With the rapid development of the mobile Internet, China's e-commerce industry has also entered a golden period of rapid growth. There are many e-commerce platforms in China today, but the real mainstream is undoubtedly the "Big Three" – Alibaba, JD.com and Pinduoduo.
In the past few years, these three platforms have occupied nearly 90% of China's e-commerce market share by virtue of their respective advantages. But at the same time, the competition between them is heating up. So, which of these three platforms is the first to fall?
If you look at the current situation, JD.com is undoubtedly the weakest of the three platforms. Compared with Alibaba and Pinduoduo, JD.com has faced the most problems in recent years and has the slower development momentum. Specifically, it is mainly reflected in the following aspects:
First, JD.com's profitability is relatively weak. Although JD.com's sales revenue still maintained rapid growth, its net profit growth slowed down significantly. In the first half of 2022, the net profit of the JD platform fell by more than 50% year-on-year.
This is mainly due to the inefficient operation of its own business, and at the same time, it also needs to bear a lot of logistics and operating costs. This has directly led to a decline in JD.com's overall profitability.
Second, there are shortcomings in JD.com's ecological construction. In stark contrast to Alibaba's Tmall and Pinduoduo's social e-commerce, JD.com has been slower to build its own business ecosystem.
JD.com's own brand influence is limited, and the stickiness of platform merchants is also weak. This makes it difficult for JD.com to achieve the network effect and marginal cost reduction of the platform.
Third, JD.com's ability to innovate has weakened. Compared with Alibaba's cloud computing and Pinduoduo's social e-commerce innovation, JD.com has begun to fall into bottlenecks in business model and technological innovation.
A series of innovative measures such as "boundary-less marketing" have not had obvious results, and the growth of users has slowed down.
It can be said that after the e-commerce industry has entered a new stage of platform competition and ecological warfare, many of JD's old problems and shortcomings have been highlighted.
It is increasingly difficult to compete with its competitors in terms of profitability, platform traffic, technological innovation, etc. This has also directly led to its declining position among the three major e-commerce platforms.
If JD.com still can't find an entry point to break through the existing predicament, then it is likely to become the first of the big three to exit the competition. Specifically, JD.com may face the following dilemmas:
The self-operated business has fallen into losses, and the platform ecology is difficult to stand on its own. As the operational efficiency of its self-operated business continues to decline, JD.com may face increasing pressure to lose money. At the same time, it is also difficult to rely on the platform ecosystem to achieve the expansion of profit scale.
Technological innovation is weak, and it is difficult to open up new growth space. JD.com has shown fatigue in technological innovation, and it is difficult to open new business growth points. This has also led to its user growth coming to an almost standstill.
Brand influence declined, and platform merchants and users lost. With the decline in service quality and negative news in recent years, JD.com's brand image and reputation have been negatively affected. This also made the platform merchants and users lose confidence in JD.com.
Financing conditions are tightening and cash flow issues are highlighted. In the context of the tightening of the financing environment in the entire Internet industry, JD.com's cash flow problems will also be further highlighted, bringing more pressure to its operations.
Labor costs are rising and operational pressures are intensifying. Human resource costs are one of the biggest expenses of e-commerce platforms. As social security and labor costs increase, JD.com's operational pressure will also increase significantly.
JD.com's current dilemmas and problems have begun to significantly limit the sustainability of its business model. If the level of internal operation and control cannot be improved, JD.com is likely to become the first of the three major e-commerce platforms to withdraw from the competition.
This possibility is not groundless, but a rational judgment based on JD.com's own problems and dilemmas.
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