JD.com, which has just announced that it will launch "tens of billions of subsidies", has made new moves, but this time it is returning to its old business. According to a report by 11 financial eleven, JD.com has quietly restarted its front-end warehouse vegetable selling business, and plans to open dozens of positions in Beijing this year.
Although JD.com has not yet responded, combined with JD.com's recent series of actions, this news may not be groundless. In January this year, a subsidiary of JD.com applied for the trademark "JD Grocery Shopping", and in February, the "JD Grocery Shopping" channel also appeared on the homepage of JD.com's home platform.
Although whether it is the front warehouse or the vegetable buying business, it is not the first time that JD.com has tasted early, but after Liu Qiangdong's return, these businesses have been "revisited", combined with the previous "tens of billions of subsidies" project, JD.com wants to further adjust the direction, using JD.com's high-viscosity business such as buying vegetables to sink the market, has been very obvious.
1
JD.com's fresh dream
Xu Xin, founder of Today Capital and one of the important investors of JD.com, once said: The last bastion of e-commerce is fresh food, and those who get fresh win the world.
Perhaps because of the investor's judgment, Liu Qiangdong has always been obsessed with the fresh food business. As early as 2018, JD.com briefly tried to lay out front-end warehouses, and successively incubated fresh group buying projects such as district shopping and friendly shops.
At that time, Jingdong's front warehouse had been piloted in Beijing, Chengdu and Tianjin, and had achieved "1-hour delivery" in most areas within Beijing's 5th ring road, but compared with other front warehouses, Jingdong's front warehouse was smaller in both scale and SKU.
On this basis, JD.com launched the fresh e-commerce "Seven Fresh" in 2019; And in 2021, it will launch Jingxi Pinpin as a "latecomer" and continue to make efforts in community group buying business.
But everyone knows the ending, JD.com officially laid off the Jingxi business group last year, while closing more than 10 stores of Qixian in Changsha, Xi'an and other places, and it is said that even Liu Qiangdong himself admitted Jingxi's failure at the group's strategy meeting and asked JD.com executives to "seriously review and sum up lessons learned."
Looking back at Jingdong's fresh food, the path it chooses is similar to most fresh food platforms. The first is the front-end warehouse model, which is also the model adopted by platforms such as Dingtone and Pupu. The advantage is that it can be deployed at multiple points, which can greatly improve the distribution efficiency, but the disadvantage is that the rental cost is extremely high, and once the customer order volume cannot be supported, it will become "burning money for scale".
The second is the seven fresh stores integrated into the warehouse, which is also the model adopted by Freshippo, which is both a small fresh supermarket and a storage center within 3 kilometers. The advantage is that it can attract consumers with rich consumption scenarios and SKUs, but the high loss rate, high rental cost, and labor cost are also more challenging for the platform.
It can be seen that no matter which model, "burning money" seems to be inevitable, JD.com is not unable to burn money, but its investment and return are obviously not proportional.
Taking Qixian as an example, the asset-heavy model requires a large amount of upfront investment, and the return period is longer, and before JD.com has explored a mature development path, the project is difficult to replicate on a large scale, and the asset-heavy investment plus the difficulty of replication, the two factors mutually restrict the pace of expansion of Qixian.
At its peak, the number of stores in Seven Fresh was close to 30, but this scale was not enough to reduce marginal costs and achieve flexible transportation, and the profit balance point was far from it.
Similarly, if the Jingdong front-end warehouse model wants to go through, it needs to be supported by a high number of customers, but Jingdong entered the community group buying war too late, even if it tries to "burn money", Jingxi's GMV still lags behind Meituan Youxuan, Duoduo Buy, and Ali Taocai Cai. According to statistics, in 2021, the GMV of Meituan Youxuan and Duoduo has reached 100 billion, while Jingxi is still around 15 billion.
Without the support of high customer orders, even if Jingdong wants to layout the front warehouse, it is "useless work", and the forgotten front warehouse project has been retained to this day, so now, is the fresh air outlet really "spring breeze again"?
2
JD.com tastes early again
Judging from the report card of peers, the market has indeed picked up. On the one hand, after three years of the epidemic, consumers' "grocery buying habits" seem to have changed, not only young people, but also middle-aged and elderly people are more willing to choose online supermarkets that save time and effort, which is an opportunity for fresh food e-commerce.
On the other hand, the fresh food track has both platforms such as the dead Ten Clubs and Orange Heart Preferred, but there are also platforms that have finally survived, such as Hema and Dingdong, which have successively announced profits. Hou Yi, CEO of Freshippo, said in an internal letter that Hema has achieved profitability in 2022; Dingtone also achieved positive GAAP net profit for the first time in the fourth quarter of this year. The platform that stayed, life seems to be starting to get better.
On the other hand, the policy outlet is also releasing friendly signals to the fresh food e-commerce industry. Recently, relevant departments have frequently issued policy guidelines for "helping farmers and rejuvenating agriculture", which is intended to encourage the development of direct procurement of agricultural products and customized production models, which is good news for rural e-commerce and fresh food e-commerce.
For JD.com, this may also be a good time to "enter the market twice". At present, the growth bottleneck faced by JD.com has become clearer, according to JD.com's 2022 half-year report, the year-on-year growth rate of annual active users has also dropped to 9.2%, which is already the trough of JD.com's growth in the past two years.
The high repurchase rate and high viscosity characteristics of fresh food categories are a new medicine for JD.com, and driven by fresh categories, it is also expected to drive the platform's low-frequency consumer goods category, while complementing JD.com's strategic categories and enriching JD.com's "3C positioning".
In addition, after "boiling to death" many competitors, although the current fresh market is still a master, for JD.com, on the basis of no lack of brand awareness and basic logistics facilities, taking the lead in buying vegetables through JD.com to "line up" may be a strategic consideration for testing the water temperature of the market.
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How to make up for the shortcomings
At present, JD.com is also prepared before exploring the fresh market for the second time. First of all, after acquiring a 10% stake in Yonghui Supermarket in 2016, JD.com's subsidiary also wholly acquired Beijing Guanhua Supermarket in March last year. After winning two supermarkets, JD.com has already helped a lot in the fresh supply chain and retail format layout.
Moreover, Jingdong and Guanhua have always had in-depth cooperation in the home business, and the acquisition of Guanhua is also considered by the outside world to be a "model enterprise" that JD.com hopes to build an offline retail market, and Beijing has always been the main battlefield of JD.com, and JD.com's exploration on its own territory will often take a step ahead.
In addition, JD.com has also adjusted its development direction in the fresh food business. The previously self-operated Jingxi and Qixian will relatively test JD.com's supply chain capabilities, so this time JD.com's "JD Grocery Shopping" has chosen the aggregation model, aggregating many third-party platforms such as Pagoda, Wumart, Dingdong Grocery Shopping, Carrefour, Yonghui Supermarket, and even competitors Freshippo.
For JD.com, the aggregation model can not only alleviate its anxiety on fresh supply and fresh consumption, but on the other hand, JD.com's strong logistics and distribution capabilities can also make it more comfortable in instant retail.
It can be speculated that when the platform-based operation mode of "Jingdong grocery shopping" develops to a certain stage, after Jingdong has completed exploration and trial and error, the platform will most likely gradually increase its self-operated products, and even further layout the national front warehouse, and then move closer to the direction of fresh e-commerce.
Looking back on the past, many fresh food e-commerce platforms that have been cleared by the market have repeatedly opened warehouses, built stores, and then closed stores and withdrawn cities in different cities, including the former Jingxi and Qixian.
The cost of repeated trial and error is obviously not small, coupled with the need for a lot of upfront investment whether it is a front-end warehouse or a one-store warehouse, JD.com's bypass of the "asset-heavy model" of direct exit is not another better choice.
Finally, looking back at JD.com's recent series of actions, from "tens of billions of subsidies" to restarting the front warehouse, JD.com's desire for the sinking market has become more and more obvious, and instant retail is obviously also a "knife" that wants to cut a hole in the sinking market, so as to achieve the purpose of pulling new ones, attracting traffic and cultivating users' minds faster.
However, this is also a problem that Jingdong may face in the future, in local life services, there are both old guns such as Meituan, as well as upstarts such as Douyin and WeChat, for JD.com, the long-term solidified brand positioning of the platform, as well as the user habits of active search on e-commerce platforms, may also become its "roadblock" on instant retail and even fresh e-commerce, JD.com to continue to "taste", the challenge will be great.