JD.com is trapped in traffic, stronger than logistics

JD.com's "10 billion subsidy" channel, which plans to launch in March, seems to be "countering" the penetration of Pinduoduo's 10 billion subsidy into the high-line user market. However, from another point of view, it may also be that JD.com is "gambling" on a traffic platform.

01

bet

For a long time, Jingdong has been considered by the market to be good at doing supply chain, not good at doing traffic, longer than "heavy", and neglectful to do "light". Its valuation level is always limited by the inherent perception of the market that "relatively low traffic".

JD.com started with 3C appliances, which is a low-frequency business (large durable consumer goods), and the brand recognition and consumption habits formed by the low-frequency business make its shopping frequency significantly lower than its main competitors, Ali in the early days, and then new traffic platforms - Meituan, Pinduoduo, Douyin.

In the sinking market, users' consumption of large durable goods often favors offline, and the penetration rate of online is not so high, so JD.com also lags significantly behind other traffic platforms in the overall user scale level.

These eventually shaped JD.com's DNA - the scale, ecology, operational capabilities and operating habits built up from the low-frequency business starts, causing it to lag behind its competitors in terms of the acumen and ability of traffic mining operations.

At this point, you will find that JD.com has been betting on traffic platforms, but it seems that it has never been particularly successful.

It is one of the first enterprises to start doing instant retail platforms (JD.com), and has also done community group buying, C2C platform business, live broadcasting, and new retail, but none of these businesses have helped JD.com make the traffic disk particularly large. In terms of playing traffic, at the level of telling traffic stories, JD.com is always relatively "inadequate".

Inside JD.com, Business Observer has heard some executives publicly admit that JD.com is indeed relatively bad at playing with traffic, "JD.com is doing supply chain efficiency and supply." It is very heavy, so it is relatively not good at doing 'light' and doing traffic. ”

Even some executives said: "Today you have to say, I go to bet on a traffic platform, but it is impossible to meet, and the traffic changes extremely quickly, I don't think there will be permanent traffic, because people's interests, technology are changing." Therefore, you can never gamble on a single piece of traffic. ”

02

sleepy

So, is heavy traffic important?

From the perspective of the development of e-commerce in recent years, it is extremely important.

When there is a traffic dividend, all e-commerce platforms can make high transactions and get a huge return on advertising revenue. And when there is no traffic dividend, the entire industry has stagnated.

A large number of new e-commerce platforms have not stopped growing due to lack of supply chain capabilities, but will be in trouble because of lack of traffic.

This is because the flow is directly related to orders, China is a manufacturing country, there is no shortage of goods and logistics capacity, but overcapacity and lack of orders.

Real orders are the basis for driving retailers' technology upgrades and supply chain efficiency improvements. Only when the order volume is large enough, the marginal cost of e-commerce will be lower, the application technology can produce higher transaction performance efficiency, and scale advantages will be formed.

This constitutes a development dilemma for JD.com. Its strength, the continuous improvement of supply chain efficiency, requires more orders, more traffic, and more data support. But the reality is that it hasn't been able to tap low-cost traffic pools at scale over the years.

At the same time, the market continues to have companies make low-cost traffic pools, creating higher transaction efficiency, and in turn, these newly emerged traffic platforms are constantly segmenting JD.com's user market, constantly growing its supply chain capabilities, and constantly making consumers feel that JD.com is becoming more and more expensive.

Ultimately, the "missing" traffic will affect JD.com's pricing power.

To achieve high performance, the common way is to constantly increase prices and continuously improve commodity turnover. However, the pain caused by the "loss" of traffic is that it is difficult to raise prices and continue to do high turnover.

03

Tens of billions of subsidies

"Tens of billions of subsidies" can be understood as a marketing platform and a traffic transaction data platform. It is not only a fist for Pinduoduo to capture the minds of users, but also a trading platform to improve turnover efficiency.

Jingdong wants to do the "tens of billions of subsidies" channel, which may indicate that Pinduoduo has affected Jingdong's user disk and affected Jingdong's bargaining power in the industrial chain.

From this point of view, JD.com is considered defensive by the market.

The problem with defense is that there is no imagination, and defense has no imagination.

Therefore, the capital market will have a negative evaluation of JD.com's "tens of billions of subsidies". The "tens of billions of subsidies" will make the capital market imagine the pressure on profits after the price war, imagine the consumption escalation under the competition of the stock market, but cannot imagine the possible creation of incremental wealth.

Some market participants even commented: "From attacking cities everywhere to retreating into positional battles, this battle is lost even if it is won, because launching this tactic is already the end of the strong crossbow." ”

However, from the perspective of JD.com's strategic positioning, JD.com's ultimate goal of tens of billions of subsidies may still be to leverage the supply chain TO B business.

A former JD.com executive once told Business Observer: "JD.com's strategic positioning, which we summarize in one sentence, is a retail-based technology service company. Based on retail precipitation of data, precipitation of customers, precipitation of supply chain resources, precipitated strategic resources, to serve TO B, TO C, we to do technology and service things. At present, the entire e-commerce industry is undergoing fundamental changes. The first half is the consumer Internet, and the second half is the industrial Internet. If what JD.com is doing in the first half (consumer Internet) is changing the retail industry, then it also means that in the second half (industrial Internet) we hope to optimize the cost efficiency of other related industries based on the data resources and technical resources precipitated by retail. “

"To give you a concept, in the entire social retail, the comprehensive cost of fulfillment, China's average is 17%, Europe and the United States is 7%, Jingdong aims to achieve 10%, there are seven percentage points in the middle, seven percentage points are placed in the total social zero of 40 trillion, the space is huge."

JD.com is an e-commerce company that started with logistics. Tens of billions of subsidies may eventually serve JD.com's logistics business.