The war of words between Alibaba and JD.com has once again heated up.
At the JD.com annual meeting last weekend, Liu Qiangdong, the “big mouth”, said that JD.com’s future goal is to become China’s largest private enterprise. In his speech, Liu Qiangdong repeatedly made innuendoes at his competitor Alibaba, surrounding issues such as counterfeit parallel imports and tax contribution, causing an uproar in the industry.
Putting JD.com and Alibaba, Liu Qiangdong and Jack Ma together is always a topic of discussion. Of course, before taking on Alibaba, JD.com also had battles with rivals such as Dangdang and Suning. But as JD.com and Alibaba went public in the United States last year, Liu Qiangdong, who is naturally aggressive, understood that the pattern of two tigers competing in the e-commerce industry has been formed, and Alibaba is the only enemy worthy of JD.com’s seriousness.
As early as last year’s Double Eleven, JD.com and Alibaba had been fighting openly and covertly over trademark issues; at the beginning of this year, Jack Ma’s “JD.com tragedy” theory also caused a lot of saliva.
After more than ten years of development, the e-commerce industry has cultivated two models and two giants, JD.com and Alibaba: one is the largest self-operated e-commerce, the other is the largest platform e-commerce; Logistics commands the world, and one person carries the flow to command the three armies. In the coming period, competition between them will be one of the main themes of the entire e-commerce industry.
As for who will win in the end, it is the result of a combination of factors such as size, structure, management, and culture. Whether it is JD.com or Alibaba, their respective advantages and disadvantages coexist, and opportunities and risks coexist. What determines their success or failure may not be their opponents, but trends and the speed of self-innovation.
Alibaba’s advantage: big and strong
From a volume perspective, Alibaba is far ahead in terms of market capitalization, GMV (gross merchandise transactions), profitability, and ecosystem prosperity. JD.com. However, JD.com’s growth momentum is good and the gap between the two is expected to narrow in the future.
As of last Friday night, U.S. time, JD.com has a market value of US$32.9 billion and Alibaba has a market value of US$243.4 billion, which is seven times the former.
GMV In the third quarter of 2014, JD.com’s GMV was RMB 67.3 billion, a year-on-year increase of 111%; Alibaba’s GMV in the same period was RMB 555.7 billion, 8 times the former, a year-on-year increase of 48.7%; although in terms of growth rate Look, JD.com is more than twice the size of Alibaba, but that doesn’t mean that JD.com can catch up with Alibaba in the short term. After all, the size gap between the two is too big, and it’s hard to predict how long JD.com’s rapid growth will last.
Profitability In the third quarter of 2014, JD.com’s net income was RMB 29 billion, a year-on-year increase of 61%, with a net loss of RMB 160 million. The reason for the loss was due to the assets and businesses in cooperation with Tencent; Alibaba’s income in the same period was RMB 16.8 billion yuan, a year-on-year increase of 53.7, with a net profit of 6.8 billion yuan, and its profitability far exceeds that of JD.com. The revenue growth rates of the two are not much different.
Users In 2013, JD.com had 47.4 million active users; Alibaba had 255 million active users in its fiscal year 2014 (the year before March 31, 2014). About 5 times that of JD.com.
Although the merchant JD.com is mainly self-operated, its open platform (POP) business is also growing rapidly. As of the end of the third quarter of 2014, there were approximately 50,000 merchants settled in ***. In the third quarter of 2014, the total transaction volume of JD’s third-party open platform business was 26.8 billion yuan, a year-on-year increase of 248%, accounting for 39.9% of the total transaction volume. Alibaba claims to have 8 million merchants, but they are not in the same order of magnitude. However, considering the differences in models, this comparison does not have much reference significance.
Mobile Mobile is the future. In the third quarter of 2014, JD.com’s mobile GMV accounted for 29.6; during the same period, Alibaba’s mobile GMV accounted for 35.8. Alibaba slightly wins in terms of share, but as JD.com deepens its cooperation with WeChat and Mobile QQ, its mobile prospects are expected to catch up.
To sum up, from the perspective of size alone, JD.com does not have the qualifications to be on an equal footing with Alibaba.
So, what are JD.com’s advantages?
JD.com Advantages: Genuine Logistics
As we all know, JD.com is a self-operated e-commerce company, with B2C as its foundation. Alibaba is a platform e-commerce company, with B2C (Tmall) and C2C ( Taobao). This difference in models makes the two completely different companies, with very different products, experiences, and platform credibility, and each has its own advantages and disadvantages.
Products In terms of products, it goes without saying that Taobao has a rich range of categories. From clothing, home appliances, 3C, home furnishings, department stores to automobiles, the "universal Taobao" can respond to every request. This is mainly due to the fact that Alibaba does not interfere. Products and all SKUs (stock keeping units) are provided voluntarily by sellers on the platform. Sellers will naturally be guided by market demand, so a large bazaar with prosperous categories will eventually be formed; relatively speaking, JD.com and Tmall, which have similar models, have higher requirements for the quality and brand of goods, and the threshold is higher. There are fewer categories. In particular, JD.com is mainly self-operated, and the cost of category expansion is very high. Therefore, from the perspective of category richness, JD.com does not have an advantage.
But in terms of product quality, JD.com has stronger control over products. For a long time, JD.com has always regarded itself as "genuine licensed goods", especially in standard products such as 3C and home appliances. Although fakes and refurbished goods have been reported from time to time, and there have also been reports of the supply of fake goods on third-party platforms. merchants, but compared with the current situation on Taobao where fakes and parallel imports are rampant and Li Kui and Li Gui coexist, JD.com clearly has an advantage in shaping the image of "genuine licensed products".
When e-commerce just started in China, price won. Taobao’s rapid rise was due to its grassroots quality of low prices. However, as competition among merchants becomes increasingly fierce and costs rise sharply, low-priced goods in the past no longer have a price advantage. In addition, the domestic consumption potential is being released, and the pursuit of branded and quality-guaranteed goods will be the mainstream consumer demand in the future. Therefore, from the perspective of product quality alone, the JD model has certain advantages. Of course, realizing that B2C is the future Alibaba, it has also spared no effort to develop Tmall in recent years. However, according to the current situation, Tmall is better at clothing and other categories, while JD.com is stronger in 3C and home appliances.
The e-commerce experience can be divided into four links: website experience, payment experience and logistics experience, and after-sales service experience. In terms of website experience, the gap between JD.com and Alibaba is not obvious, so I won’t go into details here. In terms of payment, Alipay has more than 300 million real-name users, of which nearly 200 million are active users. Although JD.com’s online banking has not announced relevant figures, it is compared to the two The gap between them is not small. The failure of online banking to become a popular payment tool will definitely affect JD.com’s payment experience. However, fortunately, after JD.com and Tencent cooperate, users can use WeChat Pay, which has improved the payment experience. But WeChat Pay is Tencent’s product after all. In addition to paying fees, over-reliance on WeChat Pay will also affect the development of JD Financial’s extended business.
Logistics has always been considered the core competitiveness of JD.com. JD.com has more than 70,000 employees, the vast majority of whom work in warehousing and distribution positions. Self-built logistics can ensure timely delivery of goods and allow cash on delivery. Couriers can also be used as salesmen in the future, becoming the offline traffic entrance for O2O. Alibaba itself does not sell goods, so logistics services are provided by social logistics companies such as Four Links and One Express. Although Jack Ma hopes to improve the situation by developing Cainiao Logistics, he has not yet seen much progress.
To sum up, in terms of user experience, JD.com has obvious advantages in terms of genuine image and logistics experience; and today, when Taobao is increasingly criticized, if Alibaba wants to defend its e-commerce empire, it needs to vigorously Supporting Tmall requires continuous improvement of logistics links, which is a big challenge.
Model battle
JD.com is engaged in retail and logistics, while Alibaba is engaged in commercial real estate and Internet advertising. Money in the retail and logistics industries needs to be earned every penny, and efficiency is life, so JD.com is doomed to struggle; the real estate industry and the advertising industry are profit-making industries with low costs and quick money. It is not surprising that Alibaba has become a rich man.
The profit model is self-operated e-commerce, buying and selling by itself, and JD.com earns the price difference.
For example, if a mobile phone is purchased for RMB 3,000 and sold for RMB 3,288, JD.com will earn the price difference of RMB 288. Excluding warehousing and logistics costs, the profit is minimal. In addition, JD.com has been aggressively building warehouses and expanding its distribution team. With these investments as a background, it is not difficult to understand why JD.com has been losing money. Alibaba, on the other hand, does not care about products or logistics. It only needs to manage traffic and collect rent and advertising fees. The gross profit margin is extremely high and the risk is extremely low.
So, when Jack Ma was making a lot of money easily, stepping onto the "altar" and calling the shots, Liu Qiangdong was still struggling to be brothers and mingle with the couriers. The problem is that the wool does not fall on the dog. Although Jack Ma is rich, it is based on the premise that millions of businesses are struggling to survive. Although Liu Qiangdong is poor, efficiency does not necessarily mean he cannot win. In the retail chain, JD.com and Alibaba both occupy a link. Which model is the more reasonable resource allocation model? Exploring this issue requires a comprehensive analysis of the upstream and downstream of the industrial chain.
Ecology
Liu Qiangdong has a famous "Ten Segments of Sugarcane" theory, which interprets the distribution of interests from the perspective of the retail industry supply chain. He believes that the five links of a product, from creativity, design, research and development, manufacturing to pricing, should be handled by brands, and the five links from marketing, trading, warehousing, distribution to after-sales should be handled by retailers. JD.com’s strategy is to do more links, with transactions as the foundation, and extend to other links such as warehousing, distribution, after-sales, marketing, etc. to pursue better services and greater profit margins. This means that when brand owners cooperate with JD.com, they only need to focus on the production stage of the product, leaving the distribution process to JD.com, which is more in line with the concept of professional division of labor. It can be said that JD.com is a retail service provider and works for brand owners.
In Alibaba’s system, the above ten links still need to be done by the sellers themselves; moreover, in order to compete for traffic, sellers often need to pay more additional costs, competition costs have skyrocketed, and survival conditions are common. difficult. This is also the reason why more and more people have lamented that doing business on Taobao is not easy in recent years.
Not long ago, Liu Qiangdong insinuated that Alibaba made sellers unable to make money, but he lived a very comfortable life, which is not unreasonable.
In short, although Alibaba’s model is easy to make money, competition among merchants is fierce. Of course, JD.com’s heavy model is not perfect. According to Liu Qiangdong’s plan, JD.com hopes to have 600,000 employees in the future. Such an expansion pace carries huge risks. Managing a company with 600,000 employees and maintaining the highest efficiency in both retail and logistics is by no means as simple as imagined.
Strategy Contest
Vision determines the height, and thinking determines the way out.
It is not difficult to see from Alibaba’s history that Jack Ma understands the importance of “going with the flow” best. He seized every high-growth point of China's economy and society after the 21st century: foreign trade transformation, retail industry reform, lack of credit, and China's backward basic logistics, etc., and turned them into the direction of the company's transformation.
Alibaba once shifted its business focus from B2B to C2C (Taobao), and later switched to B2C (Tmall). In addition to e-commerce, Jack Ma also hopes to build a new financial empire relying on Alipay. At the same time, Jack Ma is also involved in medical, education, culture and other industries. It can be said that wherever there is wind and money, there is Jack Ma.
Although Alibaba started out as an e-commerce company, it is entirely possible that in the future it will be done and left. When the industry no longer shows high growth and needs to compete for efficiency, perhaps Alibaba’s finance, medical care, education, and culture will The layout has already built several other golden mountains.
Liu Qiangdong seems determined to take root in the retail industry. In addition to finance, JD.com rarely participates in other businesses other than its main business. It is not easy to make money in the retail industry, but JD.com is determined to gnaw on this old bone.
However, in the past two years, JD.com has also been making changes. Liu Qiangdong once expected that JD Finance would support JD.com’s 70% profit in the next ten years. Financial management, supply chain loans, consumer loans, platform business, crowdfunding, JD.com holds its own users and data, and is also striving for another spring.
But before the dust settles, the competition between JD.com and Alibaba will continue.
Focusing on emerging fields such as rural e-commerce and O2O, it is not surprising that the two sides are in close combat and fighting to the death. For suppliers and consumers, competition will lead to better and better products and continuously improved services.