Gome re-solves the "thirst" of traffic: recreates the "all-retail platform" and gathers "Tengjing Spelling" in two years

Per reporter: Wang Ziwei Per editor: Liu Xuemei

Pengrun Building became lively again.

On May 5, Gome Retail (0493. HK) and Tencent formally signed a strategic cooperation agreement with Pengrun Building, Gome Headquarters in Beijing. The signing of this contract for the purpose of sharing and building a full retail ecological sharing platform covers advertising and marketing, big data, cloud services, smart stores, etc.

However, what is more concerned by the outside world is that this is another heavy ally added by Gome in the strategic transformation after Pinduoduo and JD.com successively invested in Gome through convertible bonds in 2020.

In less than two years, continuing to hold hands with Pinduoduo, JD.com and Tencent, Gome's ambitions of the all-retail ecological sharing platform cannot be underestimated Image source: Enterprise image

Regarding the cooperation between Gome and Tencent, Du Juan, CEO of Gome Holding Group, said that Gome will open up a broad space for Tencent's ability to release in the field of "Internet + retail", and Tencent can bring a comprehensive boost of digital technology empowerment to Gome's all-retail ecological sharing platform, hoping that the interaction, complementarity and mutual assistance between the two sides can achieve a win-win effect of 1+1>2.

In an interview with the WeChat reporter of the Daily Economic News, Lens Research founder Kang Yuqing said that the current strategic investment purpose of Tencent in projects such as Pinduoduo and JD.com has been achieved and gradually withdrawn. "For Tencent, Gome may be the next target they are aiming for." Yuqing said that Tencent may not invest in Gome in cash, but Tencent has gome's most urgently needed resource: traffic.

"At this stage, traffic is what Gome needs most. In recent years, gome's market value has declined, and the cost of investing in Gome at this time is also very low for Tencent. Kuang Yuqing said.

In less than two years, through the continuous hand-in-hand pinduoduoduo, JD.com and Tencent, gome's ambitions of the all-retail ecological sharing platform cannot be underestimated, and its omni-channel accumulation in the retail field for more than 30 years has begun to be revalued.

Chen Yuefeng, founder of Spirit Beast Media, said in an interview with the "Daily Economic News" reporter WeChat that Gome, as an important offline home appliance retail channel, has considerable channel value and brand value. "Whether it is for Pinduoduo or JD.com or Tencent, there are different values. Gome's offline retail capabilities, as well as offline supply chain resources, are lacking in these platforms. The two sides can complement each other well. Chen Yuefeng said.

Traffic, Technology & Marketing

The reporter learned that the signing of this contract is mainly divided into two major directions: technology and marketing. The main cooperation technologies cover the advantages of both parties in big data/cloud, Internet technology, advertising and marketing, smart stores, etc.

From the perspective of business scope, this cooperation is mainly focused on the field of data services. It is reported that in terms of offline store construction, Gome and Tencent have reached a full-process, all-scenario intelligent store construction plan.

At the signing ceremony, Qiu Yuepeng, vice president of Tencent, COO of the Cloud and Smart Industry Business Group, and president of Tencent Cloud, emphasized that Tencent has provided solid services for the retail industry, and said that Tencent has rich tools in online office, mobile payment, private domain traffic operation, customer service and other aspects.

For example, cooperation at the level of cloud services. Gome said that the technology will improve and supplement the big data resources, cloud computing capabilities and full-link connection efficiency of the national and American all-retail ecosystem sharing platform. Efficiency and computing power may be the shortcomings in Gome's construction of a full retail platform.

In terms of marketing, Tencent's precision marketing tools and precision advertising delivery have brought considerable improvements to Gome's full-scene customer acquisition efficiency, enterprise account user service depth, community marketing effect and advertising production ratio. Gome believes that these technical means will significantly expand the user scale and operating value of Gome's "home life" service.

Chen Yuefeng believes that this cooperation is mainly based on cooperation in digital and private domains, which is what both sides need.

But what is more obvious is that choosing to cooperate with Tencent, Gome has another purpose: Tencent's traffic.

"Gome has great potential for improvement in offline consumer experience, which is an advantage; but Gome lacks online drainage, which is a fatal shortcoming for Gome." Kuang Yuqing said.

In 2021, Gome integrated to create a "full retail ecological sharing platform" that integrates "online, offline, supply chain, logistics, big data/cloud and sharing and co-construction", and after the second phase of the "Home · Life" strategy was fully opened, Gome continued to try to reach consumers through entertainment marketing and other means, but the effect of these means may not meet Gome's expectations.

At a time when the user growth of various e-commerce platforms has begun to slow down, and the Internet is considered by various industries to be "peaked in traffic", it is difficult to increase and divert traffic. With Tencent's "traffic pool", gome's retail resources and various plans will be more painful.

Chen Yuefeng told reporters that after this cooperation, Gome can get tencent's support in traffic and online business. Of course, Tencent can also gain more experience and data accumulation in the offline format of home appliances.

This cooperation is also gratifying for Tencent. The reason is also that smart retail has always been a large market for Tencent to struggle with. In 2017, JD.com, Ali and other major manufacturers competed to lay out smart retail, and Tencent had already tried to move before that.

Tencent's cooperation with Gome this time is difficult not to remind people of the strategic cooperation "Jingteng Plan" launched by JD.com and Tencent in 2015. In that year, the cooperation between JD.com and Tencent began with marketing solutions including "accurate portrait", "multi-dimensional scene", "quality experience", etc., and upgraded all the way to Jingteng Plan 3.0 in three years.

However, the difference is that a year before the jingteng plan began, Tencent merged its e-commerce business into JD.com and strategically acquired a 15% stake in JD.com. More importantly, Tencent provides JD.com with a first-level entrance location for mobile applications such as WeChat and QQ mobile versions. Although in December 2021, Tencent's shareholding in JD.com in the form of a medium-term dividend payment fell to 2.3%, tencent will continue to maintain a strategic partnership with JD.com in the future.

In the middle of last year, Tencent Smart Retail released the "Thousand Domains Plan", which aims to provide assistance to retail ecosystem partners by integrating Tencent's capabilities and resources to jointly promote the prosperity of the private domain ecology. At present, Tencent Smart Retail has reached cooperation with Yonghui Supermarket, Wal-Mart and BBK brands.

For Tencent, it can make up for retail enterprises, supplement the retail sector and develop more effective empowerment tools, but the cultivation of retail genes still needs time. At present, the key moment of the transformation of the retail industry has been called out, and at this moment, Tencent naturally does not want to let go of this huge market.

Yuqing believes that the cooperation between Tencent and Gome this time is almost the same as the logic of the previous Pinduoduo and JD.com investment in Gome. "It's about looking for complementary strengths." They (Pinduoduo, JD.com, Tencent) do not have the experience scene of offline hypermarkets. JD.com's offline scene is more based on the nature of warehousing, and it does not yet have the function of consumer experience. Therefore, Gome's offline advantage is also very tempting for e-commerce without offline genes. ”

In this cooperation, Gome will "transplant" retail genes and resources to Tencent to deepen the latter's digital and intelligent connection effect. This may allow Tencent to have more new attempts in "Internet + retail".

Qiu Yuepeng said at the scene that he hopes to work with Gome in the future to carry out more pioneering cooperation and create more benchmarking cases for the combination of online and offline in the retail industry.

The reporter learned that the first project of cooperation between the two sides may be the construction of offline stores. It is reported that Gome and Tencent have reached a full-process, all-scenario intelligent store construction plan.

Gome's ambitions for an all-retail platform

"Gome originally had a bit of a problem with this system, as if it was an online transaction (platform) for Gome's offline, rather than a full-scale retail trading platform." So we spent months starting all over again, scrapping a lot of stuff and rearranging it. In October 2021, Gome founder Huang Guangyu was blunt at a press conference.

Since then, Gome has made adjustments to the all-round retail trading platform, and integrated and created a "full retail ecological sharing platform" that integrates "online, offline, supply chain, logistics, big data/cloud and sharing and co-construction", and fully opened the second phase of the "home and life" strategy.

Huang Guangyu has always firmly positioned Gome in the retail sector. After this meeting, Gome once again clarified its strategic approach: not to seek a breakthrough in a single project, but to "coordinate the advancement of the six major projects and become a trend".

Gome hopes that the six major platforms will cover two major channels online and offline, and rely on their own supply chain and logistics advantages to provide technical support with big data/cloud and sharing co-construction. When Gome's omni-channel is opened, online platforms such as True Happiness and Dress Up Home will serve as online channels to facilitate users to directly trade and place orders; offline Gome electrical appliances and Gome home will become experience stores, providing a scene-based space for "model houses" before purchase.

At that time, Gome had already raised the demand for cloud computing. This cooperation with Tencent can be seen as a further promotion of Gome's all-retail platform. Gome also revealed its future cooperation intention with Tencent in the fields of intelligent full retail, home life full service, and home entertainment social networking.

Guo Yuqing believes that the future highlight of the cooperation between Gome and Tencent lies in the degree to which the final level of cooperation between the two sides can reach.

"For example, WeChat opens a traffic entrance for Gome on the nine palace grid, and this price will not be very cheap." Gome's current market capitalization is very low, and if the opening price is too high, then Gome's control may change. Therefore, how to coordinate the interests between the two sides may be the key to determining how far this cooperation can go in the end. Guan Yuqing said.

Tencent's cooperation with Shell is a precedent. At the end of 2018, Shell reached a business cooperation agreement with Tencent to allow Tencent's traffic, advertising and cloud technology to enter the Shell platform, and then Shell entered into a cloud service and technology framework agreement with Tencent, and Tencent provided Cloud servers, object storage, load balancing, live broadcasting, on-demand and other products and services to Shell. In March 2019, Shell Housing announced the official opening of the WeChat wallet entrance.

According to public information, the initial period of this framework agreement is the date of listing of shells in Hong Kong and expires at the end of 2024. In May this year, Shell disclosed in a connected transaction that in the past three years, it has paid Tencent a total of 377 million yuan in service fees for cloud services and technology. It is worth noting that this fee does not include traffic costs. In addition, in the latest equity structure, Shell disclosed that Tencent holds 10.8% of the shares.

In addition to cooperation with Tencent, Gome has frequently sought cooperation from the outside world. At the end of April, Gome also reported that it would cooperate with Huawei on retail digital upgrading.

Digital retail is a huge piece of fat that has been well known but is still not "swallowed" by anyone. According to data from the National Bureau of Statistics, online consumption will grow rapidly in 2021, with the national online retail sales increasing by 14.1% over the previous year, of which the online retail sales of physical goods increased by 12%, an average growth of 13.4% in two years; in the first quarter of 2022, the national online retail sales of physical goods increased by 8.8% year-on-year.

A report by Analysys pointed out that under the guidance of policies and the catalysis of the epidemic, the transformation of the retail industry by digitalization has gradually moved towards the deep water area, and the new retail has appeared the expansion of the population to the countryside, silver hair and post-00s, the adjustment of goods to green, national tide, new product innovation and new supply model, platform integration and differentiation, and the "field" of de-heading within the platform.

Whether it is Tencent or Gome, using advantages to empower each other may be the most efficient choice. As for the final run-in and effectiveness of cooperation, it is still unknown. Chen Yuefeng said that the stage of Gome's home life strategy is its internal strategy, and the external market values performance, profit and market share.

"Gome is one of the most innovative companies in the retail sector, which is worth encouraging. But it is still too early to form a new business model in the new market environment. The entire retail industry is also trying to explore this. Chen Yuefeng said.

In the face of a retail market with faster and faster integration of online and offline and other players with strong digital genes, Gome wants to complete the goal of the all-retail platform, and the future that needs to be faced is a hard battle.

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