Shulou(Shulou.com)11/24 Report--

Original title: Qiangdong Xiaozheng, no casualties

On March 6, JD.com officially launched the 10 billion subsidy. And JD.com described, "to bring you the largest preferential consumer experience in history." At present, it seems that consumers' response to JD.com 's subsidy is mediocre, especially for some hot goods, users say bluntly that "you can't get it at all."

What makes people care is that as soon as the high-end, magnificent, and high-grade platform line is changed, why should JD.com "lower his price" and emulate pinduoduo to make a "10 billion subsidy"?

In fact, the "10 billion subsidy" is nothing new in the e-commerce industry. Pinduoduo and Ali have both launched relevant policies, and then Juhuasu, ele.me, Douyin, Kuaishou, Feizhu, Didi and other platforms have also followed suit, mostly to improve user stickiness and stabilize the low-line market crowd.

Pinduoduo, in particular, rose to fame by virtue of the "ten billion subsidy". In June 2019, pinduoduo first launched the "10 billion subsidy" program. According to pinduoduo's three quarterly reports that year, the number of daily active users at the entrance of the "10 billion subsidy" has exceeded 100 million.

JD.com this high-profile launch of "10 billion subsidies", presumably the ultimate goal is still to seize users, alleviate the "traffic dilemma" faced in the past two years. But what everyone is looking forward to is, what kind of variables will the frontal confrontation between JD.com and pinduoduo bring to the entire consumer market?

First, there have long been rumors that "10 billion subsidies are the big killer that JD.com places high hopes on." JD.com retail has set the main tone of 2023 as "low price". This time, JD.com launched the "10 billion subsidy", which can be said to be a continuation of the major changes made by the strategy.

At the end of last year, Liu Qiangdong strengthened his mind in an internal email that "low prices are the only basic weapon." Liu Qiangdong believes that JD.com has given some consumers the impression that it is becoming more and more expensive, and JD.com should serve multi-level consumers, considering not only the rich but also ordinary people. In his view, JD.com is not the platform positioning of "better service and more expensive price". No matter what kind of consumers are faced with, the pursuit of the ultimate cost performance of the products is JD.com 's commitment to consumers.

Especially compared with the white-collar market which tends to be saturated in the first and second line, the sinking market has huge traffic and huge market potential, and the future user growth of the e-commerce platform will depend more on the performance of the low-line market.

JD.com 's revenue in the third quarter was 243.54 billion yuan, with a net profit of 6 billion yuan, an increase over the same period last year. And its rival pinduoduo's third-quarter revenue of 35.5 billion yuan, net profit of 10.5886 billion yuan, net profit has exceeded.

Especially in the user data, for falling into the "traffic dilemma", the "10 billion subsidy" brings great temptation for new users.

JD.com 's active user growth has entered a weak period. As of September 30, 2022, JD.com had 588 million active purchasing users in the past December, the slowest growth rate in three years, at 6.5 per cent. In the third quarter of 2020 and the third quarter of 2021, JD.com 's active users were 442 million and 552 million respectively, a year-on-year growth rate of 32.1% and 25% respectively.

On the contrary, rival pinduoduo reached 788.4 million annual active buyers by the end of 2020, surpassing Alibaba to become the largest e-commerce platform in China. By March 31, 2022, the number of active buyers was 882 million, a year-on-year growth of 7 per cent.

At the same time, the rise of live e-commerce from Douyin and Kuaishou, as well as Meituan's eagerness to try, have brought greater variables to the retail consumer market. In the face of the increasingly complex e-commerce battlefield, JD.com needs to compete more aggressively for users in order to return to the fast track of growth.

Mo Daiqing, director of the online retail department and senior analyst at the online Economic and Social Electronic Commerce Research Center, said, "with the improvement of the spending power of residents in low-line cities, the consumption scene and crowd of sinking market have become e-commerce giants such as Ali, JD.com and other e-commerce giants to harvest traffic and capture the opportunity for growth. For JD.com, the growth of users also depends on the performance of the low-line market. Therefore, in the final analysis, the 'ten billion subsidy' still preempts users. "

In the view of Gao Pan, chairman of Jiangnan-Bei holding Group and an e-commerce expert, 10 billion yuan in subsidies can alleviate JD.com 's "flow dilemma" in the short term. "when JD.com, who is more aware of the authentic product in the minds of consumers, is no longer 'expensive' and the price is even lower, then it is bound to grab a wave of traffic, and JD.com will usher in a small peak of traffic growth in the short term."

He told the "State ℃" column, after three years of the epidemic, the overall consumption of netizens is downgraded, and the overall e-commerce shopping experience is not as good as before. In this context, compared with rival platforms, JD.com does not seem to have a low-price advantage or higher-than-expected shopping experience, and "expensive" is the impression that many consumers have on JD.com. It is difficult to compete for new users, while old users are gradually losing. "JD.com has to seek change. The 'ten billion subsidy' is the big killer that JD.com places high hopes on." Speak high.

Second, the frontal confrontation between JD.com and pinduoduo in the "five rings" JD.com actually has a deep "muscle memory" of the "price war".

JD.com used to be not a high-end, atmospheric, high-grade platform route, but the wolf nature team that is best at price war. For example, with regard to consumer price perception, Liu Qiangdong once proposed that "price is definitely not everything that determines the user experience," but "even if the price war is fought for another 80 years, JD.com will continue to fight."

Cao Lei, director of the online Economic and Social Electronic Commerce Research Center, according to statistics, JD.com has experienced three "price wars" since his development: first, the book price war between Dangdang and Dangdang in 2010 ended with Dangdang settling in JD.com and becoming a store in the store. this opened the way for JD.com to move from vertical to comprehensive. The second is the price war with Gome and SUNING in 2012, and the vigorous price reduction allowed JD.com to win the minds of users, thus establishing JD.com 's leading position in the field of 3C digital home appliances; and third, the full-product price war with Tmall in 2012. the contest between the two giants is undivided.

Among them, the most impressive is that on August 15, 2012, JD.com took the initiative to launch a "price war" against SUNING and set up a "fight SUNING headquarters". Liu Qiangdong personally hung up the commander-in-chief. After that war, JD.com rode off the dust and threw SUNING far behind.

Today, the action of "price war" that JD.com wants to provoke still makes the market feel afraid.

At present, it can be seen that JD.com and pinduoduo have basically formed a relatively obvious differentiation, and the focus is still on agricultural products. JD.com 's 10 billion subsidy covers all kinds of goods, including popular styles such as iPhone, Maotai, Wuliangye and Dyson hair dryers, 3C household appliances such as televisions, washing machines, refrigerators and computers, as well as kitchen utensils, paper drawing, beauty makeup, fresh, snacks, nutrition and health care, etc., which have obvious advantages in categories.

But this head-on confrontation with pinduoduo in low-line cities, JD.com 's chances of winning are not great.

After all, last year, the "Jingxi business group", which mainly hit the sinking market, was adjusted on a large scale, the business lines were almost completely separated, and some of them were directly abolished. Outsiders generally regarded it as a "stocking" state, and JD.com focused on the "outside of the five rings" plan.

On the pros and cons of JD.com 's 10 billion subsidy, Zhuang Shuai, a senior e-commerce expert and founder of Bailian Consulting, analyzed: "JD.com 's advantage lies in its strong warehousing and logistics service system. The disadvantage is that the integration of the supply chain between the open platform and the self-supporting system needs to be further improved, and the supply of factory products and agricultural products needs to be strengthened."

In Gao Pan's view, JD.com launched 10 billion subsidies, drawing lessons from pinduoduo, head-on confrontation is inevitable. "JD.com 's advantages, such as supply chain, authentic awareness, shopping experience, and fast delivery, are not as obvious as before, and need to be strengthened in the price war and seize the minds of users again through public opinion in order to form a competitive advantage."

For the entire e-commerce market pattern, whether JD.com 's operation will bring some variables still needs to be tested by the market. But for consumers, "rolled up" e-commerce are in the process of fierce competition, users can get the biggest consumption dividend.

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