Source: round-the-clock technology

Author: Zhang Chao

On March 5, all-weather technology learned from people familiar with the matter that JD.com 's "10 billion subsidy" was fully launched on JD.com App at 00: 00 on March 6, making its debut in the middle of the home screen, 20 hours earlier than originally planned (8 pm on March 6).

This is also a major change made by JD.com after Liu Qiangdong strengthened his mind that "low price is the only basic weapon" in his internal email at the end of last year.

So far, the "10 billion subsidy", a low-price sales strategy first speculated by Pinduoduo, has attracted core e-commerce platforms, including Tmall and JD.com, to follow up and set up an entry for activities.

Interestingly, each family is more or less the same in publicity, attracting users under the banner of "official subsidy", "low price" and "pay for expensive". There is a posture of competing with each other and refusing to accept each other.

Tens of billions of subsidies, from Pinduoduo into the "five rings", sharing the e-commerce cake killer mace, rose to the core e-commerce platform offensive and defensive game to break the key. Slightly carelessly, the platform loses not only the transaction profit, the entire e-commerce pattern may be changed.

The battle to bet on the future of the e-commerce platform is imminent.

Highly valued subsidies of tens of billions of dollars

Unlike the "10 billion subsidy" that was briefly launched during the 618 shopping event, JD.com obviously wants to stick to it as a long-term strategy.

All-weather science and technology has learned that "low price" has become a key work goal of JD.com, and "10 billion subsidy" is an important part of implementing this goal. 36Kr Holdings also learned from a middle-level employee of JD.com Retail that the "10 billion subsidy" project was finally decided by JD.com Retail CEO Xin Lijun, and there was no upper limit at the budget level.

JD.com 's attention to this business is also reflected incisively and vividly in the actual implementation process.

JD.com merchants told all-weather technology that half a month before the 10 billion subsidy was officially launched, the relevant personnel of JD.com Marketing Center held the "10 billion subsidy brand-new flow play training". Introduce the rules such as platform subsidies, deduction concessions, flow support, marketing communication and so on.

The training will be held live in the form of online live broadcast in JD.com Yi. Screenshots are not allowed during the whole process, and the live broadcast is not made public, so the confidentiality work has been done very thoroughly.

Only 10 days after the 10 billion subsidy was launched, JD.com opened 10 billion subsidy applications to merchants (since February 25). Businesses can sign up independently through the "marketing-marketing activities-channel position-10 billion subsidy" path of the Jingmai platform.

However, the merchant told all-weather technology that as of March 4, it was still unable to register, "click on the (registration) page."

From the front-end consumer side, JD.com 's "10 billion subsidy" is in the golden position, replacing the "ranking list", juxtaposed with "JD.com second kill", and even higher than "JD.com Live", which once again demonstrates the internal importance to the business.

In contrast, BABA's cost-effective "10 billion subsidy" is only on the second screen of App, which needs to be seen by users; only Pinduoduo, who won the popularity of "10 billion subsidy", put the entrance on the home screen of App.

Click to enter JD.com 's "10 billion subsidy" details page to find that "official subsidy", "full free delivery" and "exclusive customer service" are written at the top of the page. The subsidized goods cover most of the e-commerce categories, such as computer digital, household appliances, mobile phone communications, drinks, skin care products, mother and baby toys, personal care, home decoration, food and so on.

It is worth mentioning that, based on the genetic differences of the platform, "computer digital", "household appliances" and "mobile communication" are obviously the current key subcategories of JD.com 's "10 billion subsidy", which are listed at the forefront of the sub-tags. On the other hand, the "10 billion subsidy" is in the forefront of "Shang Xin", "clothing" and "fresh". The top sub-tags of Pinduoduo's "10 billion subsidy" are "makeup", "fresh", "sports" and "mobile phone" respectively.

Or because of the new business, JD.com 's "10 billion subsidy" is not large at present. According to incomplete statistics of round-the-clock science and technology, as of 14:00 on March 5, the number of items on the shelves of "Mobile Communications", "computer Digital" and "Home Appliances" were relatively large, which were 82, 78 and 90 respectively, while those of "Beauty and skin Care", "Medical and Health", "Life Services" and "Mother and Child Toys" were obviously fewer, with only 30, 27, 21 and 11 items on the shelves.

JD.com officially said that the 10 billion subsidy activity is a commodity subsidy activity carried out by JD.com to give back to users and joint merchants. Through the subsidy activity, users can buy very cost-effective goods. This activity is limited to users in JD.com App, and some of the products need to be verified by real name authentication.

Open bidding is intended for traffic.

In the "10 billion subsidy" merchants registration entrance, JD.com clearly wrote that this is "a new high-traffic channel, platform + merchants work together to create extremely cost-effective explosive products, help commodity transformation, set up low-price mentality."

The recently updated brief introduction of JD.com 's App version also puts the "10 billion subsidy online" at the top, and writes down the rules such as "ultra-low price of popular styles, double compensation for buying high prices" and so on.

Earlier, JD.com also issued the "Service rules" of "JD.com Open platform" double compensation for buyers in the merchant center, clearly pointing out that after consumers buy goods marked with this service logo, if the actual payment amount of the order is higher than the price of the same goods on a specific platform, consumers can apply for compensation for the double difference between the actual payment amount of the order and the actual payment amount of the order on the day of issuing the order.

The "specific platform" here refers to tens of billions of subsidies, Tmall (including websites, APP, Wechat official accounts, Wechat Mall and Mini Program, etc.). It is reported that the rules apply to third-party merchants who set up shop on JD.com 's open platform JD.COM, excluding JD.com 's shop, which will take effect on February 28th, 2023.

All signs show that JD.com has engraved "low price" in the key goal of his business in order to regain his price advantage, and the "10 billion subsidy" is the core carrier to help the platform build a "low price" mind.

In order to achieve the goal of "low price" of commodities, JD.com 's "10 billion subsidy" adopts the bidding principle. The official will release the demand for the items on the relevant platform, and give the highest bidding price and starting inventory, except for individual industrial and commercial households / natural persons or shops that are not within the category, and those who meet the inventory requirements will win the bid.

All-weather science and technology learned from the merchant side that at present, the platform only considers the qualification of merchants from the dimensions of enterprise main body, limited category, merchant violation and store star, which is not high; however, it will be required to open a free delivery service during the 10 billion subsidized commodity activities, and shall not delete the promotion after successful bidding, and shall not maliciously arbitrage or bid maliciously. Accordingly, merchants can enjoy reduced deduction points for orders generated during the 10 billion yuan subsidy activity.

By contrast, the threshold for entry of tens of billions of subsidies to businesses is much higher. A person in the health products industry of Tmall revealed to all-weather science and technology that, taking the 14-day event as an example, the platform's requirement for the additional activation of 10 billion subsidies for its track is the number of real monthly sales of 3000 + or more than 500000 of monthly sales. the fee is a pure commission model, with no guarantee and no cap. However, in the pricing mechanism, the 10 billion subsidy is quoted independently by merchants, which requires a real network-wide low price, and it is recommended to apply for a discount of 8-10% at the lowest price in 15 days.

Different pricing mechanisms reflect the strategic differences in the development of 10 billion subsidies to different stages of the platform.

In the case of a large base of merchants and goods, Tmall gives priority to ensuring low prices, and then selects powerful businesses through revenue capacity as far as possible; and JD.com 's current stage focuses more on the pursuit of "low prices", so as to appropriately relax the requirements for businessmen, so as to enrich the category and attract more traffic.

According to the financial report, JD.com maintained a 30 per cent quarterly user growth range of 20 per cent between 2020 and 2021, but that figure declined significantly last year, with year-on-year user growth of 16.2 per cent in the first quarter and 9.2 per cent in the second quarter. JD.com 's annual active users were 588.3 million, up only 6.5 per cent from the same period last year.

In the final analysis, JD.com still needs to invigorate traffic through "10 billion subsidies" and even look for new user increments.

Zhuang Shuai, founder of Bailian Consulting, believes that the subsidy of 10 billion yuan can bring more incremental users of the sinking market to the e-commerce platform, and can also play a good role in promoting consumption for price-sensitive users in first-and second-tier cities.

Not only that, in his view, the "10 billion subsidy" also has a great auxiliary effect on the repurchase rate of e-commerce platforms, because consumers will use this label to identify other goods they need, so as to make continuous purchases. At the same time, it can also enhance users' trust in the platform and improve the previous image of the platform.

Is an e-commerce war imminent?

As we all know, tens of billions of subsidies were officially launched by more than in mid-2019. In order to hold the gold-lettered signboard of "ten billion yuan subsidy" firmly in his hand, Pinduoduo once tried to apply for a trademark, but it was not approved.

Coincidentally, according to the China Trademark Network, so far, 13 applications have been made to the relevant departments for "10 billion subsidy" trademarks, and two of them have applied several times within a month, the most recent one being in November last year, but most of these applications are in the stage of "waiting for substantive review".

Just one trademark has attracted so many enterprises, the reason is that the "10 billion subsidy" business shows a strong flow attraction.

Price is always one of the core factors that determine consumers' purchasing behavior. Today, with the popularity of e-commerce and transparent information, consumers will naturally be tempted by absolutely low prices and flow to platforms with more price advantages.

According to the three-quarter report in 2019, due to the "10 billion subsidy" gimmick, Pinduoduo's average number of monthly active users was 429.6 million, an increase of 85% over the same period last year. Pinduoduo's average monthly active users increased by 51.9 million in the fourth quarter of 2019, a net increase of 209 million over the same period last year, reaching 481.5 million, achieving strong growth.

In the same year, the number of multi-year active buyers (585 million) and JD.com (362 million) further expanded, from 114 million in 2018 to 223 million in 2019, less than 150 million compared with Ali's annual active buyers.

In essence, the "ten billion subsidy" is not only a marketing method of Pinduoduo, but also a strategy of getting customers. It uses the mode of low-price promotion to attract users and break into new markets, and the same means has also worked in its overseas application Temu, which naturally leads many platforms to follow suit.

As early as December 2019, Juhuasuan also launched tens of billions of subsidies. At that time, the person in charge of the relevant business also said that the 10 billion yuan subsidy was very attractive to users in the sinking market and price-sensitive users. After that, tens of billions of subsidies have been put online one after another, such as subsidies for college students, compensation for expensive purchases, and revelations at low prices, in order to implement the goal of low prices for authentic products to the end.

In June 2020, JD.com announced the launch of activities such as super 10 billion subsidies in an attempt to create the best consumer experience and the biggest discounts, but the event was removed from the shelves after a big promotion.

Until today, JD.com has re-launched the import of the "10 billion subsidy" and regarded this business as the highlight of the year, and the potential will be done to the end, suddenly turning the competition among the major platforms into a white-hot state, sounding the bugle of the e-commerce "10 billion subsidy" campaign.

On the e-commerce platform will set off a new round of price war speculation one after another, Bailian consulting founder Zhuang Shuai also said in an interview with the media, "it is not impossible." But in the existing stock market, it is difficult to change the current e-commerce market pattern. "

When each platform is pursuing "the lowest price of the whole network", it is not easy for the businessmen in the upper reaches of the industrial chain.

The aforementioned Tmall health products industry told all-weather technology that 99% of the goods on the "10 billion subsidy" are set by the merchants themselves. "only a small number of hard-marked products will be subsidized (the platform)."

In other words, tens of billions of subsidies are actually businesses that benefit consumers, not platforms that subsidize consumers.

Because of the tilt of platform traffic, merchants will choose some goods to participate in activities even if the profit is very low. However, under the combined influence of consumer supervision, platform competition and other factors, it is not known how willing merchants will be to participate.

During the Singles' Day holiday last year, Luzhou laojiao and Wuliangye respectively submitted letters to JD.com to suspend cooperation and deduct support fees because of suspected price problems.

Judging from past experience, e-commerce platforms have made "tens of billions of subsidies" into the high-line market by subsidizing hard-marked products such as mobile phones and digital products, but this move is less attractive to consumers in the sinking market.

A mobile phone channel seller in a third-tier city in Shandong told all-weather technology that many users in the sinking market still prefer to buy mobile phone hard-label products offline, especially elderly consumers; at the same time, XIAOMI, OPPO, and vivo brand mobile phones are basically the same price online and offline, so it has little impact on channel merchants.

But he also admitted that Apple Inc mobile phone in 618, double 11 such a big promotion node, when there is a platform subsidy, it will have an impact on offline sales.

If JD.com also subsidizes this, how much impact will it have?

"We can now keep up with its tens of billions of subsidies without losing money." The dealer added, "Pinduoduo's side may be in short supply because of the delivery channels; at present, it is difficult to judge the impact of JD.com 's 10 billion subsidies."

With the development of e-commerce in China for more than 20 years, the battles of various platforms, large and small, have always been inseparable from the "price war" to determine the ranking of enterprises.

Relying on low prices, full reduction, sales promotion and other means, the e-commerce platform has earned enough eyeballs and traffic; this non-positive marketing strategy has gradually evolved into the daily operation of the e-commerce platform, forcing the majority of merchants to be "involved" and suffer a great deal of pain.

For e-commerce players who master cutting-edge technology, huge funds and rich resources, it is time to change the means of competition, seek innovation from the aspects of efficiency, mode, and operation, and find a way conducive to the sustained and healthy development of the upper and lower reaches of the industrial chain.

Edit / phoebe