Jingdong's low-price war has made a new move.
Today, there are many types of e-commerce platforms, leaving more and more opportunities for consumption choices, so that consumers have developed the habit of comparing prices on multiple platforms when they need to shop online. In such a situation where high cost performance has become the mainstream of consumption, various platforms have gradually fallen into low-price involution, and have repeatedly come up with new tricks for this.
JD.com, as a veteran e-commerce giant, has won the trust and support of consumers since its establishment in 2004 with its efficient logistics and distribution system, strict product quality control and innovative business model. However, with the intensification of competition in the e-commerce industry, JD.com is facing unprecedented challenges.
Compared with Pinduoduo, which has a deeper low-price mentality, Douyin e-commerce, which grabs the attention of users, and even Taobao, which has a richer category and relatively more small and medium-sized merchants, JD.com's situation seems to be more dangerous.
In order to maintain its leading position in the market, JD.com has had to adopt a more aggressive "bloody low price" strategy to attract and retain consumers. Previously, Liu Qiangdong said in his internal speech that "low price is the only basic weapon", which also shows the sense of crisis that Jingdong is facing in the current cruel competition.
And just recently, JD.com's latest two-step low-price strategy was released.
First of all, on June 29, JD.com's first full-category discount supermarket, Huaguan Discount Supermarket (Changyang Store), landed in Fangshan, Beijing. There is also the recent news that JD.com's Jingxi business has undergone a series of changes, and now it has a new name of "Jingxi self-operated".
The two-step move, both online and offline markets have been laid out, which is a new move of JD in the competition in the low-price market, and it also proves that even if the changes continue, the main theme of JD has always been low price.
JD.com's first discount supermarket opens
JD.com's low-price war has moved from online to offline.
On June 29, JD.com's first Huaguan discount supermarket opened. It is understood that this supermarket is located in Fangshan District, Beijing, covering Fangshan District, Fengtai, Yungang, Changxin Store and other surrounding areas. This supermarket type is a full-category discount supermarket with an area of more than 3,000 square meters.
According to the news of Huaguan Commercial Official Account, during the opening of this store, eight explosive products will be selected and sold at ultra-low prices. Including the lowest 5.9 yuan/group of the crown choice soda drink; Thailand Golden Pillow Durian at 19.9 yuan per catty; 39.9 yuan / box of three-yuan house-type pure milk and so on.
It is reported that Huaguan Supermarket was established in 1995 and is one of the largest supermarket chains in Beijing, and it entered the top 100 chain enterprises in China in 2000.
It is worth mentioning that in 2021, Huaguan Supermarket will undergo a change in equity, and the new shareholder, Jiangsu Zhuoyu Information Technology Co., Ltd., will be 100% controlled. Tianyancha data shows that Jiangsu Zhuoyu Information Technology Co., Ltd. was established in 2018 and is wholly owned by Suqian Jingdong Jiapin Trading Co., Ltd., which is a wholly-owned subsidiary of Jingdong Group. To put it simply, JD.com acquired Huaguan Supermarket in full.
However, the first acquaintance between Huaguan and JD.com can be traced back to 2014, when Hou Yi, the chief logistics planner of JD.com, signed an O2O strategic cooperation agreement with Huaguan on April 2, 2014.
For the project acquired three years ago, JD.com finally started to operate. The introduction of this measure is not difficult to remind people of JD.com's layout in the offline retail field - Yonghui Supermarket.
Yonghui Supermarket was once a traditional offline retail giant with a strong brand influence and a wide range of stores. However, with the rise of e-commerce, Yonghui Supermarket has been hit hard. JD.com invested in Yonghui Supermarket in 2015 and started a cooperation, but in the end, the cooperation between the two sides did not achieve the desired effect. From 2019 to 2022, Yonghui Supermarket suffered three consecutive years of losses under the impact of e-commerce.
JD.com has also recently started a plan to reduce its holdings in Yonghui Supermarket. Specifically, through its holding company, Suqian Hanbang Investment Management Co., Ltd., plans to sell no more than 90,750,300 shares of Yonghui. And the news also caused Yonghui Supermarket's already precarious stock price to fall again.
In fact, around 2022, offline retail industries such as Yonghui Supermarket have experienced a wave of store closures, such as RT-Mart, Walmart China, China Resources Vanguard, etc. This phenomenon undoubtedly reveals that the brick-and-mortar retail industry was facing unprecedented challenges at that time, so the failure of Yonghui Supermarket was also an inevitable result.
Perhaps, it is precisely because of the loss of Yonghui Supermarket that Jingdong will start the establishment of Huaguan Discount Supermarket. Because at the same time as the wave of offline retail closures, discount stores have ushered in a rapid rise, attracting a large number of consumers with cost-effective goods, and relying on the advantage of low prices, they have become the first choice of consumers.
According to the data of the China Research Institute of Puhua Research Institute, discount stores will be the fastest growing format in the next 10 years, with a compound growth rate of 5.6%, much higher than the 2.5% of hypermarkets and even higher than the 5.5% of convenience stores. Therefore, at this time, JD.com's entry into the discount store is the most appropriate time, and it is also the trend of the times.
In fact, JD.com is not the first player to deploy discount stores offline. Previously, fresh food platforms such as Hema and Dingdong were actively deploying hard discounts. In addition, there are new competitive Wanjia in the discount store track, such as the snack discount brand Snack Youming, which has completed 5 rounds of financing in just two years, and the number of stores has rapidly increased to 1,200.
It is worth mentioning that in addition to the price guarantee below the market price, Huaguan Discount Store is also consistent with Jingdong Huaguan Supermarket in terms of service, that is, by providing multiple services such as weighing and refunding the difference, after-sales within 48 hours, freezing compensation, bad fruit compensation, and damage compensation, etc., giving consumers a "reassurance".
And this move is also in line with JD.com's previous low-price, high-quality strategy.
Jingxi direct sales become self-operated
This is already the case offline, and online is even more in need of "heavy guarding". The second step of JD.com's low-price strategy is related to the online Jingxi business.
Previously, JD.com's consumer users were mainly from first-tier cities, so the number of users was small compared to other e-commerce. Since 2020, JD.com has begun to try to open up the sinking market. Subsequently, "Jingxi" was born, pinning Jingdong's expectations on the sinking market.
In 2020, JD.com set up a strategic emerging business group for the sinking market, including Jingxi e-commerce App, Jingxi Pinpin, Jingxi convenience store, Jingxi Tong, Jingxida and other specific offline business content.
However, then, because of the prevalence of live e-commerce, the pattern of competition among e-commerce platforms became more and more stalemate, and JD.com was forced to abandon its loss-making new business and refocus on its main business. Until 2023, JD.com's high-profile official announcement will return to low prices, and Jingxi's business has once again entered the public eye.
Now, JD.com has once again reformed Jingxi's business, saying that it is still interested in the sinking market.
Today, the newly launched "Jingxi self-operated" is regarded as an important grasp of JD.com's low price. According to market media reports, at present, Jingxi Self-operated has begun to attract investment in lower-tier cities, and is to launch a full custody model for white-label merchants. To put it simply, the merchant is responsible for production, and Jingxi is responsible for the operation, logistics, and after-sales of the merchant, from which Jingxi earns the difference in the price of goods. This strategy is also beneficial for JD.com to expand its share in the sinking market.
According to relevant personnel, JD attaches great importance to this business internally, and Qi Ting, an old man from JD who has been in charge of omni-channel and other businesses, is responsible for reporting directly to Xu Ran, CEO of JD Group. At present, the team has expanded to more than 200 people, mainly composed of three parts: procurement and sales, marketing and quality control, of which more than two-thirds are purchasers.
Just as JD.com attaches great importance to Jingxi's self-operated business, Jingxi's business is of great significance to JD.com, which is now fighting for low prices.
For Jingxi Self-Operated, its current main task is to help JD.com get more new users in the sinking market and improve the retention rate of new users. After attracting customers, through the advantages of low price and high quality, we will win in this war of e-commerce involution prices.
With a fully managed model, Keixi is able to control the supply chain of goods more directly, allowing it to offer more competitive prices and optimized services, which is essential to attract price-sensitive consumers. This strategy helps JD.com occupy a stronger position against competitors such as Pinduoduo. In addition, under this self-operated model, JD can reduce intermediate links through direct procurement at the source and direct delivery from manufacturers, effectively reducing costs, so it is easier to implement a low-price strategy.
It is understood that the current Jingxi self-operated has established stable cooperative relations in a number of core industrial belts, especially in the categories of paper, headphones, underwear and fruits, with monthly sales of more than one million. JD.com plans to expand the number of partner factories to more than 10,000 by the end of the year.
Its internal selection criteria are determined to be "bottom line, sufficient" to ensure that the quality of goods can meet basic needs while low prices.
Through Jingxi's self-operated model, JD.com has demonstrated its low-price strategic layout as a long-termist. Keixi does not focus solely on short-term sales performance, but also focuses more on the long-term value and performance of new businesses.
To sum up, the impact of Jingxi's business change to self-operation on JD's exclusive strategy must be positive, which not only strengthens JD's competitive position in the sinking market, but also improves the efficiency of the supply chain, enhances the brand image, and also helps to acquire and retain new users, which is a strong drop in JD's low-price strategy.
Bloody war with low-priced JD.com
Where is the future headed?
2023 is the first year of great changes in China's e-commerce landscape.
First of all, Pinduoduo's market value surpassed Alibaba to become the second largest Internet company in China by market capitalization; In addition, the GMV of Kuaishou and Douyin e-commerce has exceeded one trillion yuan one after another; Ali is also making frequent adjustments in the context of "1+6+N" organizational changes. "Price comparison" has become a sword of Dacles hanging over the heads of e-commerce.
The turmoil in the outside world has brought about changes in JD.com.
In the third quarter of 2023, JD.com achieved revenue of 247.7 billion yuan, a year-on-year increase of 1.7%; Among them, the retail business revenue, which accounted for 86%, was 212.06 billion yuan, an increase of only 0.06 year-on-year, and the revenue of goods decreased by 0.9% year-on-year. In the same period, Pinduoduo's revenue was 68.84 billion yuan, a year-on-year increase of nearly 94%. Compared with the two, the gap is clear at a glance.
Not long after that, Liu Qiangdong, who had been in seclusion behind the scenes for four years, returned to the front line of Jingdong and took matters personally. At that time, a JD insider said that after Brother Qiang came back, JD changed the Wen Tun of guarding the country in the past few years, and became wolf again.
That is, after Liu Qiangdong's return, Jingdong officially launched a counterattack. In March, the first card of Liu Qiangdong's return was played "low price", and Jingdong launched a subsidy service of 10 billion yuan; In April, Liu Qiangdong personally presided over and established the latest organizational structure reform framework, with the core goal of fully opening up the two major merchant systems of self-operated and POP......
In the post-reform POP model, JD.com plays the role of a "retail platform". POP merchants use JD to realize the circulation and sales of goods, and JD takes a cut from it. The specific operation of the POP store is completed by the merchant's own operation team.
According to JD.com's logic, to achieve low prices, we need to rely on third-party merchants, that is, to strive for more small and medium-sized businesses to settle in JD.com. At the same time, the low price implemented by JD.com is to bring benefits to consumers and protect the interests of merchants. Therefore, the Jingdong platform will assist low-priced merchants, and the push of commodity traffic is linked to the price home, which also means that low-priced products may get more exposure and traffic. For merchants, the transaction rate of goods has skyrocketed, so that even a drop in prices will be a positive subsidy.
Under Liu Qiangdong's series of drastic reforms, the former "Wolf Jingdong" is slowly returning. And Liu Qiangdong said internally: "Low price is the most important weapon for Jingdong's success in the past, and it will also be the only basic weapon in the future." In this way, we reiterate the importance of "low prices".
Not long ago, 618 was a test after JD.com returned to the low-price strategy. Judging from the battle report, Jingdong handed over a very good answer sheet in this trial. As of 23:59 on June 18, the turnover and order volume of JD 618 in 2024 will reach a new high, and the order volume of JD Live will increase by more than 200% year-on-year. More than 500 million users placed orders on JD 618. Among them, there are 83 brands with a cumulative turnover of more than 1 billion, and the sales of more than 150,000 small and medium-sized businesses have increased by more than 50%. The number of online products subsidized by 10 billion yuan increased by more than 100% year-on-year, and the number of subsidized users and orders increased by more than 150% year-on-year. 9.9 The number of online products in the whole cycle of the free shipping channel exceeded one million, and the number of users and orders increased by more than 100 times year-on-year.
This 618 battle report is also a milestone in the phased success of JD.com's low-price strategy. However, for the current JD.com, the sense of crisis still cannot be eliminated.
Because in recent years, the rise of content platforms such as Kuaishou, Douyin, and Xiaohongshu has taken content as the starting point to enter the field of e-commerce competition, which has also had a great impact on traditional e-commerce such as JD.com.
Low price is the most important weapon in the past and future in Liu Qiangdong's mouth, and live broadcast is a "new battlefield" opened up by JD.com to implement the low-price strategy.
Not long ago, Jingdong announced the upgrade of the "Chunxiao Plan" and launched 12 new support measures, including 5000 fixed traffic coupon incentives for new merchants' live broadcasts, "Jingdiandian" launched AI hot copywriting, and the free version of the official intelligent customer service robot was launched. to motivate the development of JD merchants' live streaming business.
See the moves, the bloody battle is low. Where will JD.com's future low-price competition go? This is undoubtedly very exciting.