Liu Qiangdong has been very big lately.
After spending 3.1 billion yuan to buy land and saying that he would build a house for his brothers, he recently planned to officially launch the "10 billion subsidy" channel in early March, directly targeting Pinduoduo. We have now entered the sprint phase before the product pool selection and bidding system goes live.
Different from the past, the "10 billion subsidy" will have a first-level entrance in the JD App, changing from the previous "big promotion" model to the daily sales model. Some of the "tens of billions of subsidies" will achieve the lowest prices on the entire network. Once the price of goods in the selected commodity pool is higher than that of the extranet, double compensation will be applied.
On February 24, an internal email exposed by the media showed that JD.com's "tens of billions of subsidies" did have this matter, and the crowdtest experience was opened to the internal from February 23 to 26.
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A vicious battle seems inevitable.
"Low price is the most important weapon for JD.com's success in the past, and it will be the only basic weapon in the future." At the end of 2022, Liu Qiangdong reiterated the importance of "low prices".
More than a decade ago, Liu Qiangdong set off two famous price wars. In 2010, a sum of 80 million overthrew the hegemon in the book field. In 2012, a vicious battle in the home appliance industry defeated Gome and Suning.
In 2023, Liu Qiangdong will not only return to the front of JD.com, but also gradually return to the spotlight and return to the public.
When tens of billions of subsidies returned, many people's first reaction was that this time, Liu Qiangdong was afraid that he would slash Pinduoduo.
Liu Qiangdong took out the "housekeeping skills"
In the field of e-commerce, tens of billions of subsidies are not a new concept, almost all Internet manufacturers have played, among them, the first to shout the slogan is Pinduoduo.
On June 1, 2019, Pinduoduo launched the "10 billion subsidy" plan, selling iPhones at the lowest price on the whole network, 1400 yuan lower than Jingdong, and the entry-level iPhone SE only sold 2899 yuan in Pinduoduo, and even the middle class called it "real fragrance" when they saw it.
At the beginning of 2019, Pinduoduo's market value was still hovering around $20 billion, and at present, it has exceeded $100 billion.
Some people jokingly say that tens of billions of subsidies are a gravitational field used by e-commerce platforms to solve the "traffic shortage".
The lethality of tens of billions of subsidies is visible to the naked eye. According to the official statement, the commodity SKUs subsidized by Pinduoduo are around 10,000, and the GMV contributed has accounted for about 10% of the total GMV. Even among the relatively wealthy first- and second-tier middle class, people who have not used Pinduoduo at all are relatively scarce.
After Pinduoduo launched the "tens of billions of subsidies" in 2019, JD.com also followed suit, but at that time, it appeared more in the form of sub-channels in the promotion node.
And this time the "tens of billions of subsidies" are very grand, and will have a first-level entrance in the Jingdong App. From the previous promotion model to the daily sales model, subsidies cover all categories, JD.com's self-operated and POP merchants (Platform Open Plan, also known as third-party sellers) participate.
According to an internal PPT, after the stages of co-construction of rules & product pools, online bidding system, testing QA, and reviewing the launch of goods, JD.com's "tens of billions of subsidies" will be officially launched in early March, and some goods will achieve the lowest price on the entire network.
In response to this news, "Phoenix WEEKLY Finance" asked JD.com for verification, and did not receive a corresponding reply as of press time.
Looking at the current e-commerce platform, the price of JD.com is indeed not cheap, especially compared with Pinduoduo.
Some netizens said that they bought a lot of things in Jingdong's self-operation, including electronic products and fresh fruits, all of which were bought when doing activities. Finally, I suddenly found that the preferential price given by Jingdong when doing activities is actually equivalent to the daily price of Pinduoduo.
It is no wonder that Liu Qiangdong has repeatedly criticized JD.com executives, "JD.com has given some consumers the impression that it is becoming more and more expensive." JD.com should serve multi-level consumers, considering both the rich and the ordinary people. ”
Liu Qiangdong said in reply to an internal email that if the customer experience of the retail business is divided into three elements - price, quality and service, the low price is 1, the quality and service are two 0s, and the low price advantage is lost, and all other so-called competitive advantages will return to zero.
"With the success of the 3C home appliance business, many brothers began to be arrogant and complacent, and no longer paid attention to our low-price advantage, so sooner or later they will become the second Suning!"
Obviously, Liu Qiangdong did not want what happened to Zhang Jindong to happen to him.
At the Jingdong management training meeting at the end of last year, Liu Qiangdong released a cruel word, "If you don't reflect on the price and blindly complain to me about the traffic, then you should reflect, not that the traffic is less, but that your price is not enough to attract people!" ”
"Low price is the most important weapon for our past success, and it will be the only basic weapon in the future." Liu Qiangdong, who once defeated Dangdang, Suning, and Gome at a low price, used this almost ultimatum-like warning to kick off the process of JD.com entering the next era.
Hold the "last position"
The growth of JD.com has indeed reached a bottleneck period.
According to the third quarter of 2022 performance report, as of September 30, 2022, the number of active purchase users of JD.com in the past 12 months was 588 million, with a growth rate of 6.5%, the lowest in three years. In the 3C category, JD.com's revenue in the third quarter of 2022 increased by only 8% year-on-year. In the same period, Pinduoduo's revenue in the quarter was 35.504 billion yuan, a year-on-year increase of 65%; The net profit attributable to the parent was 10.589 billion yuan, a year-on-year increase of 546%.
In the past few years, the 3C segment of home appliances mainly operated by JD.com Retail emphasizes quality and service, builds its own logistics, and improves after-sales. Consumers, especially consumers in first- and second-tier cities, are also more concerned about the authenticity of the brand, the quality of the product and after-sales, in short, the quality of JD.com.
However, JD.com's customer acquisition costs have shown a high trend: in 2021, JD.com's marketing expenses soared 42.7% year-on-year to 38.7 billion yuan.
In addition to its own growth bottlenecks, the weak consumption market, the impact of the epidemic, and high logistics costs have all put pressure on JD.com.
A recent consumer research report released by McKinsey and Bain shows that consumers have become more price sensitive under the influence of the epidemic. They have reduced the frequency of shopping and are more active than before looking for discounts and promotions, such as community group buying and live streaming.
The rise of live streaming has passively put JD.com under great pressure.
When buying things on traditional e-commerce, people buy and go. But live streaming e-commerce is different, it is a kind of stressful sales. Consumers who did not have this demand, because the anchor described it colorfully, the price was affordable, and they would involuntarily place an order.
Moreover, a person's time is limited. After brushing Douyin, I didn't have time to visit JD.com and Taobao.
Starting from Double 11 in 2022, Tmall and JD.com have no longer disclosed specific GMV data. In the words of industry insiders, being impacted by live streaming e-commerce, there is no war report to be sent.
The cake is so big, but more and more people share it.
From the experience of Pinduoduo, the "tens of billions of subsidies" are anchored by the lowest price and genuine product guarantee on the entire network. Not only is the price cheaper, but also an endorsement from the official.
This also makes the market realize that it is possible to create another phenomenal product by continuing to emphasize the habitual output of low prices and daring to fight and smash.
Some industry insiders told "Phoenix WEEKLY Finance" that Liu Qiangdong hopes to use tens of billions of subsidies to pry people's desire to buy, even if it is just to come to JD.com to compare prices. When users taste the sweetness in JD.com, they will naturally form a repurchase.
Zhuang Shuai, founder of Bailian Consulting, told Phoenix Weekly Finance that whether it can be recognized by users in the sinking market depends on whether the subsidized categories and commodities meet the consumer demand of the sinking market. In addition, it also depends on the promotion and influence of JD.com's tens of billions of subsidies in the sinking market.
JD.com's sinking war
The low-price strategy is only one aspect, JD.com hopes to do the supply chain sink and improve efficiency.
At the second quarter results briefing last year, the term "sinking market" was repeatedly mentioned, and it was also regarded as the most important incremental market by JD.com CEO Xu Lei.
Xu Lei said that JD.com will continue to expand the breadth of users in the sinking market, while deploying intra-city retail, and continue to enhance supply chain capabilities.
For a long time, supply chain capabilities have been one of JD.com's most powerful chips to empower small and medium-sized businesses and individual merchants. As of the end of the third quarter of 2022, the asset scale of JD.com's supply chain infrastructure has reached 126.7 billion yuan, a year-on-year increase of 65%.
After the acquisition of Debang, JD Logistics has operated more than 1,500 warehouses, with a total area of more than 30 million square meters. This ability to materialize can distinguish JD.com from those traffic platforms.
But the challenges are also clear.
Unlike Pinduoduo's "10 billion subsidy", which mainly focuses on distributors' goods, JD.com's "10 billion subsidy" takes into account both self-operated and POP ecological (open platform) merchants. Some netizens said that JD.com's third-party stores protect customers far less than Taobao and Pinduoduo, and logistics are relatively slow. Therefore, only Jingdong's self-operated product "Xue Wool" will be selected, and POP merchants will not be considered.
Quality, fast delivery, cheap three elements that reflect the value of Jingdong, the first two points Jingdong has done, simply to achieve the third point is not difficult, the difficult is how to low prices, but also take into account quality and delivery quality.
The answer to this question is: how much money does JD.com still have to burn?
From the third quarter of 2022 financial report, the performance continued the positive growth of the first two quarters, achieving a total revenue of 243.535 billion yuan, a year-on-year increase of 11.35%; Operating profit was 8.728 billion yuan, a year-on-year increase of 239.35%. Although JD.com's revenue remained solid, its substantial profit growth was mainly due to "cost reduction and efficiency increase".
Under the contraction of the overall strategy, it is difficult to determine how much resources JD.com is willing to invest in subsidies of tens of billions of yuan.
Investors seem reluctant to burn money with JD.com. As soon as the news of the tens of billions of subsidies came out, JD.com's stock price on the NASDAQ fell 11%, the biggest drop in nearly four months.
Pinduoduo is more nervous. "Phoenix WEEKLY Finance" learned that as soon as JD.com's tens of billions of subsidies came out, Pinduoduo blocked the Pinduoduo accounts of many JD.com employees around IP addresses.
But this will not shake Liu Qiangdong's faith.
A person close to JD.com told Phoenix Weekly Finance that Liu Qiangdong said the same. The former Jingxi project was personally led and decided by Liu Qiangdong, and everything was decided by Liu.
"If the tens of billions of subsidies are effective in a short period of time, JD.com will most likely increase investment to do it." If the effect is average, then it may eventually be reduced to the next community group purchase and directly abandoned. The person said.
Today, when the sinking market has become a battleground for soldiers, this knife wielded by Liu Qiangdong is destined to bring another vicious battle.