According to many media reports, Liu Qiangdong, who has rarely appeared in the past two years, recently returned and rushed to the current hottest community group buying.
In the highly competitive community group buying market, does Liu Qiangdong, who personally leads the team, have a chance to win?
01
Jingdong fights again in community group buying
Before answering whether Liu Qiangdong has a chance to win, let's take a look at some news about JD community group buying this month.
On December 2, LatePost reported that JD.com was planning a community group buying project called "Jingdong Optimal". Liu Qiangdong personally led the team. It is expected to be officially launched at the end of December and early January next year.
On December 7, multiple media reported that JD.com was seeking US$200 million to buy Meijiamaicai, the community group buying platform of Meicai. On the same day, Meicai.com responded that the information was not true. Jingdong did not respond to this.
Tech Planet reported on December 8 that the Jingxi Business Unit under the former Jingdong Retail Group has recently been upgraded to Jingxi Business Group. The newly established Jingxi business group integrates the Jingxi business department and the new channel business department, community group buying business department, Yihaodian business and other departments of the original JD retail supermarket omni-channel business group.
Liu Qiangdong knew the importance of community group buying early on, and in 2017 he drove JD to start exploring community group buying.
In April 2017, Liu Qiangdong proposed the "JD Convenience Store" plan and announced that it would open 1 million JD convenience stores in the next five years, half of which will be in rural areas. In 2018, some media reported that due to the supply chain, logistics cost, and dual-line system, JD’s convenience store plans to encounter a "closed tide."
From 2018 to 2019, JD.com continued to experiment with community group buying. In July 2018, JD.com launched a small program for community group purchases, "Jingdong Neighborhood Group", which was later renamed "Crimson Buy"; in November 2018, JD Group’s subsidiary "Beijing Jingdong Sanbailu Shidu E-Commerce Co., Ltd. (legal person: Liu Qiangdong) launched a small program called "Youjia Shop". The network introduced it as: a community group buying platform directly under JD.com, which focuses on the daily needs of the community, including fresh fruits and daily necessities; in 2019, JD.com proposed a community group buying test water project codenamed "Chunxiao", mainly centered on Baoma , Ordinary residents + offline outlets for regional deep cultivation. The project was renamed "Jingdong District Purchase" when it was officially launched in 2019.
In 2020, JD began to integrate community group buying. In April this year, JD.com established a new omni-channel business group for Dashang Supermarket. The business group integrates multiple departments such as the Xintong Business Department, 7Fresh and Yihaodian.
In the latest adjustment in December, a separate community group buying business department was established under the omni-channel business group of Dashang Supermarket. This department merged the original Youjia shop, cricket shopping, Jingdong district shopping and other community group buying businesses of Jingdong.
02
Why did Liu Qiangdong personally engage in "community group buying"?
Before answering the question of why Liu Qiangdong personally engages in "community group buying", we must first understand what the community group buying food is.
Up to now, the industry does not have a clear definition of "community group buying". Xingsheng Youyou introduced itself as "a warm community e-commerce company". Its positioning is to solve the daily needs of household consumers, providing selected products including vegetables and fruits, meat, poultry and aquatic products, rice, noodles, grains and oils, daily necessities and other products. Relying on community physical convenience stores, it provides services to users through the "pre-sale + self-pickup" model; Tongcheng Life’s introduction to itself is "a new e-commerce platform with a community group buying model" and is committed to serving the big scene of family consumption. Fresh food, ingredients, household goods and peripheral services, etc.; Duoduo Mai Cai introduced himself as "Pinduoduo has launched an affordable, secure and convenient grocery shopping service in response to the changes in consumer family lifestyles." Through the Pinduoduo APP or the WeChat "Duoduuobu" applet, consumers can carry their baskets to buy selected good products from the national agricultural production areas without leaving home.
Judging from the introduction of the above three companies, "community group buying" is an e-commerce, but compared to traditional e-commerce, the service objects of community group buying are more inclined to family life consumption.
Since community group buying vegetables belongs to the category of e-commerce, how is it different from traditional e-commerce? The first point is that there are differences in user groups. Compared with Taobao and JD.com, which thrive in first, second and third tier cities, community e-commerce mainly targets residents in tier four, five and six cities and villages. These people are more price-sensitive, and Taobao and JD.com have rarely touched before. Group; the second difference is the difference between selling goods and services. Compared with residents in Tier 1, 2, and 3 cities, the daily life of residents in Tier 4, 5 and Tier 6 cities and villages has its own rhythm. They do not have as much construction as residents in Tier 1, 2, and 3 cities, nor do they have so much demand for commodities. Their demand for commodities is concentrated on satisfying the "daily life". Generally speaking, the daily demand for commodity SKUs of the fourth, fifth, and sixth tier user groups is within 300, which is far lower than the demand for commodity SKUs of people in large cities; third, the demand of residents in the fourth, fifth, and sixth tier cities and villages is in dynamic changes. Their perception of life brought by e-commerce is becoming more and more real, and they hope to enjoy a more convenient and high-quality modern life.
The reason why Liu Qiangdong wants to personally engage in "community group buying" is that the user groups in the 4th, 5th, and 6th tier towns and rural areas are rarely touched by JD.com before. The community group buying is an important key to the sinking of JD.com and opening the fourth, fifth, and sixth-tier markets.
This market is where Jingdong’s core growth lies in the future. Even this is a market that determines the future direction of domestic e-commerce.
03
What is Liu Qiangdong's chance of winning?
Adjusting the organizational structure and upgrading Jingxi, Liu Qiangdong personally rushed to the front line. The recent multiple actions of JD.com in community group buying indicate that Jingdong wants to do a lot.
It's one thing to make up your mind, it's one thing to be able to do good things. So, can Liu Qiangdong lead the team to win this battle?
Xi Ge believes that it is wise for Liu Qiangdong to sort out community group buying resources such as Youjia Shop, Cricket Shopping, and Jingdong District Shopping, and to integrate with Jingdong's supply chain and logistics. This reorganized the team to a certain extent and reduced internal friction.
But what Xi wants to say is that just making such adjustments is not enough. Under the current circumstances, even if Liu Qiangdong personally leads the team, it is not easy for Jingdong to win the community group buying battle.
The first is the cost-effective aspect. JD.com is known for its authentic products in the first, second and third tier cities. One of the reasons why users in big cities choose JD.com to buy is also because of the quality of its products. High-quality products make the people in big cities have a higher tolerance for their prices. But in tier 4, 5 and 6 towns and villages, JD.com, which has relatively higher prices, will have to make changes.
When it comes to price, one has to talk about supply chain issues. As we all know, JD.com has always been known for its supply chain and logistics in the first, second and third tier cities, but these two advantages are not obvious in the fourth, fifth and sixth tier cities.
In terms of supply chain, JD.com's supply chain is built on brands and manufacturers and manufacturers, and these factories are not small in scale. Such a supply chain is an advantage in first, second, and third-tier cities, but in fourth, fifth, and sixth-tier cities, direct sales of origin, such as direct connections between agricultural products, daily necessities, and users, are more important here. Although JD has been sinking in the past two years, it has not yet effectively established direct connections between production areas and users in the sinking market.
Although the current community group buying is still hitting some provincial capital cities and its lower-level cities, many platforms have begun to truly go to the rural market, delivering goods to users in person (most of them are sent to nodes in the town, and then an agent Call the user to inform the user to pick it up), this is also an inevitable trend of community group buying. For JD.com, if it wants to gain an advantage in the supply chain, it must make up for its shortcomings in the rural market. One is to find someone (the head of the group, the person in charge of the rural commissary, etc.) who can reach the agent of any user in the village, so that fresh food, vegetables, daily necessities, etc. can be delivered to the village users the next day. This requires JD.com to establish its own front-end warehouses in rural areas and rebuild a supply chain suitable for rural users.
Let's talk about logistics. JD Logistics is very strong, and it can deliver every other day or even the same day in big cities. But in the rural market, JD Logistics is far worse. Just like the supply chain, JD.com must reinforce its problems in the "last mile", match the front-end warehouses well, and reach them within the next day, in order to truly highlight its advantages.
In a word, community group buying is quite different from traditional e-commerce in terms of supply chain, logistics, or user delivery methods. Jingdong needs to strengthen itself in order to gain an advantage in the community group buying war.