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Pinduoduo, challengers are coming!
The e-commerce war in 2023 is destined to be a huge storm. JD.com, once a giant, is now preparing to declare war on Pinduoduo, a war that will rewrite China's e-commerce landscape. In this upcoming contest, the two e-commerce giants will compete fiercely with each other, and the sparks of this battle have burst out in some subtle changes.
War drums beat!
As early as February 21, 36Kr exclusively disclosed that JD.com plans to officially launch the "10 billion subsidy" plan on March 8. This is not the first time JD.com has launched "tens of billions of subsidies", but this time, they will "start from a new start", no longer attached to 618 or Double 11, but independent into an army, with their own first-level entrance, full coverage of subsidies, and no upper limit. More strikingly, JD.com has also built a "network-wide price comparison system", if the price of JD.com shopping is higher than other e-commerce, they will "double compensation".
After this news, JD.com's stock price fell sharply, and Pinduoduo was also affected. This strategy of "hurting the enemy by 1,000 and self-harming by 800" shows Liu Qiangdong's jealousy of Pinduoduo's competition.
The speed of Pinduoduo's rise is staggering. As of the third quarter of 2022, Pinduoduo's quarterly revenue reached 35.5 billion yuan, a year-on-year increase of 65.1%, and its net profit increased by 546% year-on-year. In contrast, JD.com and Alibaba's growth rate is relatively slow.
Pinduoduo is not only developing rapidly, but also seizing market share in JD.com's core area - 3C digital market.
Chen Lei, chairman of Pinduoduo, revealed that Pinduoduo has not only gained a foothold in small and medium-sized cities in China, but also emerged in the field of digital products such as Apple mobile phones and computers. Their "10 billion subsidy" plan has also gradually taken root. Last year, Pinduoduo expanded its business to overseas markets, successfully topping the US AppStore twice with outstanding results.
On the contrary, the situation on JD.com is not optimistic. Not only has the domestic market share eroded, but overseas business is also shrinking. JD.com closed its Indonesia and Thailand stations, and the slogan of "building another JD overseas" seems to be just empty words.
Liu Qiangdong used to have a negative attitude about whether Pinduoduo was a competitor, believing that Pinduoduo was just a flash in the pan, but now he has taken the initiative to launch a price war. The move seemed to show a sign of a windswept turn, with Mr. Liu turning to a familiar low-price strategy to regain a competitive advantage.
The gene of low-price competition
Mr. Liu has said he founded JD.com because he was forced to engage in price wars with others. This is also a true portrayal of JD.com's development process.
In 1998, Liu Qiangdong founded Jingdong, the initial scale of the company was small, but in the optical magnetics industry achieved a certain advantageous position. However, in 2001, Taiwan's winning group entered the Chinese market and said that it would drive JD.com out of the optical magnetics industry. They claim that no matter how high the price of JD.com, they will always be 100 yuan lower than JD.com.
Faced with this challenge, JD.com was forced to engage in a price war with Taiwan's winning group, and finally succeeded in reducing the price from 2700 yuan to 700 yuan. However, in fact, JD.com's burners were basically sold out at that time, and they even bought hundreds of burners from each other.
The price war gave JD.com a big win, but it also cost Taiwan's winning group more than 2 million. This story has become a classic case in the development of JD.com, showing Liu Qiangdong's low-price competition strategy.
JD.com has also engaged in a series of price wars with Dangdang and Suning. In 2010, JD.com fought a "book" price war with Dangdang, and with Dangdang's popularity, it attracted book suppliers to settle in and distracted Dangdang's energy. JD.com challenged itself with its smaller book business, winning or losing, but eventually won market share.
In 2012, JD.com turned its attention to the major appliance business to compete with Suning, the home appliance giant at the time.