Darkest moment: Jingdong's dilemma and broken game

First, the supply chain is king, the achievement of online retail giants

Looking back at the growth history of Jingdong, since the transformation from offline 3C counters to e-commerce in 2004, in addition to capital support, Jingdong has always relied on two trump cards throughout China's e-commerce business: low-price authentic products and high-quality experience. The former directly hit the early online shopping price chaos, fake rampant pain points; The latter takes the efficient logistics experience of self-distribution as the core, sets up the benchmark of e-commerce experience, and leads the trend of e-commerce branding together with Tmall. 14 years after the listing, Jingdong has introduced Tencent and Walmart two strategic shareholders, greatly expanding the company's front-end traffic entrance and back-end supermarket supply chain resources, becoming a comprehensive e-commerce giant with cross-category operation second only to Tmall in scale. In 2017, JD's transaction scale reached 1.29 trillion yuan, revenue 362.3 billion yuan, and annual active users of 290 million people, which surpassed the e-commerce industry.

We understand that Jingdong is a retail company with Internet attributes. Since its establishment, Jingdong has maintained strong retail attributes, self-operated business is the company's business basis and traffic source, and platform business is the company's cash tool: in 2017, Jingdong self-operated accounted for 58% of the total GMV, contributing 92% of the revenue; Self-operated e-commerce users realize the realization of advertising traffic through open platforms, and platform services (mainly advertising commissions) contributed 25.6 billion yuan of gross profit in 2017, accounting for more than half.

Jingdong's quality user base precipitated over the years is the underlying foundation and traffic barrier for Jingdong's future expansion. Jingdong currently accumulates 300 million quality users with high stickiness and strong consumption power: 1) According to the company's disclosure, the average annual purchase volume of Jingdong's old users registered in 2008 increased steadily from 3.7 in 2008 to 30.2 in 2017; 2) In January 2016, Jingdong officially launched the paid membership system "Jingdong PLUS", as of September 2018, PLUS members exceeded 10 million, membership renewal rate of nearly 80%, becoming the most mature e-commerce paid membership system in China. From the perspective of member portraits, 65% are young members under the age of 35, nearly 60% of members live in first - and second-tier cities, and 89% of members are highly educated people with a bachelor's degree or above.

Second, the core advantages of logistics are weakened, and the scale growth is slowing down

Since the second half of 17 years, the growth rate of Jingdong scale has plummeted. 3Q17 single quarter GMV growth rate decreased from 46.4% in 2Q17 to 32.3%; To 3Q18, although GMV still maintained a growth rate of 30.5%, revenue growth dropped to 25.1%, at the lower end of the company's guidance (25-30%), and further forecast that 4Q18 revenue growth of 18-23%; The growth rate of active users dropped to 14.6%, and the absolute user scale of 305 million at the end of the period declined for the first time (314 million 2Q18 users), and was surpassed by the rapidly rising Pinduoduo (386 million).

The difference in industry pattern determines that it is difficult for Jingdong to completely copy the road of Amazon's platform. Jingdong's model of starting from self-operated e-commerce and self-built logistics is similar to Amazon's starting point, and it was listed with the label of "Chinese Amazon", but it failed to replicate Amazon's success in the US e-commerce market in subsequent development. The reasons are as follows: 1) Different market position and competition pattern. Amazon's successful transformation benefited from eBay's backward strategy of not switching to B2C in time, and when Jingdong's self-operated business was not fully developed, Ali had begun to transition to B2C, and the advantages brought by network effects were at Ali's end. 2) The degree of improvement of supporting infrastructure is different, and Amazon logistics is more attractive to consumers than Jingdong Logistics and has a stronger traffic grip. 3) 3P business has different roles, and Amazon plays the role of "universal Taobao", with obvious differentiation competitive advantages.

Of course, there are short-term external competition factors such as Ali brand "two choices", but we understand the more fundamental reason is that in the past, the experience advantage of Jingdong relying on logistics time as the core was quickly caught up by the rookie system, and the differentiation advantage has not been established at the flow and commodity level.

1) Traffic operation. Since its establishment, Jingdong has been good at supply chain efficiency with logistics as the core, and since the 15-year "Jingteng Plan", front-end marketing has mainly copied the cooperation model of first-level entrance + advertising resources. Compared with Pinduoduo, which is also based on wechat ecology, Jingdong has failed to find an effective way to play the "sharing" attribute of social traffic, taking logistics sinking and quality service as the core selling point, and it is slightly difficult to compete for "edge users" of online shopping in the low-line market.