Hello, and thank you for standing by for JD.com's fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode. After the management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Mr. Sean Zhang, Director of Investor Relations. Please go ahead.
Thank you. Good evening and good morning, everyone. Welcome to our fourth quarter and full year 2021 earnings conference call. Joining us on the call today are Mr. Lei Xu, President of JD.com, and Ms. Sandy Xu, our CFO. For today's call, Lei will kick off with opening remarks and Sandy will discuss the financial highlights. After that, we'll open the call to questions from analysts. Before we continue, let me remind you that today's call will include forward-looking statements, and please refer to our latest safe harbor statement in the earnings press release on our ir website, which applies to this call. Also during this call, we'll discuss certain non-GAAP financial measures. Please also refer to our earnings release, which contains a reconciliation of non-GAAP measures to the comparable GAAP measures.
Finally, please note unless otherwise stated, all figures mentioned in this call are in RMB. Now, I'd like to turn the call over to our president, Mr. Xu .
Hello, everyone. This is Xu Lei. Thank you for joining JD.com's 2021 fourth quarter and full year earnings call. JD continues to deliver high quality growth amid the evolving macro, consumption, and industry environment in the fourth quarter. Total revenues recorded at 23% year-on-year growth in Q4 on a high comp and grew nearly 28% for the full year of 2021. This shows that we continued to outperform the industry and continued to contributed to the high quality expansion of China's consumption. At the same time, we achieved a healthy profit growth in this quarter, thanks to improvements in efficiency driven by technology. Our progress demonstrates the increasing appreciation JD has earned among consumers and business partners. It also validates that new type of real economy-based enterprises have become important driving forces for growth in the retail industry and up and downstream entities.
JD's business and investment strategies have always centered on users and business partners through different economic cycles, and this is our strategic determination and focus. First, in terms of users, we saw synchronized increases of both user number and quality. In 2021, annual active users reached 570 million, maintaining efficient and healthy growth while the overall consumption industry underwent recovery. More importantly, we saw users' shopping frequency, range of categories purchased, and app's all meaningfully improved in the fourth quarter. This was driven by our stronger user engagement and Omni-channel initiatives. Here, I would like to reiterate two points of view that I have shared before. First, JD's goal is not to chase high growth in any single operating or financial metric. Instead, we focus on the healthy and sustainable growth of our business as a whole.
Second, as China's internet industry develops into a more mature stage, the traffic-driven growth model driven by subsidies is being replaced by a user quality and operating efficiency-oriented model. In such a new environment, we believe that JD's user growth and business operations are facing so-called wet snow and rainy mountain. Time is on our side. We have much to do, as there are so many users who need to be explored and satisfied. We always set higher standards and goals to serve users.
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For our business partners, we have been striving to build an open and integrated ecosystem to meet the diversified needs of both suppliers and third party merchants. In JD's ecosystem, it is very common for brands to run both 1P and 3P businesses at the same time as different models bring them different values. We are glad to see that 1P and supply chain have become mainstream topics in this industry in recent years, with more companies working on each, working on such initiatives. We are willing to share our experience to contribute to the industry's healthy development. However, we have to point out that we don't think 1P merely means product procurement or even advancing payment for securing inventories. We believe 1P is about building a comprehensive system of supply chain management.
The strength of the 1P model is to provide high quality shopping experience to users and raise operating efficiency along the supply chain so that business partners can enjoy better capital and inventory turnover.
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In a time of uncertainty, JD has helped our business partners to cope with external changes with better operating efficiency and lower costs, sharing stability and certainty with them. As a result, JD has gained increasing recognition from all kinds of business partners. In the fourth quarter, both the types and number of business partners in our ecosystem continued to expand. In particular, the number of 1P suppliers achieved a double-digit percentage growth, while further expanding coverage across all product groups. The growth of third-party merchants also accelerated to the highest level in the past three years, as we added more new merchants in Q4 than we did in the previous three quarters combined. We believe that the number of our business partners will continue to grow healthily in the future. Meanwhile, we have been constantly strengthening our win-win cooperation with our business partners.
We further shortened inventory turnover days to the lowest level in the industry, despite the number of SKUs that we manage is now close to RMB 10 million. Our accounts payable days also shortened, which helped improve business partners' capital turnover efficiency. As such, JD has helped millions of online and offline suppliers and SMEs to gain their fair growth opportunities and a reasonable profit in support of the real economy. Going forward, we will cooperate with more partners, generate mutual benefits, and facilitate each other's growth.
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The healthy growth momentum of our core retail businesses, our further enhanced supply chain capabilities and operational efficiency have put us in a strong footing to firmly execute our long- term strategy. Now let's take a closer look at the recent development of JD Logistics and new businesses.
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JDL achieved a series of milestones in 2021. Firstly, its total revenue grew rapidly and exceeded the RMB 100 billion mark for the full year. Second, the long-term investment in JDL made in establishing integrated supply chain logistics services started to bear fruit, as it served more external customers and expanded its total addressable market. This also led to better revenue structure for JDL, as revenues from external customers grew at a faster pace and accounted for over 50% of total revenue for the first time on a full year basis. Our business partners can better focus on their core operations and achieve high-quality growth as JDL's integrated supply chain logistics services helped to drive their overall efficiency and competitiveness.
We are proud to see that revenues from customers using JDL's integrated supply chain logistics services contributed over 70% of its total revenues for the full year. Moreover, driven by the expanding economies of scale and operational optimization, JDL achieved sequential margin improvements in 2021. In the future, JDL will continue to invest and upgrade its infrastructure capabilities and resources to provide larger scale and more diversified supply chain-based products and services to our business partners in China and abroad, and further strengthen its industry-leading position, as well as expand market share.
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On the new business, Jingxi, which focuses on lower-tier markets, undertook a series of iterations and optimization measures in 2021. By improving supply chain and fulfillment efficiency in lower-tier markets, particularly for fresh produce and general merchandise, as well as lowering merchandise circulation costs, Jingxi provided better services to customers and helped the local merchants generate more revenues with higher efficiency and cost savings. Since the second half of 2021, Jingxi has led the industry in proactively focusing on selected markets, as well as on efficiency and user experience to drive local supply chain capabilities and refinement of the UE model. As a result, we are seeing better supply chain efficiency and cost structure in our selected markets. In particular, fulfillment cost per order continued to come down, while net promoter scores and merchant satisfaction levels further improved.
We believe this is a sector that requires a long-term commitment over the next five-10 years in order to build up supply chain infrastructure and gain consumer mindshare. The inflated scale expansion driven by short-term marketing expenses are not sustainable. The recent industry trend also validates our view.
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JD achieved a healthy and sustainable growth across all business lines in 2021. We also opened up our supply chain and service capabilities to provide reliable and steady support to our business partners and consumers amid a challenging macro environment. JD has and will continue to develop new growth drivers for the industry and create greater value for the society. 2022 is the third year since the pandemic broke out. We are still in midst of many changes and uncertainties, and the competitive landscape in China is ever-evolving and sometimes can be intense. Companies must grasp the core business logic and persistently deliver on their long-term strategy. In 2022 and also 2022 is the nineteenth year since JD's inception. Throughout our history, we have never dwelt long on short-term and local gains and losses. Our core business logic is clear.
Our business model and strategic positioning have always revolved around consumers and business partners. The resilience of our business model has been proven many times in the past. We believe we have a highly differentiated core competence that will lead us to a healthier and more sustainable growth trajectory in the long run. The results we achieved in 2021 have also set a strong foundation for our growth and market share expansion in 2022. We truly appreciate all your trust and support along the way. This concludes my remarks. Now I'll give the floor to Sandy.
Thank you, Lei. Hello, everyone. We are pleased to finish 2021 with another strong set of results in the fourth quarter. While 2021 brought many uncertainties in the macro environment, supply chain and the consumption industry, we executed and delivered on our strategic priorities, continued to gain market share with a robust top-line growth, and achieved a solid bottom line. The results speak volumes about the strength of our supply chain-based business model in creating value for both our users and business partners, and driving long-term sustainable growth of our business in 2022 and beyond. Our net revenues achieved 23% year-on-year growth to RMB 276 billion in the fourth quarter, and 28% year-on-year growth to RMB 952 billion for the full year of 2021.
We continue to demonstrate notable resilience in our business and persistently outperformed industry growth despite the relatively soft consumption trend in recent quarters. Our solid top-line growth comes alongside our proactive strategic priority on improving user engagement and lifetime values. Our annual active user base reached a total of 570 million by the end of 2021, adding nearly 100 million users from a year ago. In particular, our quarterly average DAU grew over 25% year-on-year and hit an all-time high in Q4. This reflects the results of our strategic focus on improving user mindshare and engagement. We are also gaining more wallet share from our expanding user base.
As we increasingly become the go-to destination for consumers' regular shopping, LTM GMV per user has been steadily trending up over time and increased year-over-year in every quarter in 2021, even as we continue to expand our total user base. Furthermore, our JD+ members surpassed 25 million in the quarter, and average member spending increased by double-digit percentage points from a year ago. By end of Q4, the average annual spending of Plus members was 10 times as much as that of non-Plus members. The encouraging progress in high-quality user growth and improving user engagement validate our relentless focus on superior customer experience over the years. Our revenue base saw further diversification. In Q4, our net product revenues grew at a solid 22% year-on-year, while net service revenues grew faster at 28% year-on-year against a high comparable base.
Over a two-year period, contribution from net service revenues increased from 12%- 15% of total revenues. Our marketplace and marketing revenues exceeded the RMB 20 billion mark in a single quarter for the first time in our history in Q4, growing at 27% year-over-year. This is a testament to our ongoing improvement in our platform ecosystem. Logistics and other services revenues grew by 30% year-over-year in Q4, maintaining hypergrowth momentum. Now let's turn to our segment performance. First, in Q4, our core business, JD Retail, delivered both solid top-line growth and healthy margin improvement. JD Retail's revenues reached RMB 250 billion in Q4, growing at 21% year-over-year in the quarter. For the full year of 2021, JD Retail revenues grew 25% year-over-year to RMB 866 billion.
Category-wise, we continue to see resilience in electronics and home appliance category with a 22% revenue growth year-on-year in Q4. The power of JD's supply chain capability has been on full display against the global supply chain disruption. Our general merchandise revenues grew 23% year-on-year in Q4, outperforming the market amidst a challenging consumption environment. Order volume in our supermarket category has been consistently growing at around 30% two-year CAGR in every quarter in 2021. The strong growth of our supermarket category has helped drive more frequent user engagement and continued the greatest number of new users. Our 3P ecosystem also saw encouraging progress. As more merchants appreciate the increased value adds delivered by our ecosystems, we are pleased to see higher engagement and spending from our existing merchants.
It's worth mentioning that we added more merchants to our marketplace business in Q4 than we did in the first three quarters combined. Our Omni-channel business has been growing rapidly as our offline stores and business partners, including home appliance franchise stores, Five Star and 7FRESH, as well as our O2O initiative, achieved close to 80% year-on-year GMV growth in the full year of 2021. The exciting progress in our Omni-channel business further demonstrates JD's position as a new type of real economy-based enterprise. It also bodes well for our growth in the coming years. Moving on to JD Retail's profitability. Operating margin increased to 2.1% this quarter, up from 1.9% a year ago, thanks to the expansion in fulfilled gross margin.
On a full year basis, JD Retail's operating margin reached 3.1%, a 10 basis points improvement from a year ago, and 32 basis points improvement from two years ago. Our core business is well on track to realize sustainable margin improvement. We are optimizing for a healthy category mix and exploring new business strategies to expand our TAM in the long run. JD Logistics or JDL achieved remarkable milestones in 2021, and concluded the year with strong top-line growth and sequential margin improvement. Its Q4 revenues grew by 28% year-on-year to RMB 30 billion. On a full year basis, JDL's revenues grew 43% year-on-year to RMB 105 billion. This was mainly driven by the growth in the number of external integrated supply chain logistics customers, as well as their increasing ARPU.
Contribution of external revenues reached a historic high and accounted for 57% of JDL's total revenues for the full year of 2021. We are proud to see JDL deliver a margin improvement while quickly ramping up its external business. JDL achieved positive operating margin in both Q4 and the second half of 2021. These results also demonstrate JDL's ability to boost infrastructure utilization and improve operating efficiency while maintaining robust top-line growth. Revenues of our new business segment accelerated its growth, its growth pace sequentially to 45% year-on-year to reach RMB 8.2 billion in Q4, and grew 48% to RMB 26 billion on a full year basis. Revenues of our Jingxi business grew over 40% quarter-on-quarter in Q4, mainly led by the Jingxi Pinpin business, which regained growth momentum after we proactively focused resources in selected markets in Q3 last year.
We are committed to better allocating resources to improve our local supply chain capabilities, to empower a broader spectrum of our business partners, many of which are local SMEs, and to serve new and existing customers. We will continuously drive innovation and improvement in the supply chain infrastructure, while firmly committing to better UE for our new business. Moving to the consolidated bottom line. Our Q4 non-GAAP net income attributable to ordinary shareholders was RMB 3.6 billion, with non-GAAP net margin of 1.3%, up from 1.1% in the same period last year. Our full-year non-GAAP net income attributable to ordinary shareholders was RMB 17.2 billion, up from RMB 16.8 billion a year ago. While we continued to deliver solid operational and financial results, we also increased support to our business partners in a time of uncertainty.
We have consistently kept our inventory turnover well below 35 days, despite that the number of SKUs under our management continued to expand. We continue to share our efficiency gains with our business partners as we shortened the LTM account payable turnover days from 47 days a year ago to 45 days at the end of 2021. Our business partners highly appreciate the increased supply chain efficiency and faster turnover of cash and goods from their collaboration with us. As we are getting stronger, we are creating greater value for everyone along the supply chain. Our free cash flow for trailing 12 months this quarter remained healthy at 36.2 billion RMB. By the end of Q4, cash equivalents, restricted cash and short-term investments added up to a sum of 191 billion RMB.
In summary, JD capped off a year of increased uncertainties and macro headwinds with remarkably resilient performance. This is a cumulative result of our 19 years of unwavering efforts in building our core competence and committing to our right way to success business philosophy. I truly believe we have set a solid foundation for long-term sustainable growth. Looking ahead to 2022, while we remain mindful about the near term macro volatility, we aim to continue to gain market share with a set of proactive, sustainable and high quality growth strategies. At the same time remain on track of our long-term margin improvement trajectory. I would also like to take this chance to welcome our new shareholders, many of whom are old friends, to join the journey with us soon. This concludes my prepared remarks. We can now move to the Q&A. Thank you.
Thank you. The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed. Our first question comes from Ronald Keung from Goldman Sachs. Your line is open.
Thank you. Thank you, Xu Lei, Sandy and Sean and team. We've seen the recent macro weakness and Xu Lei you talked about that and COVID disruptions, higher oil price. Just wondered what management could you share just how do you see JD Retail growth this year, whether given some moderation in general merchandise revenue that we've seen in the fourth quarter, what are the strategies for JD Supermarket and your marketplace? And with these in mind, any potential implications for margins this year? Thank you.
This is Xu Lei. To answer your question on the macro environment, we do face a slowdown in the macro environment with a lot of uncertainties such as the macroeconomic conditions and weak consumption demands and the rising price of raw materials on the supply chain and fierce industry competitions and the COVID disruptions. All these odds has posed pressures on China's retail industries. In the face of all these uncertainties, we continue to stick to our business logic and our strategies, and this will be carried out in the following three ways. First, JD's development has always been centered on creating unique value for our customers, no matter on the product, services and user's experience. This helped us to enhance the mindshare among our customers and deliver the sustained development, the sustained growth.
Second, we pay high attention on our business partners. In the time of uncertainties, we are making full use of our capacities on supply chain to support our business, brands and merchants to help them on the financial and the goods inventory turnover. By all the support, they're able to deliver predictable and a stable growth under all these external changes. Thirdly, in the face of those COVID challenges, by leveraging JD's fundamental capabilities on supply chains and warehousing, et cetera, we can maintain a stable sales momentum in those COVID hit areas. At the same time, we are supporting the government and the people to provide the living necessities to the people in need and to fulfill our social responsibilities.
All this effort has been widely recognized by the people and by the government, and further enhance our brand or our JD's reputation in the society.
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We are confident in our resilient business model and our core capacities on supply chains. All this has proven to be viable in the past and it will also help us to outperform the market. For the outlook in the future, we will continue an optimistic attitude and to achieve sustainable and healthy growth on each different categories and the different each business and also gain a greater market share.
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Also I want to share my feelings and the facts as we pay a lot of visits to our business partners by the end of last year and early this year. They've all expressed that they will pay great attention and attach great importance to the collaboration with JD, and they have a high expectation on the collaboration with JD in the year 2022.
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A few words on the supermarket categories. It has a lot of changes are taking place and our brand partners, they are feeling the pressures from the rising price from the upstream and also a faster changing consumption demand. In the past few years, the traditional sales channel has been affected by various factors, and all this has brought a lot of uncertainty for the manufacturers operations.
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We gonna address these categories in four aspects. First, to the consumers, we will focus on bringing new products and new categories to the new consumers and bring them quality products and build up their mind share as JD Super is their go-to place to buy supermarket category products.
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On the cooperation with our business brand partners, we will strengthen synergies with them on supply chains, on marketing and warehousing, etc to deepen our cooperation and synergies on all aspects.
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Also JD Super is a very important categories in our Omni-channel strategies. It has the highest penetration rate across all the categories and in the future we will continue to collaborate with more and more business partners to develop Omni-channel strategies in diversified shopping scenarios.
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For the supermarket categories, we continue to improve its supply chains and made a lot of innovations in this aspect, such as our warehouse stores and other methods and other new innovations. For this category, its profitability continues to improve. We are close to the breakeven point.
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Also our marketplace and the 3P ecosystem we have done the following four efforts. First is that we continue to do the refined management of our third-party merchants. Second, we make efforts to help them to lower down their operating costs and alleviate their burden to run on our platform. Thirdly, we provide those toolkits to help them to do better operations on our platform. At the same time, we are also exploring more and more ways to support those small and medium-sized companies and brands to thrive on our marketplace, POP or the marketplace ecosystem.
As mentioned that in this quarter, for the 3P merchants, their overall number is even more than the Q1-Q3 combined, and they have demonstrated very high engagement during the Singles' Day Grand Promotion. Thank you.
Okay.
This is Sandy. I can add some color on the outlook for JD Retail. First, in terms of the macro environment and consumption, so far we see that the overall consumption in Q1 or even first half year of 2022 to be relatively conservative. Secondly, category-wise, we expect that the supermarket, home products, healthcare products, corporate business, including MRO, will generate higher growth compared to our overall average. Third, Omni-channel business, as Lei mentioned, will continue to be one of our strategic focuses and deliver hypergrowth in 2022. Fourth, we also expect that 3P to grow faster than 1P, as we have been optimizing our 3P ecosystem and tools for merchants, as Lei just mentioned.
We expect JD Retail continue to deliver quality growth, in terms of user base, user engagement and stickiness, which is a long-term growth driver for our retail business. Overall, although the retail consumption is currently under pressure to certain extent, we are confident that we will deliver higher growth than the industry average.
That's it. Thank you, Sandy.
Thank you. Next question, please.
Thank you, Ronald.
Thank you. Our next question comes from Eddie Leung from Bank of America. Your line is open.
Good evening, guys. Just a question on competition. Could you guys share your thought with us on the growing market share of the e-commerce broadcasting platforms? How do you think about the impact on your business? How are you going to deal with their growing market share? Thank you.
About the e-commerce by live stream and short video platforms, they are still undergoing a fast development period, which is in line with our previous predictions. For these business models, it can attract and satisfy some shopping demands of some people based on their interests, and they're still developing fast thanks to the traffic dividends. Given their business models and the people's recognition of this platform, we believe this live streaming e-commerce will generate a long-term impact to those platform e-commerce players.
While we see some challenges, at the same time, we do see there's opportunities and space to collaborate with these traffic platforms. Even consumers' shopping demands are diversified. For JD.com, we see most of the people come to our platform for planned shopping or shopping for their family, so we are less affected by their emergence.
Second, we see that brands and merchants, while they enter these traffic fields to do operations, in their operating efficiencies, they're encountering a lot of, quite a lot of difficulties and they also need some help.
Thirdly, we believe that for all kinds of business new business models, after they pass their dividend periods, they all need to come down to the work and serve their customers and better provide a win-win collaboration with their business partners.
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Compared with platform e-commerce players, for JD.com we have complete supply chain infrastructure and the fulfillment capabilities, customer services and the skills for the platform governance and so on. All these can help us to reduce the supply chain circulation cost, which puts us at a very unique and differentiated competitiveness.
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We continue to have an open attitude towards all these emerging new business models. By building our capacities on Omni-channel and supply chains, we are exploring diversified touchpoints to reach our customers in diversified shopping channels and use cases. We will also continue to collaborate with these content platforms and support merchant partners to operate on these traffic fields.
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I also want to add that besides JD Retail, for our JD Logistics, they also have collaborations with those live stream and short video platforms to provide a two-way transportation and logistics support, which also represents a huge opportunity for JD Logistics.
That's it.
Thank you.
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Thank you. Next question.
Thank you. Our next question comes from Thomas Chong from Jefferies. Your line is open.
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Let me answer question about the users growth. In this quarter and on the overall industry, we have seen a weak growth, no matter it's on the general, on the online side. For JD.com, we continue to build our business surrounding our users experience, and we achieved healthy growth and hit our yearly target.
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Here I just want to emphasize again that our business principle is to deliver sustainable and quality growth. In terms of the new users acquisition in Q4, we have seen their ARPU has been improved by 11%. For our existing customers, their shopping frequencies has been improved by 3% and their ARPU has increased by 4.5%. All this has demonstrated again our principle for sustainability and quality growth.
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For 2022, we will continue to focus on the users growth quality and refined users management, and also make dynamic policy adjustments.
During this process, we see our users growth ceiling are still very high, and we expect a healthy users growth in the following years. The users growth are mainly coming from two aspects. First is on our categories. As we are successfully expanding our categories, this will continue to drive our users acquisition. For example, for the JD Super, supermarket categories with FMCGs continue to be the engine for the new user acquisition. For the other category, it's the consumer electronics. We have a very strong mind share among our consumers. Even though we are under this supply shortage at this moment, we continue to see more and more consumers mind share is building up in this category, and we continue to gain larger wallet share in this category.
Second part of the users growth opportunity comes from our marketplace ecosystem and our Omni-channel business. This will bring us diversified channels and diversified approaches to reach new consumers, new users. The ecosystem we co-build with our merchants and brands, as well as our offline ecosystem, will also contribute to the growth of new users. Okay. Let me take the question on OpEx and margin. On the bottom line of JD Retail, we need to take into consideration of a few changes in our business model and category mix shift. First, the supermarket category will continue to outgrow our overall retail business, while its operating margin is on the track of steady improvement but still lower than our average margin level. Second, 3P business will grow faster than 1P.
That somehow mitigates the impact from the category mix shift. Third, Omni-channel grows faster than online retail. As this business model is still in relatively early stage, so it is currently still in a slight loss making position, but will again improve their UE year- over- year. Overall, we are facing dynamic external macro environment changes and which will affect our bottom line performance. The management team will adjust our investment strategy, you know, from time- to- time. For Q1, I want to remind everyone that, as a sponsorship fee for the CCTV Spring Festival Gala, as well as the related promotion expenses were all reported in one single quarter, our marketing expense ratio and operating margin will be, you know, slightly affected in the short term.
We will adjust our pace of annual marketing spending and the impact to our marketing spending for the whole year 2022 is manageable. I want to emphasize again that for JD Retail, we pursue sustainable quality growth, and we are well on track of our long-term margin trajectory. I believe their management team also shared some color in their earnings call. For the margin performance, if you remember, we made heavy investments in capacity in the second half of 2020 and gradually ramped up the utilization in 2021. In 2022, the investments in capacity will be in line with, largely in line with the business development. The utilization of capacity is expected to be further optimized.
At the same time, we will continue to improve the operating efficiency, so the UE for JD Logistics will also improve compared to 2021. For our new business, we see that the competitors in this industry is like now become more rational. Companies, you know, compete on their core capabilities rather than burning capital. We see that the competitive environment is more healthy. JD has been pursuing sustainable growth, and we will continue to do so. We always balance investments in new initiatives and our profitability of our core business. For new business initiatives, we are always very cautious in investments to ensure the investment can generate adequate ROI for our investors and create true value for the supply chain and business partners.
We never pursue short-term KPI through subsidy. We will evaluate the market situation and make adjustments from time to time to our investments again. Overall, given the uncertainties in external macro environment, we would put more weight on profitability this year on the management KPI than growth. For new business initiatives, we expect them to deliver hypergrowth while controlling investment to improve the UE and annual investment will not exceed what we incurred in 2021.
Finally, at the group level, as a reminder, we completed the acquisition of CNLP and Dada in Q1, and we will start to consolidate them from March this year. Well, we don't expect them to have a significant or material impact on the top line and bottom line, but due to we previously reported investments in Dada as an equity method investment, so the P&L presentation or loss pickup from Dada will be changed to different line items.
Got it. Thank you.
Thanks. Thank you, Thomas. Can we have the last question, please?
Thank you. Our last question comes from James Lee from Mizuho. Your line is open.
Great. Thanks for taking my questions. Just wondering if you can share maybe some of the new learnings of JDDJ as you integrate more this Omni-channel delivery on your platform. Just curious what you're seeing in terms of cross-selling rate. Any key reasons people are buying Omni-channel versus not buying? How should we think about the demand in general? Is it more incremental or substitutional versus your core e-commerce offering? Thank you.
On the questions on the on-demand retail, as I explained, I shared with you in a previous call that JD are building different kinds of supply chains based on the changing demands of our consumers. For the on-demand retail, it's one of the fastest growing competition fields. We think that the on-demand retail does not help us to break the ceilings for our long-term retail sales growth, but it also helps us to create deep connections with the real economy-based offline retail ecosystem and to support the overall retail industry's digital transformation. On-demand retail is an important part of JD's Omni-channel strategies, and it's an important extension for our existing shopping scenario. Itself, it's a trillion-dollar market with a lot of potentials. We also want to take full
We want to fully use our current capacities on supply chain to use this business model to provide richer choices of quality products to serve our customers in a more timely manner. For some heavyweight products or those products that require cold chain or higher standard transportation, like fresh foods and other cold chain products, we will leverage the LBS-based local delivery services, which has some better user's experience for our customers compared with our B2C model, because they have a lower cost and will be more time sensitive to reach our customers. Shop Now program, which is also.
Which is our on-demand retail service, can help us to expand our goods resources to connect with the market resources and supplement to our online inventories, so we can collaborate with more offline stores to create more traffic and a win-win cooperation. In 2021, based on JD's supply chain logistics, we have made some exploratory attempts on the on-demand retail based on our users' demand. Tens of millions of users on JD has experienced that. For this business, it has achieved a RMB 10 billion dollar scale at this moment. Just one correction for this, JD's online retail, it has achieved RMB 10 billion, not dollars, market scale at this moment. For 2022, we will continue to build our supply chains and fulfillment capabilities and strengthen consumers' mind share on this business.
Also, we will continue to construct our capabilities on this business surrounding our local community resources and our O2O operating system to further empower our merchants and partners and to enable them more retail, on-demand retail services. Also the on-demand retail will help JD to increase the stickiness and engagement and the up value of JD users. There's a lot of work for us to do. Thank you.
Thank you.
Thank you. We are now approaching the end of the conference call. I will now turn the call over to JD.com, Sean Zhang, for closing remarks.
Thanks for joining us on the call today and for your questions. If you have any further question, please contact us and our team. We appreciate your interest in JD.com and look forward to talking to you next quarter. Thank you.
Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.