Authors: Lu Hanzhi ▪ Wang Zhen ▪ Luan Li ▪ Liu Xiaoying
Liu Qiangdong, who has been "quiet" for four years, recently returned to the public in the form of an internal letter. As strong as before, he directly "strikes" the management team of nearly 2,000 people.
A person familiar with the matter confirmed to a reporter from China Business News that on November 20, Liu Qiangdong convened a meeting of executives above the deputy director level and proposed to eliminate the last position of executives at the end of the year.
Two days later, Liu Qiangdong announced through a letter from all employees of JD.com that starting from January 1, 2023, the cash salaries of senior managers of JD Group will be reduced by 10%-20%, and the higher the position, the more the reduction will be. .
This is the first time in the past few years that JD.com has proposed a comprehensive salary cut for executives.
JD.com’s new round of structural adjustments has also been exposed: the original 3C home appliance business group was split into two, and the three major business divisions of computer digital, communication, and home appliances were adjusted into the home appliance and home furnishing business group and the computer communication business group; The Home Furnishing Division of the Fashion Home Furnishing Business Group merged with the Home Appliances Division to form a new Home Appliances and Home Furnishing Business Group.
Li Shuai, the former CFO of JD Retail Group, was appointed as the head of JD Home Appliances Business Group.
Behind the big adjustment is the challenge that JD.com faces in retail e-commerce. There is even a discussion in the outside world that "JD.com may be ransacked by groups such as Pinduoduo, Meituan, and Douyin if it doesn't get nervous."
Is JD.com's core competitiveness still there?
CBN reporters tried to find the answer to this question by interviewing the heads of JD’s e-commerce partners such as home appliances, liquor, milk powder and beauty makeup.
Double Eleven "cold"
JD.com suddenly tensed up and down, which is related to the fact that the sales data of Double Eleven did not meet expectations.
Starmap data shows that this year’s Double Eleven, the total transaction volume of comprehensive e-commerce represented by Tmall, JD.com, and Pinduoduo was 934 billion yuan, a year-on-year increase of 2.9%.
Live e-commerce represented by Douyin, Diantao, and Kuaishou recorded a total transaction volume of 181.4 billion yuan on Double Eleven this year, a year-on-year increase of 146.1%.
On the other hand, JD.com's position in the sinking market is also facing the threat of Pinduoduo.
As of December 31, 2021, JD.com had 569.7 million active purchasers in the past 12 months, and Pinduoduo had 868.7 million active purchasers during the same period.
Take JD.com's advantageous home appliances as an example. Although JD.com is still the overlord, live broadcast e-commerce and Pinduoduo are making great strides forward.
According to data from Xingtu, on Double Eleven this year, the household appliances category is the highest-selling category on the comprehensive e-commerce platform, with sales reaching 156.6 billion yuan, a year-on-year increase of 15.7%, of which JD.com accounted for 59% and Tmall accounted for 33%.
But even if he has won half of the home appliance field, Liu Qiangdong is not satisfied with his performance on Double Eleven.
It is reported that Liu Qiangdong internally criticized before and after Double Eleven this year, saying that JD.com must maintain a low-price advantage and that the sales price should not be inferior to that of live broadcast e-commerce. And Pinduoduo's "crushing".
Wang Bing (pseudonym), the regional director of an electrical appliance company, told reporters that Pinduoduo has been fighting for low prices. This year’s Double Eleven will provide tens of billions of subsidies. Its customer base is larger, but the unit price of each customer is not as high as JD.com.
According to the "Double 11 Report of Major Appliances" by Aoweiyun.com, live e-commerce companies such as Douyin, Kuaishou, and Diantao have a cumulative turnover of 181.4 billion yuan on Double 11 this year, a year-on-year increase of 146.1%, and the penetration rate of e-commerce live broadcasting has increased from 0.27%. It climbed to 17.97%, and the private domain of traffic became more and more obvious.
In addition, the turnover of new retail (JD Daojia, Taoxianda, etc.) was 21.8 billion yuan, an increase of 10.8% year-on-year, and the turnover of community group buying was 13.5 billion yuan, a year-on-year increase of 1.1%. Channel fragmentation has intensified.
Aowei Cloud Network believes that the channel structure is changing, from "trading field" to "content field", and online channels are becoming more subdivided.
The rapid rise of the live broadcast platform has further accelerated the differentiation of online channels, and the market share of the sinking market has expanded, becoming an important growth engine for home appliance companies.
In the trend of online retailing, according to the online monitoring data of major home appliance retailing from Aoweiyun.com, the live e-commerce business is growing rapidly. From January to October 2022, taking refrigerators, freezers, air conditioners, and washing machines as examples, Douyin, The retail sales of Kuaishou reached 1.42 billion yuan, 30 million yuan, 950 million yuan, and 1.19 billion yuan respectively; the sinking market has huge potential. From January to October 2022, refrigerators, freezers, air conditioners, washing machines, and clothes dryers in the sinking market The sales accounted for 28.5%, 25.8%, 29.6%, 30.7%, and 15.4% respectively. Pinduoduo is sinking into the market. From January to October 2022, the retail sales of its refrigerators, freezers, air conditioners, washing machines, and clothes dryers Respectively amounted to 2.68 billion yuan, 1.04 billion yuan, 3.35 billion yuan, 2.1 billion yuan, and 230 million yuan.
The rise of emerging consumption patterns has challenged JD.com's advantages in the field of home appliances.
The rising cost of customer acquisition of centralized e-commerce platforms has peaked their growth potential, and Douyin, Kuaishou, and WeChat have stopped diverting traffic to e-commerce platforms; many home appliance companies have lamented the high "toll fees" and traffic fees ", will still pay for the trend.
In order to break the situation, JD.com also tried to independently develop the group shopping business. In June this year, JD.com dismantled the Jingxi business group, and Jingxi Pinpin was merged into the retail business.
In addition, Wang Bing told reporters that JD.com has also deployed about 800 JD.com service stores in the third- and fourth-tier markets in South China to compete for the sinking market.
However, from the perspective of platform fee rate control, the effect is not obvious.
"Jingdong platform e-commerce's large appliance retail expense ratio (the ratio of extracting expenses from commodity sales revenue) is about 5%-6% (excluding the delivery fee for consumers, if the delivery fee is included, the expense ratio Higher), the cost rate of live e-commerce may be 2%-3%, and the cost of emerging e-commerce is lower, which can pass on profits to consumers.” Wang Bing introduced.
Difficulties in expanding into new markets
For JD Retail to be large-scale, it must expand to markets other than home appliances, 3C and other advantageous fields. This is similar to Amazon’s move to sell all categories of goods after its success in online book sales. It is a natural choice. Today, JD Retail In the expansion of new markets, we also encountered the same problems that Amazon encountered back then.
In the liquor market, not only did some big-name liquor companies not buy into JD.com, they even took advantage of their market position to counter JD.com. It is not easy for JD.com to establish its core competitiveness in these areas.
After Double Eleven in 2022, the conflict between Wuliangye and Luzhou Laojiao, two leading liquor companies and JD.com, highlighted the contradiction between some consumer goods companies and JD.com’s self-operated business.
From November 10th to 11th, Luzhou Laojiao and Wuliangye successively sent letters to JD.com. In the official letters, Luzhou Laojiao expressed dissatisfaction with JD.com’s recent behavior of selling its core product Guojiao 1573 at random prices, saying that JD.com had repeatedly, low The sale of 52 degrees Guojiao 1573 series products at a low price disturbed the market and destroyed the basis of cooperation, and decided to suspend related cooperation with Jingdong from November 10.
Wuliangye also imposed a "punishment" on JD.com, deducting 3.65 million yuan in market support costs in 2022.
The key to the conflict between JD.com and the two liquor companies is the issue of "disorderly price sales".
It is understood that during the Double Eleven period, the prices of JD.com’s self-operated Guojiao 1573 and Wuliangye exceeded the price “bottom line” stipulated by the factory due to the superimposition of coupons.
Xiao Zhuqing, chairman of Wuhan Jingkui Technology Co., Ltd., who once managed a liquor company, told the first financial reporter that JD.com sells Guojiao 1573 at a low price, which has greatly harmed the rigid price difference of the offline channel price system. Internet platforms only account for about half of Chinese liquor. With 10% of the market share, it is impossible for any famous winery to condone the Internet platform and offend the traditional offline channels with 90% of the market share.
Due to China's vast territory and large differences in consumption levels and habits, liquor companies adopt a market-based management model by region and level. In particular, leading liquor companies have established a huge market distribution system through a multi-level dealer system, and strictly control goods and prices. If the online price is too low, it will impact the offline price system.
On November 25, the reporter saw in the self-operated store of Jingdong Luzhou Laojiao that the price of a single 500ml bottle of 52-degree Guojiao 1573 was 1259 yuan per bottle, and the price after the discount was 1139 yuan per bottle, which is higher. The actual price in the market is tens of yuan, which is higher than that of wine group-buying merchants.
However, from the perspective of the industry, this price is more of a price demonstration and brand function, not for faster sales.
Liquor companies dare to "tough" Jingdong, which is also a special case in the consumer goods industry. Because of the scarcity of famous wine production capacity and resources, liquor companies, especially leading companies such as "Maowulu" have an absolute advantage in manufacturer relations, so they do not I don't care if it "offended" JD.com.
Although liquor companies are relatively strong, some consumer category companies are in a delicate state in their cooperation with JD.com.
A person in charge of a milk powder company told a reporter from China Business News that the gross insurance rate of the company’s self-operated cooperation model with JD.com is 20%, which consists of 8% of profits and 12% of market input costs. The former is JD.com’s platform deductions. , the latter is used to purchase JD.com’s advertising services, etc.
In terms of the cooperation model, merchants need to negotiate a supply price with JD.com itself, and JD.com will be responsible for the sales after that.
The above-mentioned person in charge said that in the past, the selling price was adjusted by JD.com according to the sales situation, which means that JD.com was responsible for its own profits and losses. However, this policy has been adjusted in the past two years. JD.com will require merchants to return bad products, and the platform will only make a profit but not a loss.
In addition, a reporter from China Business News learned that in most cases, there will be no conflict between the brand owner and JD.com in terms of price, but friction is prone to occur during promotional seasons such as Double Eleven.
According to reports, the brand owner and JD.com will negotiate promotional prices in advance, but generally follow JD.com’s arrangement. Because the negotiation fails, JD.com will not arrange “events” for the brand, which will affect the final sales, so in most cases, the company compromises.
The above-mentioned person in charge said that when the platform adjusts the promotional price, such as issuing coupons, it will not discuss with the brand side, so the final price of the product after stacking the coupons is actually "not counting" by the brand side, so "breaking the price" may occur Case.
At present, most of the fast-moving consumer goods are still mainly sold through offline sales channels. Product market price control is also an important part of maintaining market stability for fast-moving consumer goods. Some fast-moving consumer goods companies will adopt different methods of online and offline sales of product specifications and packaging. Establish a segment to avoid impacting the offline price system.
However, in some industries, such as infant formula milk powder, due to restrictions such as the formula registration system, the same product is often sold online and offline, and online "breaking prices" will greatly damage the brand's offline price system.
A relevant person in charge of a milk powder company revealed that since JD.com accounts for a considerable proportion of its online sales, even if the price is broken, it will not "tear the face", but will quickly take measures to reduce losses.
Song Liang, an independent dairy industry analyst, told CBN that although milk powder brands will make some price agreements with JD.com to ensure stable online and offline prices, objectively speaking, these promotional rebates or discount coupons make JD.com more competitive than offline ones. have more advantages.
The main channels of some small and medium-sized enterprises are mainly offline, so they began to abandon large e-commerce platforms in order to protect the offline price system.
Attempts in the beauty category
At a time when traditional advantageous consumer categories are under pressure, JD.com is also actively expanding new consumer categories.
In the latest corporate restructuring of JD.com, the fashion household business group has been changed to the fashion beauty business group. Guan Peisheng Kong Xiangying joined in 2013, which is enough to show that JD.com pays attention to this category.
Kong Xiangying has served as the general manager of the POP (Open Platform) business department of JD Digital and the head of the Ecology Department of JD’s retail platform. She is also a management cadre trained by JD.com.
Prior to this, Wang Tao, the general manager of JD.com's retail beauty business department, also worked hard in the beauty industry for many years.
Wang Tao joined JD.com in 2018.
It is said that on the first day of joining JD.com, Wang Tao's first self-introduction was: "I am a veteran in the cosmetics industry and a newcomer to the Internet."
From Wang Tao's public resume, it can be seen that this person is extremely experienced in the industry.
Since 2007, Wang Tao joined Dior as the sales director, responsible for Dior's business in the Chinese market; joined L'Oreal China, responsible for launching new brands and became the brand leader; and then joined Beiersdorf to be in charge of the national sales of La Prairie and training work, and later entered Amorepacific Group as the brand manager of Sulwhasoo China, and the sales of Sulwhasoo China at that time increased from 300 million to over 1 billion within two years.
After Wang Tao joined JD.com, he introduced more than ten high-end brands such as Helena, L'Occitane, and Biotherm to JD.com in less than a year.
And these actions are also reflected in the data.
Judging from the public data, Taobao Tmall’s 2020 beauty and skin care category sales are 298.2 billion yuan, a year-on-year increase of 24%; Jingdong’s 2020 beauty makeup and skin care category sales are 40.6 billion yuan, a year-on-year increase of 42%; Currently, Taobao and Tmall are still in the absolute lead, but the high growth rate also shows that JD.com’s beauty and skin care market has high development potential.
As a result, the latter has also become one of the channels that many brands are willing to cooperate with.
In September not long ago, LA PRAIRIE's official flagship store opened on JD.com.
Wang Tao said: "Since the beginning of this year, JD New Department Store has continued to expand its matrix of high-end beauty makeup brands, and has welcomed more than ten international first-line beauty brands to settle in one after another. In the future, JD New Department Store will continue to enrich the selection of beauty makeup brands and products."
In the new personnel adjustment, the addition of Kong Xiangying has raised the strategic position of fashion beauty to a higher level, but it will take time to verify whether the brand and practitioners can reverse the inherent impression of JD.com's influence in the beauty industry.
Industry insiders told reporters that Jingdong’s beauty business has gradually gained popularity in recent years, and more and more beauty brands have settled in Jingdong.
The financial report for the third quarter shows that in the third quarter, beauty brands such as La Mer, Armani, Jo Malone, Shiseido, and MAC entered JD.com and opened their own official flagship stores on JD.com.
The reporter learned from interviews in the industry that several top international beauty makeup groups currently have different forms of cooperation with JD.com, but they are more out of diversified layouts and will not "put eggs in one basket".
South Korea’s Amore Group told reporters: “Digital transformation is an important strategy of Amorepacific. We have a steady layout on mainstream platforms such as Tmall and JD.com, expand brand and product exposure, and ensure brand positioning within the platform. 6.18, Double Eleven) to achieve growth. But at the same time, it is also vigorously developing emerging social and e-commerce platforms such as Douyin and Kuaishou to cultivate new growth drivers.”
Compared with other platforms, a person in charge of local cutting-edge beauty makeup told reporters, "JD.com has very little involvement, and at most there are some distribution channels. For new local brands, it is very difficult to open up the situation on JD.com. It’s not a platform from 0 to 1.”
She explained to reporters that when new brands and products start to build momentum and promotion, users and product positioning need to be done, but it is difficult to guide content on JD.com, unlike Douyin and Xiaohongshu, "From the perspective of companies like us For the first time, JD.com may be more suitable for mature products, brands with a certain reputation and customer accumulation. The first wave of promotion and sales of new companies is not suitable for this platform.”
Another founder of a domestic beauty brand told Yicai.com, “After the brand was established last year, we opened a flagship store on Tmall, and then opened an official account on Douyin in June this year. JD.com is also expanding the brand as a traffic channel. However, considering the current traffic and empowerment of Douyin, we still choose to develop on Douyin first, and the delivery and live broadcast of Douyin are currently very satisfactory to the brand.” The founder said that the layout will be next year For Jingdong’s business, Jingdong pays more attention to its sub-warehouse and logistics capabilities.
Where is Jingdong going?
Judging from the status quo of comprehensive e-commerce, JD.com, Ali, etc. are currently facing the dilemma of peak traffic.
Li Ming (pseudonym), a veteran in the home appliance industry, told reporters that JD.com’s current fundamental problem is how to obtain new traffic. Tencent’s WeChat traffic now supports its own video account, and it also supports Pinduoduo more.
If JD.com wants to fight for low prices, home appliances will have opinions.
Live broadcast e-commerce and JD.com’s platform e-commerce have different attributes.
Jingdong is a sales attribute, and manufacturers hope to make money.
Douyin and other live broadcast e-commerce companies integrate promotion, sales, promotion, and operation. Manufacturers hope to expand the popularity of new products and combine brand expenses.
JD.com targets mature consumer groups, while Douyin targets young consumers.
JD.com’s live broadcast and group shopping have not started, and it is still seeking the transformation of a new business model.
It is understood that after the restructuring of JD.com, Xie Fan is still the person in charge of JD.com's home appliance business, cooperating with JD.com's home furnishing business. His boss is Li Shuai, the person in charge of JD.com's home appliance business group.
Li Ming believes that the current growth rate of JD.com and Ali is declining, while Pinduoduo and Douyin are growing rapidly.
Many low-priced miscellaneous brands are selling on Pinduoduo. At present, Pinduoduo is also strengthening its supply chain, inviting big brands to enter, and the platform fee is low to help divert traffic and provide subsidies.
It is expected that the competition in home appliance retail channels will become more intense in 2023.
Regional chains will replace the status of large national chains, Pinduoduo will have more brand-operated stores, and Douyin is also accelerating its expansion of home appliance retail business.
JD.com also realizes the importance of the "low price" market.
In this year’s Double Eleven campaign report, JD.com highlighted the growth of low-priced items.
JD.com said that through in-depth cooperation with brands and merchants, it has brought real low prices to hundreds of millions of consumers. The sales of half of the tens of billions of subsidized products in the tens of billions of subsidy sessions increased by more than 50% year-on-year, and the sales of more than 10% of the products increased by 10 times.
When facing challenges, JD.com has seen changes and is also trying to adapt to changes.
For example, in the face of more rational consumers, JD.com also tries to launch more cost-effective services.
JD.com CEO Xu Lei mentioned in both the second quarter and third quarter earnings conference calls that under the influence of factors such as the economic downturn, JD.com’s sales of mobile phones in the second and third quarters were challenged.
Therefore, on Double Eleven this year, JD.com's mobile phone trade-in service has also opened up a more environmentally friendly new channel for phone buyers. During the Double Eleven period, the number of users who purchased phones through the old-for-new method increased by more than 200% year-on-year.
In the field of home appliances, with the upgrading of sales scenarios, JD.com is also working hard to cater to new trends.
Wu Xianjian, assistant to the chairman of the China Household Electrical Appliances Business Association, told reporters that the integration of home appliance and home retail business starts from the demand side and provides users with one-stop shopping and package solutions to improve quality and efficiency.
In addition, in the 5G era, user needs and industry iterations are changing rapidly, and JD.com also needs to adapt to changes and make changes quickly.
Dong Jingjing, brand director of Ningbo Youban Intelligent Technology Co., Ltd., analyzed to reporters that the integration of home appliances and home furnishing is a trend.
Especially in the kitchen appliance industry, leading kitchen appliance companies all have integrated kitchen companies, such as cabinets and whole-house customization.
Customized home furnishing companies also have corresponding kitchen appliance OEM business.
Home furnishing needs to be customized, and the unit price per customer is higher. It is only natural that home appliances drive the development of home furnishing business.
JD.com's combination of home furnishing and home appliance retail business is also related to the current poor prosperity of the home appliance market.
Peng Xiandong, general manager of Gfk's major appliance division, told reporters that the retail channels for home appliances have changed rapidly recently, and the scale of social networking platforms has grown significantly.
JD.com's organizational adjustment this time is firstly to adapt to the current changes in the retail industry; secondly, it is to focus on users and invest more resources in the combination of retail scenarios and users from the perspective of scenarios.
In fact, for the first time this year, the national policy level will promote the combination of home appliances and home furnishing consumption.
In August 2022, the relevant state departments issued a notice on the action plan to promote the high-quality development of the home furnishing industry, promoting the integration and innovation of home appliances, furniture, lighting, hardware products and other industries, and cultivating a smart home ecology.
Analysts believed at the time that this was a breakthrough in the post-real estate era.
The pre-registration of home appliance retail channels has also made the building materials and home furnishing market an emerging force in the sales of high-end home appliances.
For example, Red Star Macalline is actively opening a large store of smart appliances.
According to data from the AVC research report, in July 2022, the sales of kitchen appliances in China's high-end building materials channels accounted for 26.6%.
"It's not surprising that JD.com combines home appliance retail business." Wang Bing told Yicai Global that JD.com is already making plans.
In Nansha District, Guangzhou, JD.com opened a 3,000-square-meter home appliance store; in Qingyuan City, JD.com is planning to open a home appliance store of several thousand square meters; in Zhongshan, JD.com also opened a similar home appliance store.
The number of people in offline home appliance retail stores has decreased, and the rent cannot be supported. Many offline home appliance retail businesses have shifted to the home furnishing, furniture, and building materials markets.
When consumers who want to decorate are looking for someone to design, they also take refrigerators into consideration. The sales of home appliances are transforming from the terminal retail market to the sales of complete sets of home appliances, moving towards the front end. JD.com has adjusted its structure to cater to market changes.
On the whole, JD.com is facing the challenge of emerging channels in its traditional advantage category of home appliances, but it can also be seen that JD.com is changing by adapting to the consumption scene. However, the higher customer acquisition cost of the comprehensive e-commerce platform proposed by the manufacturer is There may not be a good solution right now.
For example, in the liquor industry, unlike other categories, liquor manufacturers are more powerful. In the previous conflicts between JD.com and Luzhou Laojiao, Wuliangye and other manufacturers, manufacturers have a greater say.
The field of beauty makeup is an area that JD.com has actively explored in recent years, but for many emerging brands, JD.com is still not the first choice. If the impression of the brand side on JD.com’s strong logistics and lack of drainage is to be reversed, JD.com needs to do more. effort.