No more scraping orders
On August 23, JD.com dropped a depth charge on the market, and a notice on JD.com's blackboard newspaper instantly flooded social media.
In the notice, JD.com announced that from the same day, the threshold for free shipping of self-operated goods will be lowered, and ordinary users will be lowered from the original free shipping of 99 yuan to 59 yuan. Jingdong PLUS members began to enjoy unlimited free shipping throughout the year.
Prior to this, Jingdong PLUS members only had 5 6 yuan shipping coupons per month, and they needed to pay their own postage when they bought them after use. Now, PLUS members can enjoy the free shipping benefits of "unlimited times, unlimited unit price, and unlimited degree" even if they just buy a bottle of mineral water, a pack of tissues, and a data cable in a self-operated store.
▲ (Source/Jingdong Blackboard News)
As soon as this news came out, many JD PLUS members applauded and cheered. Li Man, a consumer who has been a member of JD PLUS for three years, told "City Boundary" that because he was too lazy to make up for orders, he had repeatedly had to switch to other platforms after using up Jingdong freight coupons, especially when he needed urgent supplies.
The most helpless time was to buy a puff, she recalled that the freight coupon of the month when she bought it had been used up, she compared the price of Jingdong and Taobao, and found that Jingdong's was a little more expensive after adding freight, and finally ran to Taobao to place an order. Due to the rush to use the puff, Taobao's order was not delivered the next day, and during the days waiting for the delivery, she had to use her fingers instead of the puff to set her makeup, which was very inconvenient.
After seeing the free shipping rights upgraded by JD PLUS members, Li Man was relieved, "I can finally live an unscrupulous next-day life." ”
Data show that as of the end of the first quarter of this year, the size of JD PLUS members was 35 million, and the average annual consumption level was 8.4 times that of non-PLUS members, and the launch of this strategy will further increase the number and activity of these core users.
"Jingdong this wave is enough brothers", "Dongge is different, when he comes back, it is different", "There will be no need to make up orders in the future", "Don't say it, this will renew", some users commented on social media.
After seeing JD.com's new policy, Li Lili, a member of JD.com's PLUS for many years, only had one feeling: "The free shipping for ordinary users has dropped from 99 yuan to 59 yuan, which is ruthless enough." ”
Li Lili made such a sigh because JD.com's move is equivalent to lowering the shopping threshold for ordinary consumers, and at present, in the mainstream e-commerce platform, Tmall Supermarket and Vipshop have a free shipping threshold of 88 yuan. In comparison, JD.com's 59 yuan free shipping is obviously more competitive.
Industry insiders analyzed that if the price of goods is the same, the threshold for Jingdong shopping is low, and the delivery time is fast, which will greatly increase the frequency of consumers shopping on Jingdong. For example, if you want to buy a bottle of soy sauce in the past, you think of either spending a few dollars for shipping, or make up the order, and consumers may not buy it or go to other places to buy it. Now that the threshold has been lowered, consumers are less entangled in making choices.
It is worth noting that JD.com's adjustment is limited to self-operated goods. To buy goods from third-party merchants on JD.com, in addition to free shipping in the tens of billions of subsidy zone, many still need to pay for shipping.
The large-scale introduction of third-party merchants is an important part of JD.com's "low price" strategy. This is also an important arena for JD.com to compete with Taobao and Pinduoduo, whose low price and free shipping have occupied the minds of a considerable number of users in recent years.
In order to grab the market, fight
For Jingdong's practice of lowering the threshold for free shipping and rolling its own volume, the industry generally believes that the core is still out of the need to fight.
After seeing the news that JD.com announced the lowering of the free shipping threshold, Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian Consulting, his first reaction was: "out of competition considerations", that is, in order to seize the market.
Guo Tao, an angel investor and well-known Internet expert, further explained that on the one hand, JD.com's move can encourage more consumers to buy self-operated goods, thereby increasing sales and turnover; On the other hand, it can increase the user's shopping experience and satisfaction, help to increase the user's repeat purchase rate and loyalty, thereby further promoting the long-term development of the company.
"To put it bluntly, JD.com is strengthening its core competitiveness around 'how fast is better to save'." Industry insiders emphasized that unlike Taobao, Pinduoduo, and Douyin Mall's delivery services, which mainly rely on three links and one delivery, JD.com can achieve 211 delivery through self-built logistics, which is a major core competitiveness, and now the threshold is lowered, which is essentially a dimensionality reduction blow.
"Province" is very important for this consumer, even a few dollars of freight can affect the consumption decisions of many people, in order to keep consumers in the JD system, JD has to roll itself.
Before this time, JD.com was actually already doing "low-price" articles around "provinces". On March 6, the Jingdong 10 billion subsidy channel was launched, located at the first-level entrance of the main page of Jingdong, in the middle of the home page, allowing users to see it at first glance when they came in. The general view in the industry is that JD.com's tens of billions of subsidies were born with the mission of boosting JD.com's performance.
During the 618 period, in the information released by JD.com, the frequency of "low price" and "cheap" was super high. Therefore, as soon as the second quarter earnings report came out, whether the low-price strategy worked became the focus of the industry. According to the financial report, in the second quarter of 2023, JD.com's revenue reached 287.9 billion yuan, a year-on-year growth rate of 7.6%, far exceeding the first quarter. The net profit reached 8.6 billion yuan, compared with 6.5 billion yuan in the same period last year, a year-on-year increase of 32.31%.
"The low-price strategy is pushing JD.com into a healthy growth track." JD.com said. Xu Ran, who succeeded Xu Lei as the CEO of Jingdong Group, revealed that 618's results exceeded expectations, but it still needs more efforts or a longer period of time to gradually change the minds of users and promote the operation of the daily sales model with low prices every day.
▲ (Jingdong CEO Xu Ran. Source/Visual China )
While market confidence has greatly increased, careful observation found that JD.com did not disclose the effect of low prices on the activity of JD.com users in the second quarter financial report, and rarely did not publish the data of PLUS members. On the contrary, marketing expenses increased by 16.7% to 11.1 billion yuan from 9.5 billion yuan in the second quarter of 2022, and marketing expenses accounted for 3.8% of revenue, compared to 3.5% in the same period last year, which JD.com said was mainly due to increased spending on promotional activities.
This indirectly means that the low-price strategy is a protracted battle, and it is also a tough battle for JD.com, which takes longer to see the effect and needs to make more moves.
Lowering the free shipping threshold is another trick JD.com has found, and Zhuang Shuai believes that with the increase in orders, merchants and users, it can further increase the profit to JD.com. Some e-commerce people also expect that JD.com will begin to roll itself, and in the stock competition market, this move is very likely to force peers to follow up and roll up together.
"At present, the only thing that can be emulated is the Taobao 88VIP membership system, and other e-commerce platforms do not currently have a paid membership system as strong as JD.com." Zhuang Shuai analyzed.
Liu Qiangdong has always been ruthless
In fact, in the early days, when the horse race, the e-commerce platform is free free shipping, the price is a huge loss, later the industry pattern is stable, raising the threshold of free shipping has become a common practice in the industry, after all, the goods from the warehouse to the consumer, is required cost, have to pay the fare, warehouse fee, labor fee, this money can not always be subsidized by the platform to lose money.
The reason why Taobao and Pinduoduo have been able to free free shipping, the core essence is still because the cost is borne by the merchant, they are equivalent to opening a shopping mall, only providing stores, earning advertising fees, how to operate, how to operate, is the business's own business.
So, this time JD.com lowered the threshold for free shipping, who will bear the extra cost?
In this regard, a number of Jingdong self-operated merchants told "City Boundary" that the free shipping fee after the adjustment of rights and interests is borne by JD.com, and the merchant is not responsible for this. It can be said that this time the pride of throwing thousands of dollars, in the end, JD.com itself bore everything.
Industry insiders believe that Liu Qiangdong, who returned to JD.com, is very decisive in the business war, whether it is the previous tens of billions of subsidies, or this time to lower the threshold of free shipping, Jingdong is constantly changing its image in the minds of consumers and reoccupying the minds of users.
Throughout the development history of JD.com, in fact, at every critical juncture of JD.com, there is always a timely price war to save it from danger, and these strategies are all from Liu Qiangdong.
In 2010, when the JD book section was just launched, Liu Qiangdong claimed that he was "blocked" by his opponents. At that time, Li Guoqing, the president of Dangdang, took out 40 million yuan to fight a price war, and said that "the price of all best-selling products will be at least 50-100 yuan lower than other digital online stores", which made Liu Qiangdong quite annoyed, and directly took out a double subsidy price of 80 million yuan to fight with Dangdang, and later directly said that "Jingdong book department will not be allowed to make profits within five years".
The outcome of this business war ended with the victory of JD.com. After hitting the price, Dangdang's vitality was greatly damaged, and it was still profitable when it was listed in December 2010, but it fell into a loss half a year later. Later, when Liu Qiangdong summed up this price war, he proudly said, "The key factor to win is price."
After tasting the fruits of the victory of the price war, Liu Qiangdong turned around and launched a price war against Suning and Gome. In 2012, Liu Qiangdong announced the establishment of the "Fight Suning Command" and promised that all major JD.com appliances would be more than 10% cheaper than chain stores such as Gome and Suning. Suning.com and Gome, who were forced to get involved in the price war, had no choice but to fight, but they were also unable to do so. In 2014, JD.com surpassed Suning.com with a net income of 115 billion yuan and became the first brother of home appliance retail, and Suning.com said after the price war that even if JD.com continues to fight a price war, Suning.com will not continue to follow up on preferential promotions.
▲ (Source/Liu Qiangdong Weibo)
After Liu Qiangdong returned last year, he raised the price weapon again, for which he also criticized JD.com's executives, and reflected: "JD.com has given some consumers the impression that it is getting more and more expensive, so JD.com will become the second Suning sooner or later." He emphasized that the low price is "1", the quality and service are "0", and if the advantage of low price is lost, all other so-called competitive advantages will be zeroed.
"Low price is the most important weapon for our past success, and it will be the only basic weapon in the future." Liu Qiangdong hit the nail on the head.
Since then, tens of billions of subsidies have been launched, and this reduction of the free shipping threshold is the second bullet shot by JD.com to the low-priced mind, but whether this bullet will hit the bullseye in the future and boost the PLUS member data not disclosed in the semi-annual report remains to be seen.
(The consumer in the article is a pseudonym)
Author | Zhang Jikang Chen Chang
Author | CHEN Fang
Operations | Liu Shan