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JD. com faces battle to gain ground in China's instant delivery market

JD. com faces battle to gain ground in China's instant delivery market

Time of India6 days ago
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Chinese ecommerce giant JD. com is going all out to build its instant-delivery business to diversify revenue, but breaking into the competitive industry is proving difficult.The company has poured billions into JD Takeaway, the food-delivery unit it launched in February, to cut reliance on a core retail business hit by a weak economy and tough competition.Its results on Thursday showed the service has lifted its user base, traffic and revenue, with both quarterly active customer growth and shopping frequency up more than 40%.But it is struggling to take market share from long-established incumbents Meituan , the industry leader, and Alibaba 's Ele.me Daily active users in JD's delivery business have fallen steadily since peaking in mid-June, slipping more than 13% week-on-week by July 27 versus a 6% drop and a 1% gain in the previous two weeks, M Science data showed.The data signals "a significant loss of momentum for JD.com , and likely market share loss", M Science analyst Vinci Zhang said."Meituan and Alibaba already have considerable domain expertise in food delivery , and I don't think JD has expertise in that area yet. It will be very challenging," Zhang said.JD.com's food delivery investments have also squeezed profitability. Its adjusted operating margin shrank to 0.3% in the June quarter from 4% a year ago.Meituan's daily orders across food and retail goods reached an all-time high of 120 million. The company holds nearly 70% of the delivery market, Morningstar analysts said in May.Alibaba's Taobao instant commerce business combined with Ele.me reached 80 million daily orders early in July, with daily active users crossing 200 million.Company executives have warned of fierce competition, with the three companies together pledging nearly 200 billion yuan ($27.87 billion) in recent months to subsidize instant delivery, sparking an "instant retail" price war that has drawn regulatory scrutiny."The competition started to intensify since July," JD. com CEO Sandy Xu said on Thursday, adding the company was focused on improving its platform to attract more users, merchants and riders.Meituan and Alibaba are yet to report quarterly results.
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