massive, complex supply chains with high costs. JD.com hopes to reduce customer costs to two-thirds of the original through non-productive main materials (referring to materials used for equipment maintenance, repair, and operation in industrial production)." According to official data, the program received nearly 50,000 hotel merchant applications within just two days of launch.

The core of JD.com's "food delivery + hotels/travel" dual-track layout lies in the synergistic effects of membership systems and supply chains. In Q1 2025, JD.com PLUS membership exceeded 35 million, with annual average spending 4.2 times that of regular users. This high-consumption group closely matches the core customer profile of quality food delivery and mid-to-high-end hotels. Liu Qiangdong also revealed deeper supply chain logic: "Now 40% of customers purchase our e-commerce products. The money lost on food delivery is actually more cost-effective than buying traffic from other social media platforms."

Through this series of strategic moves, JD.com's real strategic logic centers on reshaping industry cost structures with supply chain as the core. Whether food delivery or hotels/travel, they are essentially extensions and applications of JD.com's supply chain capabilities in different scenarios, utilizing high-frequency food delivery and hotel/travel services to activate PLUS members and form supply chain synergies.

**Post-Regulatory Intervention "Three-Kingdom Battle"** **JD.com Unexpectedly Gains Breathing Room**

On July 18, the State Administration for Market Regulation summoned three platform companies - Alibaba's Ele.me, Meituan, and JD.com - requiring them to strictly comply with relevant laws and regulations, participate rationally in competition, and jointly build a mutually beneficial ecosystem. Regulatory intervention pressed the "cooling button" on this fiercely contested food delivery market.

The policy shift following the regulatory meeting unexpectedly provided JD.com with a strategic adjustment window, allowing it to step back from the subsidy war quagmire. On August 1, JD.com issued a commitment to standardize subsidy behavior: "JD.com food delivery will continue to maintain its anti-involution stance, resolutely eliminate unfair competition, resist malicious subsidies like '0 yuan purchases,' and never use order volume to demonstrate market position or create market bubbles." While this seemingly constrained JD.com's previous subsidy-driven growth model, it actually saved substantial financial pressure, allowing the company to legitimately withdraw from the cash-burning competition.

In contrast, Meituan and Alibaba, after strategy adjustments, still need to maintain some degree of targeted subsidies to consolidate market positions, while JD.com gained an opportunity to reassess its investment strategy. Data shows JD.com's order volume declined, with weekly active users among riders and merchants also decreasing. However, from a financial perspective, regulatory intervention to halt the subsidy war actually helped this food delivery industry "third player" by alleviating financial pressure. Media reports suggest that while JD.com has superficially restrained its aggressive subsidy strategy, its internal strategic positioning for food delivery business has not fundamentally changed - JD.com is lying low, waiting for a more suitable opportunity to re-emerge.

Institutional market observations seem to more intuitively reflect JD.com's real position in this "three-kingdom battle." Morgan Stanley analysis suggests JD.com's market share in food delivery and instant retail will remain small, predicting China's instant retail market size will be revised up to approximately 2.5 trillion yuan by 2030 (24% growth from 2024-2030). JD.com holds about 5% market share in food delivery orders and 4% GTV (Gross Transaction Value) market share. Nevertheless, analysts believe JD.com will continue leveraging this field for user acquisition as an important component of its overall ecosystem.

Based on disclosed financial data, JD.com paid a significant price in this "three-kingdom battle." In Q2 2025, JD.com's net profit showed obvious decline, with adjusted net profit of approximately 7.4 billion yuan, down 49% from nearly 14.5 billion yuan in the same period last year. Overall operating loss approached 900 million yuan. By business segment, the new business segment (covering food delivery, overseas business, Jingxi, and Dada) became the key factor dragging down group performance. This segment's operating loss expanded dramatically from approximately 700 million yuan in the same period last year to about 14.8 billion yuan, with operating profit margin dropping to -106.7%. Food delivery business, playing the main role in new businesses, incurred losses of at least 12 billion yuan. Additionally, the company's cash flow situation tightened, with Q2 free cash flow of approximately 22 billion yuan, down 55% from nearly 49.6 billion yuan in the same period last year.

Compared to food delivery business, JD.com's hotels/travel business faces more severe challenges. Social media posts warning against booking hotels through JD.com have increased, with some consumers reporting automatic cancellations and poor experiences.

Deeper challenges lie in industry barriers. The hotels/travel industry has obvious resource scarcity - there's only one five-star hotel in a scenic area, and without cooperation, there are no alternatives. Established OTA platforms like Ctrip have developed obvious advantages in hotel resources over nearly 20 years, holding over 50% market share. For JD.com, relatively weaker in the "three-kingdom battle," how to achieve multi-front operations with limited resources becomes a realistic test it must face.

Facing these challenges, JD.com is shifting from high-profile market entry to pragmatic adjustment, needing to find truly differentiated breakthrough paths during this relatively calm window period.

**From High-Profile Entry to Pragmatic Adjustment** **JD.com Proposes Synergistic Enhancement**

JD.com's lifestyle services layout is essentially an innovative strategic attempt to reshape its business logic with "outsider thinking."

During the August 14 earnings call, CEO Xu Ran clearly stated: "We don't view food delivery business as an isolated business segment, but as deeply integrated into JD.com's ecosystem. In the future, we hope to achieve greater synergistic enhancement through JD Logistics and other ecosystem businesses." Behind this statement is JD.com's redefinition of food delivery business value - shifting from pure business competition to ecosystem synergy.

From an "enterprise development overall account" perspective, JD.com's investment in food delivery and other new businesses can actually be understood as customer acquisition and traffic costs for the core e-commerce foundation. Xu Ran emphasized during the earnings meeting: "Food delivery business has begun achieving clear synergistic effects with core retail, and we actively expand cross-selling opportunities brought by food delivery business." "Conversion rates of food delivery users when purchasing our core e-commerce categories continue improving, especially in supermarket categories where substantial cross-purchasing exists." Financial reports show JD.com Group's quarterly active users and shopping frequency both achieved over 40% year-over-year growth, with quarterly active users achieving consecutive double-digit year-over-year growth for seven quarters.

However, behind these apparent growth figures, actual effectiveness remains controversial. From Q2 financial results, revenue growth from core income sources like 3C and general merchandise has not shown explosive growth due to new business expansion, indicating that rapid user growth has not fully converted to core business revenue growth. This phenomenon suggests the enhancement effect of food delivery business on the core foundation still requires continued observation and optimization. Facing challenges, JD.com management remains optimistic about long-term effects of this mechanism. Xu Ran revealed during the earnings call that the company has invested resources in algorithm and system development to promote cross-shopping capabilities, with related tools launching gradually in Q3. This means JD.com must establish effective user conversion mechanisms within a limited investment window.

Supporting this strategy is JD.com's innovative capability in supply chain. The Seven Fresh Kitchen model attempts to achieve multi-party win-win for platform, merchants, and consumers by restructuring cost structures and ensuring food quality, without relying on excessive subsidies. This model provides foundational logic support for JD.com's diversified exploration in lifestyle services, with each new business format exploration adding value to supply chain capabilities and user ecosystem. Based on this logic, JD.com's first discount supermarket emphasizing "hard discount" officially opened in Zhuozhou, Hebei on August 16. From a layout perspective, JD.com attempts to seize more market share in this emerging track by leveraging warehouse scale advantages and sinking channels. Interestingly, Meituan has also focused strategic priorities on the same track, with its discount supermarket brand "Happy Monkey" first store also planned to meet consumers on August 29, directly competing with Alibaba's hard discount supermarket "Hema NB."

Compared to the mature model of Meituan and Alibaba extending from food delivery to hotels/travel and other high-ticket scenarios, JD.com faces unique challenges: needing to rely on supply chain advantages to convert more food delivery users to e-commerce users, achieving effective transformation from "customer acquisition costs" to "ecosystem value." Based on current approximately 10% food delivery market share, JD.com faces a race about efficiency and time, needing to maintain strategic determination for long-term layout while proving the feasibility of this ecosystem synergy logic before the input-output balance point arrives. Whether food delivery or hotels/travel, they are essentially adding value to its supply chain capabilities.

The essence of JD.com's "losing" business is exchanging short-term pain for long-term ecosystem synergy. Whether it can deliver on the promise that "front-end meal sales can permanently operate without profit, making money through supply chain," validate the scalable feasibility of new models, and stabilize the user foundation after subsidy cooling - these will directly determine whether JD.com's ecosystem restructuring can transform "from ideal to reality."