Total U.S. web traffic from Feb.-April 2023 was -5.3% for Home Depot, -8.9% for Lowe’s, and -13.1% for Overstock, according to Similarweb estimates.

Home Depot (ranked No. 4 in the 2023 Digital Commerce 360 Top 1000 database) had the best conversion rate (3.3%) among home improvement merchants, which include Lowe’s (No. 12), Overstock.com (No. 50), Wayfair Inc. (No 10), Ikea, and Ace Hardware Corp. (No. 662). That’s down half a point from 3.8% a year prior and 3.8% in the quarter ended Jan. 31. Ikea ranks No. 3 in the Digital Commerce 360 Europe database.

When compared to earnings results for Q1, only Lowe’s reported an increase in online sales (6%) for the three-month period ended May 5.

Home Depot online sales for fiscal Q1 ended April 30 fell 2.9%. While Overstock.com reported that online sales were down 29% in its fiscal Q1 ended March 31. Wayfair reported revenue decreased 7.3%, active customers decreased 14.6% and orders were down 6.7% for its fiscal Q1 ended March 31. 

Home Depot led the pack in web traffic 

With more than 521 million visits to its website in Q1 2023, Home Depot outpaced Lowe’s 321 million visits and 303 million visits to Wayfair.com, according to Similarweb estimates of desktop and mobile web visits from Feb.-April 2023.

Ikea has the most web visits that lead to conversion

Ikea’s converted web visits grew 0.3%, the only merchant to grow in this category. Wayfair’s conversion rate decreased 0.1%, followed by Ace Hardware (-0.2%), Lowe’s (-0.3%), Home Depot (-0.5%) and Overstock (-0.6%). 

Lowe’s lost the most web traffic share but gained online sales in Q1

It may be quality of time, not quantity of time, when it comes to web traffic visits. Lowe’s web traffic declined in Q1 but online sales increased 6% — an anomaly among competitors whose ecommerce sales declined.

Bounce rates were down for Lowe’s but up for Home Depot, according to Similarweb estimates. Lowe’s bounce rate decreased 2.77% in April 2023 year over year. 

“This could reflect a better ecommerce experience for website visitors,” says David Carr, senior insights manager. Over the last few years, Lowe’s has invested in upgrading its 15-year-old legacy software system. 

Online sales increased 6%, representing more than a 10% sales penetration. Lowe’s will continue to focus on upgrading its B2B Pro digital experience with new tools and personalization, said Marvin Ellison, chairman, president and CEO, during the retailer’s May 23 earnings call. Ellison attributed online growth to an increase in its pro sales. Lowe’s pro customers are contractors, repair remodelers, tradesmen, as well as property management and facility management professionals, according to the merchant.

“We also continue to enhance our DIY online experience by making home improvement projects easier for consumers to visualize, estimate and shop,” Ellison told investors. “These investments are paying off with higher online convergence and attachment rates.”

Consumers are also spending less time per website visit, according to Similarweb’s estimates. The average minutes per visit, desktop and mobile web, worldwide, is on the decline. 

In April 2023, the time spent decreased year over year:

Ace Hardware gains the most web traffic in Q1

Smaller merchant Ace Hardware’s desktop web traffic grew 22.4%, according to Similarweb estimates of desktop and mobile web visits from Feb.-April 2023. That’s in line with Ace Hardware’s Q1 2023 (ended April 1) report of a 22% increase in online visits. The merchant reported that online revenue increased 11% compared with the year prior.

Wayfair web traffic also increased 3.1%.

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Both merchants cited falling lumber prices and unfavorable weather conditions as reasons why do-it-yourself consumers pulled back on projects in Q1.

Home Depot Q1 2023 earnings

Net sales fell to $37.25 billion in the fiscal first quarter of 2023. That’s down 4.2% from $28.90 billion during the same quarter in 2022.

Net earnings were also down 8.5% at $3.9 billion, compared with $4.2 billion a year prior.

Home Depot chair, president and CEO Ted Decker told investors that after 43% growth in three years, the merchant expected “demand would moderate in fiscal 2023, which our first quarter results reflect,” according to a Seeking Alpha transcript of the earnings call with investors on May 16.

While do-it-yourself (DIY) customers bought more compared with Home Depot’s B2B Pro customers, sales to both were negative compared with the prior year, Decker said. Home Depot’s B2B Pro business sells to professional home improvement and other contractors.

The merchant still uses stores to fulfill some of its online orders. It fulfilled 45% of online orders through stores during the period.

Comparable retail sales for expensive items were down 6.5%, Billy Bastek, executive vice president, merchandising, told investors. These are for transactions over $1,000.

Lowe’s Q1 2023 earnings

Lowe’s net sales were $22.35 billion, down nearly 6% compared with $22.66 billion a year earlier.

The retailer’s net earnings for the three-month period ended May 5 were $2.26 billion, compared with $2.33 billion the year prior.

Online sales increased 6%, representing more than a 10% sales penetration. Lowe’s will continue to focus on upgrading its B2B Pro digital experience with new tools and personalization, said Marvin Ellison, chairman, president and CEO, during the May 23 earnings call.

Comparable sales decreased 4.3% compared with a year earlier.

Supply chain improvements

Ellison told investors Lowe’s continues to roll out its market delivery model, bringing the merchant to 12 geographic regions across the U.S. supporting 1,100 stores. Improvements include delivering large and bulky products more efficiently.

“And with our improved online capabilities, like easy scheduling and order tracking, we continue to see more and more of our customers getting comfortable completing their purchases online,” Ellison said.

Lowe’s to expand rural products in some existing stores

Lowe’s plans to add rural assortment merchandise to as many as 300 existing stores by the end of year. The stores will offer farm, ranch and outdoor products. This is in an effort “to position Lowe’s as a one-stop-shop to make it convenient for rural customers to get what they need in one shopping trip,” Ellison said. The rural store locations will offer merchandise for pets, livestock, trailers, utility vehicles, specialized hardware, and apparel from clothing brand Carhartt.

“While in years past, our penetration of rural and remote stores was viewed as a competitive disadvantage,” Ellison told analysts, “we now expect that these stores will be a key component of our operating profit growth over the next three to five years.”

The year ahead for home improvement

Deflation in lumber will be less of a headwind in 2023, says Brian Yarbrough, an analyst at financial investment firm Edward Jones. Consumer discretionary spending habits are more telling, he says.

Home Depot has had three years of unprecedented growth. As its Pro customers shift from bigger projects to small- to mid-sized projects, the merchant will continue to experience a slowdown, he says.

“Home Depot might feel some of that headwind in the near term,” Yarbrough says.

“We saw this huge pendulum shift during the pandemic for the home improvement category,” he says. “Now we’re seeing it normalized. Consumer spending is shifting back to the services sectors like travel and entertainment.

“But homes will get older,” Yarbrough says. “They will require more repair and maintenance in the long term.”

Meanwhile, over the last two to three years, Lowe’s has upgraded from a 15-year-old [technology] legacy software system to the cloud.

“Now, Lowe’s system can handle a lot more traffic,” Yarbrough says. “Lowe’s has also updated online transaction capabilities. It has been playing catch up, in a sense, with Home Depot. And I think they’re there now.”

Lowe’s plans to expand into rural locations is an interesting move, Yarbrough says. He doesn’t believe the move will affect Home Depot so much as it might Tractor Supply. Tractor Supply is conveniently located to rural shoppers and has a strong welcome/loyalty program, Yarbrough says. It also appeals to consumers on the go — its mobile app accounted for 20% of digital sales in Q1 2023.

“It’s early, so let’s not get too excited here,” he says. “But if this strategy works and starts driving more customers to [Lowe’s rural stores] and drives better sales, it will be an interesting dynamic to watch over the next several years.”

Home Depot ranks No. 4 in the 2023 Digital Commerce 360 Top 1000 database. Lowe’s ranks No. 12.

Home Depot earnings

For the first fiscal quarter ended Apr. 30, 2023, Home Depot reported:

• Net sales decreased to $37.25 billion. That’s down 4.2% from $38.90 billion from the comparable period a year earlier.
• Net earnings were $3.9 billion, down 8.5% from $4.2 billion compared to a year earlier.
• Online sales decreased 2.9% for the quarter, compared with the same quarter in 2022.
• Comparable sales in the U.S. decreased 4.6%.

Lowe’s earnings

For the quarter ended May 5, 2023, Lowe’s reported:

• Net sales increased to $22.35 billion. That’s down nearly 6% from $23.66 billion for the comparable period a year earlier.
• Net earnings was $2.26 billion, compared with $2.33 billion a year earlier.
• Online sales grew 6.0% compared with the same quarter in 2022.
• Comparable sales decreased 4.3%.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

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JD.com CEO Xu Lei is departing China’s No. 2 online commerce firm after more than a decade of climbing the ranks. He’s handing the reins to chief financial officer Sandy Xu starting June. While the outgoing CEO only officially took up his role around April 2022, he headed up JD’s core retail division for years. He was once regarded as the heir apparent to billionaire founder and chairman Richard Liu.

The management shuffle was announced after JD on May 11 reported revenue grew 1.4% to of 242.96 billion yuan ($35 billion). That beat projections but was the company’s lowest-ever pace of expansion. It swung from a loss to net income of 6.3 billion yuan in the March quarter, helped by 2.8 billion yuan of investment gains.

Meet the new boss

The incoming CEO is a two-decade auditing veteran who spent time with PriceWaterhouseCoopers. She now takes up the task of reviving one of China’s largest and highest-profile public companies. JD’s results, the first from a major Chinese tech company for the March quarter, suggest the internet sector is making some headway in efforts to eke out top-line growth, but still struggling to regain momentum after years of punishing COVID Zero restrictions.

JD’s performance was a far cry from the double-digit percentage expansions of previous years, before Beijing’s 2021 clampdown on internet spheres from online commerce to ride-hailing chilled a once-booming, free-wheeling tech sector.

JD.com is No. 1 is in the Asia Database. That’s Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales. Rival Alibaba Group Holding Ltd. owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). JD.com is No. 4.

The legacy of the outgoing JD.com CEO

The 48-year-old outgoing CEO Xu, known for devising JD’s signature “6.18” sales bonanza, said in a statement he was quitting to devote more time to family. His successor becomes one of the few women chiefs of a major technology company. She emphasized in the same statement that Xu will remain involved with the company.

Xu leaves behind a legacy that includes introducing the rival to Alibaba’s Nov. 11 Singles’ Day gala, pushing back against internal opposition to roll out the weeks-long equivalent event around the company’s June 18 anniversary. He also stepped up during the company’s low points — including an investigation into Liu over alleged rape in 2018. He trimmed the workforce and cut units that weren’t contributing to growth.

JD’s earnings gave investors a sense of what to expect when Tencent Holdings Ltd., Alibaba and Baidu Inc. report results next week.

The future of JD.com

JD is now spending on incentives to ward off intensifying competition from rival merchants as well as social media platforms such as ByteDance, owner of TikTok. It launched a 10 billion yuan discount campaign to capture new Chinese users in March even as it pulled away from Southeast Asian ecommerce. It closed its Indonesian and Thailand ecommerce sites to try to shave costs elsewhere.

Xu Lei stressed on a call with analysts that he would continue to support the company as chairman of its advisory council. He lauded his successor for working alongside him in 2018 through JD’s “so-called darkest moment.”

On the company’s discount programs, his successor said the strategy sought to offer consumers wider price ranges and product categories, in an adjustment to post-pandemic shopping patterns.

“We are confident in our ability to control the overall costs of this program,” she said. “It has limited impact on our margins.”

JD had avoided the worst of the years-long crackdown that hit Alibaba. In March, Alibaba made the historic decision to split itself into six business units that could seek independent fundraising and listings.

JD.com itself has spun off several units including JD Health International Inc. It is in the process of listing its property and industrials businesses in Hong Kong. It would remain the majority owner of both companies, which haven’t disclosed fundraising plans.

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Etsy operates an online marketplace for handmade items. Artisans and merchants sell a variety of clothing, photos, jewelry, toys and more on the site. Based in Brooklyn, New York, Etsy went public in 2015.

Etsy also owns fashion resale marketplace Depop, musical instrument marketplace Reverb, and Brazil-based handmade goods marketplace Elo7.

A key metric at Etsy is what the company calls consolidated gross merchandise sales, which measures the dollar value of items sold in all Etsy marketplaces including Depop, Reverb and Elo7. In the first quarter, consolidated GMS was $3.1 billion, down 4.6% year over year.

At the core Etsy marketplace, GMS in Q1 was $2.7 billion, down 4.7% from a year earlier.

On a more positive note, the Etsy marketplace grew active buyers by 1% year over year to 89.9 million, the first time this metric has grown on a year-over-year basis since the fourth quarter of 2021. The marketplace acquired 7 million new buyers, reactivated 21% more buyers than during the prior year period, and retained active buyers at levels above pre-pandemic rates on a trailing 12-month basis.

“While we remain cautious on the broader macroeconomic climate, we are pleased to see positive trends in our first-quarter 2023 buyer data, particularly the return to year-over-year growth in the Etsy marketplace’s active buyer base,” Rachel Glaser, chief financial officer, said in a written statement.

Etsy is No. 17 in the 2023 Digital Commerce 360 Global Online Marketplaces database. It is No. 6 among U.S.-based marketplaces.

For the fiscal first quarter ended March 31, 2023, Etsy reported:

• A 13.4% drop in net income to $74.5 million.
• Consolidated revenue of $640.9 million, a 10.6% increase from a year earlier.
• A 3.8% increase in the number of active sellers.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

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Amazon’s total sales include its own product sales, sales from its marketplace, as well as marketplace seller fees, advertising fees and revenue from Amazon Web Services (AWS).

Amazon reported net income of $3.2 billon in the first quarter, a dramatic swing from the $3.8 billion loss a year earlier. Ecommerce sales dropped 0.06% year over year to $51.093 billion in Q1.

Amazon revenue breakdown

Amazon’s results suggest the company’s efforts to reduce costs are starting to bear fruit. Operating expenses increased 8.7% in the quarter, the slowest pace in at least a decade. The company’s North America segment was profitable on an operating basis for the first time since late 2021.

Amazon Web Services generated $21.4 billion in sales, a 16% rise from a year earlier and higher than the $21.2 billion analysts had expected. The cloud-computing division is the company’s largest source of income. Despite AWS’  better-than-expected Q1 performance, Amazon said it began laying off employees in the AWS operation amid slowing sales growth in its most profitable division.

That 16% rise from Q1 2022 is the slowest growth rate reported since Amazon began breaking out the segment and the fifth consecutive quarter in which growth slowed year-over-year.

Earlier this year, chief financial officer Brian Olsavsky warned that AWS growth would slow in 2023.

Advertising sales rose more than 21% to $9.51 billion in the quarter. Revenue from third-party seller services — which include commissions, shipping services and other fees that Amazon collects from sellers on its marketplace — jumped 17.7% to $29.8 billion in Q1.

“Amazon did what it needed to do in Q1 by reversing — or at least stalling — its most troublesome declining growth trends,” said Andrew Lipsman, an analyst at Insider Intelligence, told Bloomberg News. “Amazon’s stronger-than-expected performance for its key profit centers of AWS and advertising indicate that the enterprise and the digital ad sectors may be turning the corner.”

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Amazon announces BNPL option

Several hours before releasing its earnings, Amazon announced a new buy-now-pay-later option called Citi Flex Pay on Amazon Pay. Under the program, eligible Citi credit card members can pay over time with Citi Flex Pay when using Amazon Pay during checkout at participating online retail sites. The deal with Amazon marks the first time Citi credit card members can use Citi Flex Pay through a digital wallet.

Amazon already offers BNPL through Affirm. Amazon also accepts Apple Pay, and in March Apple announced a BNPL plan of its own.

Operational changes at Amazon

Amazon has made several moves in recent months to cut its operating costs, most notably by laying off thousands of workers from its ecommerce unit. In early January, CEO Andy Jassy said planned job reductions totaled 18,000 workers. That’s a full 1% of Amazon’s workforce — and well above earlier expectations that Amazon would slash 10,000 jobs.

The Seattle-based company employed almost 1.47 million people as of March 31, a decrease of 10% from the period a year earlier and down from more than 1.54 million workers three months earlier.

Second-quarter guidance on Amazon revenue

Seattle-based Amazon said it expects sales in the current quarter to reach between $127 billion and $133 billion, keeping in line with analysts’ forecasts.

Other news from the first quarter

On April 26, news site The Verge reported Amazon had decided to close its Halo division, which sold fitness- and sleep-tracking devices. Amazon had stopped selling its three Halo products and plans to lay off portions of the Halo team, the news site said.

“We have made the difficult decision to wind down the Halo program, which will result in role reductions,” Melissa Cha, Amazon’s VP of smart home and health, told staffers in an email The Verge obtained.

Some analysts said Amazon has more work to do. “We keep waiting for profit and cash flow to turn here,” Stefan Slowinski, an analyst at BNP Paribas Exane, told Bloomberg. “With all of the headlines on restructuring and closure of businesses, we’re really not getting that coming through in the numbers.”

Amazon earnings

For the fiscal first quarter ended March 31, Amazon reported:

• Amazon revenue from third-party seller services of $29.8 billion. That’s 17.7% increase from the comparable quarter of 2022.
• $9.5 billion in revenue from advertising services, a 21% jump from a year earlier
• Operating cash flow of $54.3 billion for the trailing twelve months, an increase of 38% from the $39.3 billion for the trailing twelve months ended March 31, 2022.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

Bloomberg News contributed to this report.

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Revenue will be at the bottom end of the range of $97 billion to $99.4 billion provided in January, the company said April 25 in a statement. Sales were $22.9 billion, in line with analysts’ expectations.

Retail demand is down

“In the first quarter, deceleration in U.S. retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia,” CEO Carol Tomé said in the statement.

The decline in package demand from pandemic highs tests Tomé’s strategy of focusing on the small businesses, health-care providers and other high-paying customers to boost profit margins while curtailing service to some large ecommerce companies, such as Amazon.com Inc., that negotiate more discounts.

Management is also leaning on technology to boost efficiency, including putting radio frequency identification tags on all packages to reduce mistakes while sorting and loading packages into delivery trucks.

The courier faces the possibility of a union strike from its 330,000 workers as the company negotiates to replace a five-year labor contract that expires July 31. Some customers have diverted package volume to rivals, including FedEx Corp., in case there’s a work stoppage. Tomé has said she expects to find middle ground with the union and reach a new contract before the strike deadline.

UPS’s adjusted operating profit margins fell to 11.1% from 13.6% a year earlier. The courier also adopted the low end of its January guidance on 2023 profit margins of 12.8% to 13.6%.

“Over the first quarter of 2023, the global volume environment deteriorated due to challenging macro conditions and changes in consumer behavior,” UPS said in the statement.

Pressures on UPS are likely to continue

The company’s U.S. domestic unit, which makes up about two-thirds of sales, saw parcel volume drop 5.4% even as revenue per package rose 4.8%. Revenue dropped almost 7% at the international business as volume fell 6.2%. Sales at supply chain solutions, which among other things provides freight brokerage, plummeted more than 22% as cargo prices decline.

Package demand is expected to continue “under pressure,” the company said.

“We will remain focused on driving productivity while investing in efficiency and growth initiatives, enabling us to come out of this demand cycle even stronger,” Tomé said.

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A revamp of Walmart’s website and app, unveiled Monday, seeks to highlight a selection of goods and cut down on clutter. The goal is to entice shoppers with items they weren’t necessarily looking for instead of offering a utilitarian framework for consumers who already know what they want.

The Walmart ecommerce website homepage, as of April 3, 2023.

With the redesign, the Walmart ecommerce website seeks “to curate an experience when customers walk through our doors, whether they’re physical doors or digital,” said Tom Ward, the retailer’s U.S. ecommerce chief, in an interview.

That means taking a page out of the brick-and-mortar playbook with a greater emphasis on seasonal products and hot new sales trends, Ward said. Walmart is also trying to focus more eyeballs on its online offerings and growing marketplace of third-party sellers. It will do so by providing “a more engaging way to browse,” as Ward said in a statement on the company’s website.

Walmart’s U.S. ecommerce revenue has expanded at an 11% to 12% clip during the last two years. The online business accounted for almost 13% of U.S. revenue last year. That’s up from 12% the year before, according to a recent regulatory filing.

Walmart is America’s largest overall retailer. It is No. 2 in Digital Commerce 360’s Top 1000, trailing only Amazon in annual ecommerce sales. The Top 1000 ranks North America’s largest online retailers by web sales.

Walmart ecommerce sales

In a call with Wall Street analysts following its most recent earnings announcement, Walmart CEO Doug McMillon said ecommerce represents 13% of Walmart’s total global sales. Walmart said its digital sales rose 17% year over year in the fourth quarter.

In February, Walmart announced it would sell outdoor gear retailer Moosejaw Mountaineering to Dick’s Sporting Goods. It was the latest instance at the time of Walmart unwinding ecommerce-focused acquisitions it made from 2016 to 2018.

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Lands’ End ecommerce sales

For the 2022 fiscal year ended Jan. 27, 2023, Lands’ End reported that global ecommerce net revenue decreased 10.1% to $1.1 billion. Meanwhile, the company’s U.S. ecommerce decreased 7.0% and international ecommerce decreased 24.6%.

Andrew McLean, CEO, Lands’ End Inc,

Land’s End did not break out B2B ecommerce sales. But the company said its Outfitters business, which supplies uniforms and other apparel for companies and schools, reported a 4.6% increase in net revenue to $265.9 million. It attributed the increase to strength in travel-related national accounts and “school uniform customers returning to historical purchasing patterns.” Lands’ End sells uniforms, personalized apparel and promotional products online through its Lands’ End Business ecommerce site.

The drop in overall fiscal year 2022 Lands’ End ecommerce sales was “primarily driven by lower consumer demand as a result of delayed receipts of key products caused by the global supply chain challenges in the first half of fiscal 2022, macroeconomic challenges impacting consumer discretionary spending and industry-wide promotional activity,” Lands’ End says.

Net revenue declines in fiscal ’22

Overall net revenue decreased 5.0% to $1.56 billion compared to $1.64 billion in the prior year. Net loss was $12.5 million compared to net income of $33.4 million in fiscal 2021.

“Over 90% of our revenue comes from a click,” CEO Andrew McLean told analysts on the company’s year-end earnings call. “So, we will continue to emphasize digital channels for serving existing and new customers. At Lands’ End, we’re customer-obsessed. The key to executing this product strategy is making sure we reach our customers in the right cadence with the right products at the right time, helping them to build their basket across categories.”

The key to restoring ecommerce growth is digging deeper into consumer and business buyer behavior and delivering a better online user experience, McLean said.

“We’re going to take a page from our history and focus on engaging directly with our customers while encouraging them to shop across the preferred channel,” McLean told analysts. “Lands’ End already has a robust buyer file, nearly 7 million strong. And we are going to double down on our approach to understanding our customers, both current and potential, and seek to grow our share of our addressable market by leveraging our proprietary data.”

Fiscal Q4 earnings summary

For the fourth quarter, net revenue decreased 4.6% to $529.6 million, down from $555.4 million a year earlier. The overall drop includes a 2.1% decrease in net Outfitters revenue to $60.5 million.  Meanwhile, Lands’ End ecommerce net revenue was $414.5 million, down 6.1% from $441.5 million in the fourth quarter of fiscal 2021.

“We’re confident that through our enhanced use of data and analytics, our teams will be better able to predict and manage appropriate inventory levels, reducing that expense without impacting the customer experience,” says chief financial officer Bernie McCracken.

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China’s second-largest online retailer said March 9 that revenue rose 7% from October to December. That’s down from 23% growth a year earlier. It and larger rival Alibaba Group Holding Ltd. have grappled with weak consumption sentiment since the world’s No. 2 economy buckled under the weight of China’s rigid COVID control measures.

China’s exports and imports continued to decline in the first two months of 2023, clouding the outlook for an economy gradually recovering from the COVID years and waves of infection. Economists expect consumption to be the main GDP driver this year. However, the data showed a slowdown in urbanization and a rise in inequality in 2022, two trends that could slow private spending. Alibaba had reported a mere 2.1% rise in quarterly revenue in 2022’s final three months, underscoring the economic uncertainty that’s prevailed even after China abolished COVID restrictions in December.

JD.com is No. 1 is in the Asia Database, Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales. Alibaba also owns Lazada Group, which is No. 2.

Alibaba owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). JD.com is No. 4.

JD Q4 sales

JD reported sales of 295.4 billion yuan in the period, slightly below the 295.5 billion yuan average of analysts’ projections. It posted net income of 3 billion yuan, versus a 2.9 billion yuan estimate.

Executives on March 9 affirmed that the company was pulling out of Southeast Asian ecommerce for now, because building a regional operation would require too much investment over a long period. JD is closing its Indonesia and Thailand shopping sites. It remains a leading domestic player, along with Alibaba, in logistics. JD said March 9 it sold Class B preferred shares in its supply chain services unit JD Industrials to a group of unidentified investors.

It will stay focused on lowering costs, increasing efficiency and improving user experience, CEO Xu Lei said.

JD set for $1.4 billion discount spree

The online retailer is offering discounts across its shopping platforms in a 10 billion yuan ($1.4 billion) campaign to capture new users ahead of an anticipated Chinese economic recovery this year.

The campaign has spurred concerns that larger rival Alibaba or upstart PDD Holdings Inc. may retaliate with cuts of their own, igniting a margin-eroding price war. JD announced March 4 the launch of the subsidy plan in a statement on its official WeChat account.

China’s internet firms are revving up efforts to outdo each other since Beijing began to wind back its bruising crackdown on the tech sector, spurring an abrupt surge in competition that’s spooking investors. Meituan is said to be expanding into Hong Kong and has embarked on a campaign to hire 10,000 people on the mainland — an effort to beat back heightened competition from new entrants such as ByteDance Ltd. in the $145 billion Chinese food-delivery arena.

Competition could be closing in

Like Alibaba and Tencent Holdings Ltd., JD faces intensified competition from up-and-comers such as PDD Holdings Inc. and ByteDance Ltd. It has balanced tightened cost controls with targeted measures to shore up its market share.

The company expects to control its overall marketing costs. Part of that comes from its plan to rope in merchants to help control the expense from discounts.

“What we hope to do is to transform our marketing strategy from focusing on big sales to creating an environment of everyday low prices, gradually shifting people’s shopping behavior,” Lei told analysts on a conference call. “These programs will have a limited impact on our margins.”

Alibaba executives have since dismissed speculation it would directly engage its longtime rival. They warned that a return to the price wars of years past was in nobody’s best interest.

In 2020, Beijing launched a crackdown campaign to rein in what it called the “reckless expansion of capital,” affecting sectors from ecommerce to online education and the sharing economy. The government has begun rolling back restrictions since late 2022, intent on reviving a Covid-struck economy.

What Bloomberg says

JD.com’s total retail earnings gain in Q4 would have surpassed revenue growth as COVID-led weakness in consumer and business sentiment across mainland China prompted the firm to tighten cost controls from a year earlier. It likely also cut overseas expenses. The firm took steps to cease operations in Indonesia and Thailand by March this year.

JD.com’s plan to offer 10 billion-yuan worth of subsidies to shoppers on its platforms could lift average spending per active user and attract new customers this year. This might help the firm meet consensus expectations for an acceleration in revenue growth to 15% in 2023 vs. about 10% the prior year.

— Catherine Lim and Trini Tan, analysts

Founded by billionaire Richard Liu, JD largely avoided a direct hit from Beijing’s 2020 and 2021 crackdown on the country’s biggest internet companies. That regulatory assault left Alibaba — the target of a months-long antitrust investigation — reeling and struggling to revive growth. Its annual revenue surpassed 1 trillion yuan for the first time, in 2022.

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Net income rose 3.7% to 13.8 billion kroner ($2 billion) in 2022, the Billund, Denmark-based company said on Tuesday. Expenses jumped 22% and revenue rose 17% to 64.6 billion kroner, driving gains in market share. Lego grew online sales by about 10.5% in 2022, according to Digital Commerce 360’s estimates. Lego is privately held and does not release all financial information.

The LEGO Group is No. 129 in the 2022 Digital Commerce 360 Europe Database.

Lego opened stores and produced more toys

The maker of colorful building bricks, which is owned by the billionaire Kirk Kristiansen family, opened 155 new branded stores last year and increased production at three of its five factories. It’s also working on building two new large facilities in Vietnam and the United States. The company said it expects to win market share again this year with “single-digit” revenue growth.

Lego’s results were better than the company had expected, CEO Niels B. Christiansen said.

Earnings momentum “was driven by the investments made during this time, which are both paying off now and establishing a foundation for long-term, sustainable growth,” the CEO said in the statement. “We plan to accelerate investments in strategic initiatives in the coming years.”

Lego plans to hire 500 more digital experts in Denmark, the United Kingdom and China in addition to as many as 6,000 workers for its new factories in the U.S. and Vietnam in coming years, Christiansen said.

Other toymakers see declining demand

Lego’s hiring spree is an outlier in the the toy market, which shrunk last year. Its biggest rivals, Mattel Inc. and Hasbro Inc., both reduced headcount in 2022.

Lego’s U.S. rival Mattel Inc., which owns the Barbie brand, last month said it expects no revenue growth this year, while the other large U.S. toymaker, Hasbro Inc., said it sees a contraction. Hasbro cut its workforce by another 1,000 jobs, about 15% of workers, after a poor holiday season. Hasbro said the digital gaming business, including the Dungeons & Dragons and Magic the Gathering games, performed well. However, its traditional toy business faltered. Both companies said toy sales were down after a boom during the pandemic.

Mattel and Hasbro are No. 203 and No. 534, respectively, in the 2022 Digital Commerce 360 database of the largest North American online retailers by web sales.

Lego as a symbol of resistance

In 2022, Lego made headlines for its symbolism following the Russian invasion of Ukraine. The toy manufacturer said it had “paused shipments of products to Russia given the extensive disruption to the operating environment,” and donated more than $16 million to humanitarian organizations.

Polish illustrator Paweł Jońca was inspired by Lego’s blue and yellow similarity to the Ukrainian flag. He created a poster showing a red bear representing Russia, stepping on blue and yellow Lego blocks representing Ukraine.

“The proportions and colors refer to huge Russia and smaller Ukraine,” Jońca said. “The heaviness of the aggressor and the tenacity and persistence of the defender. Most viewers associated stepping on the block with their own experience and immediately thought, ‘Hope it hurts!’”

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