JD.com is cooking in person, what big chess is Liu Qiangdong playing?

Recently, Liu Qiangdong, who was having sex with his friends at a street stall, became a hot search again, and Liu Qiangdong launched another royal bomb combination. JD.com launches Qixian Xiaoqi, which is to be self-promoted and sold in the catering industry. After JD.com announced its entry into the takeaway business at the beginning of the year, its strategy seemed to be gradually becoming clear.

When JD entered the takeaway industry, the outside world did not know what JD Hulu sold. When Meituan and Ele.me were still using the "0 yuan to eat" price war, JD.com, the latest entry in the takeaway industry, has hit the real pain point of the takeaway industry. Liu Qiangdong started directly from the root of takeaway and established the self-operated catering brand "Qianxian Xiaochu", with plans to use 1 billion cash to introduce 1,000 signature dishes. It is also planned to open 10,000 "Qianxian Xiaoqian" within three years, specifically looking for chefs to cook together.

The industry believes that if Liu Qiangdong's plan is truly implemented and implemented, JD.com will become the largest catering group in the country. All kinds of well-known brands of restaurants on the market can appear in JD.com's Qixian Kitchen Takeaway Store. 10,000 Qixian Kitchen will cover the whole country. This strategy and ambition are just like Liu Qiangdong killed Digital City back then, copying the Digital City directly online and becoming the largest Digital City in the country. It is just that the uniqueness of catering makes it a certain difference from other products. Whether Liu Qiangdong’s grand plan can be implemented is still unknown. It remains to be seen whether JD.com’s strategy can boost its market value this time.

JD's market value is seriously underestimated

JD.com's revenue in the first half of this year was 657.7 billion yuan, a year-on-year increase of 19.28%; net profit of 17.07 billion yuan fell by 13.68% year-on-year. The gross profit margin of 15.89% increased by 0.35 percentage points compared with 15.54% in the same period last year, while the net profit margin of 2.73% decreased by 1.07 percentage points compared with 3.80% in the same period last year. This is not good news for JD.com, which has huge revenue.

JD.com's revenue in 2024 was 1.159 trillion yuan, exceeding one trillion yuan for three consecutive years since its first annual revenue exceeded one trillion yuan in 2022. The net profit margin of 3.85% is also a new high in the past four years. However, JD.com's market value is only US$46.58 billion, while Alibaba's market value during the same period was US$336.6 billion, and Pinduoduo's market value during the same period was US$177.5 billion. Among the three major e-commerce platforms, JD.com has the lowest market value. JD.com's old rival Meituan has a market value of HK$596.3 billion in the same period, which is about US$76.6 billion after conversion at the latest exchange rate, which is also much higher than JD.com.

JD's current price-to-earnings ratio is 8.69 times, which is significantly lower in the e-commerce industry. Alibaba's price-to-earnings ratio in the same period was 16.52 times, Pinduoduo was 13.07 times, and Meituan was as high as 19.29 times. Investor Shi Baogang said that JD.com's price-to-earnings ratio is lower than some peers, indicating that the market's expectations for its profit growth are conservative. At the same time, JD.com's price-to-book ratio hit a five-year low of 2.0x in 2023. Although it rebounded to 2.3x in 2024, it is still lower than the 2020 peak of 7.3x, which reflects the pressure on JD.com's asset valuation.

Shi Baogang believes that JD.com will split up its core businesses such as logistics and list them independently, such as JD.com Logistics, resulting in the dilution of the parent company's market value. Although this strategy can improve the valuation of the sub-sector, it will weaken the overall market value performance of the group. At the same time, JD.com faces strong competition from e-commerce giants such as Alibaba, which increases advertising costs, reduces gross sales profit margins, and has an impact on profitability. "In addition to e-commerce business, JD.com also has involved in many fields such as cloud computing, logistics, and finance. These expansions have increased operating costs, especially investment in technology research and development and logistics construction, causing overall costs to rise. JD.com is involved in new business areas such as artificial intelligence and unmanned delivery. The market expectations may not meet the company's expectations, causing investors to have doubts about the company's future growth prospects. Liu Qiangdong's massive entry into the catering industry may seek new profit growth points to stabilize investors' confidence."

Can Qixian Xiaochu replicate JD Logistics?

Liu Qiangdong's courage lies in his always daring to do things that others dare not do, just like JD Logistics back then.

On June 18, 1998, Liu Qiangdong started a business in Zhongguancun and established JD.com. At first, JD.com was just an agent for optical discs, disks and other products. In 2003, Liu Qiangdong owned 12 stores in Beijing. It was this year that Liu Qiangdong began to get involved in e-commerce and made every effort to online. The initial online cooperating express delivery was a third party.

At that time, Liu Qiangdong found that 70% of JD's customer complaints were concentrated in the logistics process, including slow delivery and serious damage to the goods. Third-party logistics lacks control over franchisees, and violent loading and unloading is common, especially on high-value 3C digital products. JD.com mainly uses 3C digital, with a high value of individual parcels, and the risk of losing parts from third-party logistics is high. At the same time, JD.com also faces the problem of collecting payments on behalf of others. Third-party express companies generally have long deposit cycles (more than 15 days) and risk of running away, and self-built logistics can solve the problem of capital flow security. Liu Qiangdong has been brewing the idea of ​​building self-built logistics.

In 2007, Liu Qiangdong decided to build his own JD Logistics. He regarded logistics as JD's core competitiveness and believed that heavy asset investment could be transformed into a long-term advantage of "experience, cost, and efficiency". Although he was questioned about "burning money" in the early stage, he insisted that "burning money for user experience is worth it". As we all know, self-built logistics is a huge gold-swallowing beast, which not only affects JD's early profits, but also causes JD to continue to lose money until 2016. During this period, Liu Qiangdong withstood the huge pressure from all parties, especially during the global financial crisis in 2008. Liu Qiangdong had to use a bet agreement to persuade shareholders to continue to invest in self-built logistics. His "three-stage rocket" construction path (warehousing-distribution-technology) gradually verified the value of self-built logistics, such as the Asia No. 1 smart warehouse reduced the sorting cost to 1/6 of the industry average.

The successful construction of JD Logistics has basically solved JD customer complaints, and achieved full control of the distribution link through self-built logistics, especially ensuring the safe delivery of high-value 3C products, reducing the loss rate of 3C digital products to below 0.01%, far lower than the industry average. The average delivery time has been shortened from 3-7 days for third-party logistics to within 48 hours, and some cities have achieved "211 limited time delivery". Such shopping experience has significantly improved the user repurchase rate under the fierce competition of e-commerce. Through the independent payment system, JD.com has compressed the merchant’s payment cycle from 15 days of third-party logistics to T+1, eliminating the risk of running away. This move is also regarded as an important sign of Liu Qiangdong's forward-looking vision.

This time, Qixian Xiaochu is similar to JD Logistics. It was just that others thought that Liu Qiangdong could not do it. At the beginning, JD Logistics had no external support at all. It relied entirely on independent self-reliance to develop step by step into an independent listed company, becoming JD's largest moat.

Now Liu Qiangdong plans to invest more than 10 billion yuan in three years to build 10,000 Qixian Xiaoqian, with an average of 9 new stores per day to form instant retail ecological collaboration. At this time, Liu Qiangdong was under much less pressure than self-built logistics in 2007, but in the early stage, it may affect JD.com's net profit and have to bear the pressure from shareholders.

Liu Qiangdong's top plot

JD.com's self-built Qixian Xiaoqian is regarded by the industry as Liu Qiangdong's top plot.

According to JD.com's plan, 10,000 Qixian kitchens will be established nationwide within three years. The ingredients and quality control will be controlled by JD.com, and they will be fried and made immediately, which can solve food safety issues to the greatest extent. JD.com’s “Dish Partner” plan aims to ensure the taste of the dishes. It is calculated based on 1,000 dishes, each of which requires a guaranteed share of 1 million yuan, with a minimum investment of 1 billion yuan. Liu Qiangdong’s business model is that the sales share is not topped, and brand restaurants and individual chefs can register.

In this way, the ingredients and quality control of Qixian Xiaoqiu are controlled by JD.com, and the partner restaurant or chef is responsible for the color, fragrance and flavor of the dishes, and gradually build JD.com's self-operated takeaway. Liu Qiangdong said: "I look forward to this business model that can completely solve food safety problems and allow consumers to buy cost-effective and safe food."

In this model, partners only need to provide the recipe for the dish, and all the others are handed over to JD.com. JD will strictly control food hygiene, from the procurement and processing of ingredients to the end delivery to customers, all of which are completed in accordance with JD's unified standards. From purchasing, making and delivering raw materials for dishes, JD.com has achieved a closed loop of catering takeaway. JD Qixian Xiaoqi's first store became very popular as soon as it was launched. More than 1,000 orders were sold on the first day, and the user score was as high as 4.9 points.

JD.com built its own Qixian Xiaoqi, like the early JD Logistics, belongs to the heavy asset model. JD.com had to build its own warehouse for selling 3C products, and now even making takeaways, but in an era of frequent food safety issues, JD.com used transparent visualization operations to relieve consumers' worries. Build a self-built kitchen can ensure the quality of dishes, and self-built delivery can guarantee half an hour delivery. Using JD Logistics outlets is more controllable than Meituan.

At that time, Liu Qiangdong spent a lot of money on his own JD Logistics, but eventually became the core competitiveness, and opened up the gap with Taobao's "third-party logistics" and achieved the highest revenue of e-commerce platforms. Currently, JD Logistics has become JD ace. Many consumers would rather spend more money than buy on JD.com. The fundamental reason is that they save time and worry and have a safe shopping experience.

Now Liu Qiangdong has launched Qixian Xiaoqian, which is basically similar to JD Logistics. JD builds its own central kitchen, uses machines to control the temperature, and establishes strategic cooperation with leading suppliers such as COFCO and Zhengda. The whole process of fresh food can be traced.

Financial analyst Xu Yi believes that Liu Qiangdong's strategy may be far more than selling takeaways. "If Qixian Xiaoqian is made, JD may become the leader of the industry. Liu Qiangdong is betting on a controllable future and is using high-frequency urgent needs to improve customer stickiness. After all, people's consumption demand for other products is far less than eating, and eating is the highest frequency demand at present. Catering is the entrance to traffic, and other businesses are monetization methods. After all, JD's ultimate goal is to become a "local life super platform", and its current main competitors are Meituan and Ele.me. Takeaway is the foundation of Meituan. Once the 10,000 Qixian Xiaoqian plan is fully implemented, it will have a far-reaching impact on the takeaway industry."

After Liu Qiangdong took all the social security for the 150,000 delivery guys, he launched a new business model in the lively takeaway track, opening up the imagination space for the takeaway industry. Liu Qiangdong, who likes to end things in person, has also enabled JD.com to achieve self-reliance in the field of takeaway.

What many consumers are looking forward to is Liu Qiangdong's exploration in the field of takeaway. Can the food safety problems be completely solved? Once this pain point is completely solved, JD.com will become the largest catering company in the country or even the world. At that time, JD.com's market value will naturally rise.

This article is an original article from BT Finance. It may not be used, copied, disseminated or adapted without permission. If it constitutes infringement, legal liability will be pursued.

Author | Mengxiao