Jingdong Mall may not have reduced gross profit because of the "mega promotion" of 618 million yuan. On the contrary, it may also increase revenue and profits through this preferential activity.
June 18th, Jingdong Mall’s anniversary. By convention, Jingdong Mall will start the year's biggest promotional campaign every year on the anniversary of the anniversary. Yesterday, Jingdong Mall announced that it invested 618 million yuan in cash coupons to reward its open platform buyers. In May, Jingdong announced that it invested RMB 1 billion for the franchise of the anniversary.
According to this calculation, Jingdong Mall's total profit for this time is as high as 1.618 billion yuan. This figure has exceeded Jingdong Mall's gross profit in 2011. According to the unaudited financial data of Jingdong Mall, which was flown by the investment bank, Jingdong Mall reported revenue of RMB 21.2 billion in 2011 and gross profit of RMB 1.16 billion, accounting for 5.5%.
What puzzles the industry is that Jingdong who is in IPO rumors will really do profitable business?
The "big promotion" without money?
16.18 billion yuan is more like the gimmick used by Jingdong Mall to attract users.
According to Tencent Technology's understanding from multiple sources, from the beginning of May, Jingdong has made a big push this time. The cost of investing in the offline market in Shanghai is only 5 million yuan, and the national offline market cost is estimated to be less than 30 million. Yuan; Online, Jingdong has stopped CPS advertising, mainly using microblogging reds hanging "Jingdongdianqingyue" portrait of the publicity, to 10,000 / day / number calculation, the cost of investment not exceeding 200,000 yuan. In other words, Jingdong Mall only spends more than 30 million yuan for the investment in the store.
According to an industry source who did not wish to be identified, Jingdong Mall did not subsidize the price reduction of any of its products. It is entirely required that its manufacturers lower their retail prices.
Gong Shanbin, chairman of Wuyicheng Electric Appliance Network, said that the usual non-profit sales promotion method is that the channel side and the manufacturer jointly bear the cost of commodity price cuts. However, this year, due to the cooling of the domestic consumer market, manufacturers' voice is weak, and manufacturers have shown more tolerant acceptance of price wars.
Especially in the home appliance industry, affected by the real estate downturn, the nationwide home appliances products sold 30.11 million units from January to May of this year, a year-on-year decline of 5.7%. And this trend of decline in the middle of May this year, the Ministry of Finance issued a subsidy of home appliances energy-saving subsidies of 265 billion yuan, before turning.
The downturn in the consumer market has led to a backlog of vendor inventory and a shortage of funds. Gong Shanbin said that this is also one of the reasons that prompted the home appliance category to play a big price war on major online channels this year. And Jingdong Mall, which occupies 17.2% of the domestic online channels (including platform B2C), naturally has greater bargaining advantages.
Jingdong's model is to dilute the cost through scale growth. It is not difficult to understand Jingdong's strong attitude toward manufacturers. There is an unconfirmed case in which Jingdong had sought cooperation with Digital China to increase its market share in category 3C and pledged to use a property as collateral, but after a period of cooperation, Jingdong unilaterally lifted the property. Mortgage commitments, but Digital China also because of Jingdong's larger volume, has not been investigated.
In addition, Gong Shanbin believes that Jingdong Mall's sprinting demand for IPO has also led to further price wars by depressing manufacturers' prices.
According to the unaudited Jingdong financial data which has been circulated in the market, Jingdong Mall reported a revenue of RMB 21.2 billion in 2011 with a gross margin of 5.5%. Liu Qiangdong (microblogging) recently said that Jingdong Mall's revenue in 2012 will grow to 45 billion yuan, gross profit margin will rise to about 8%. The price war will be a "double income" means that Jingdong not only sells and drinks but also benefits.
In this big promotion, it is worth noting that Jingdong's 618 million yuan is mainly used to invest in department stores on its open platform. Some industry insiders believe that, unlike the standardized products, the personalization of department store categories is strong and the gross profitability is relatively large, and it is not easy to compare prices. Jingdong is also expected to use this to increase its own sales and gross profit margin.
According to official data provided by Jingdong, on June 18 this year, Jingdong's sales of fitness equipment and pet staple foods increased 500% year-on-year; golf sales increased by 600%; furniture and daily necessities increased by 800% year-on-year; home textile brands on Jingdong platform rose by 600%. Luxury goods sold 1.01 pieces per minute on average, and the unit price was nearly 2,000 yuan.
On the other hand, Jingdong’s price cuts have also been questioned, and even some of its peers have accused it of “false price cuts.â€
An e-news.com operator expressed to Tencent Technology that originally Yixuan was worried about the price war led by JD. However, the monitoring found that JD’s promotional efforts in the big 3C and home appliance industries did not even have low commodity prices during the week. Therefore, Easy News gave up its follow-up strategy for Jingdong's vigorous promotion.
Price war: optional or required?
The original anniversary of Jingdong was smashed into a promotional festival for online shopping. This makes flattering online shopping people who often find themselves on the Internet.
Just after JD.com announced that it would open a promotional campaign on June 18th, online shopping platforms such as Tmall, Suning, Kuba, etc. had also launched various promotional slogans.
Ai Yi CEO Zhang Yi believes that Tmall, Suning Tesco and other B2C have played in the JINGDONG store on the day of the promotion of promotional cards, mainly for the purpose of “encircling and hunting†JD. First, all major e-commerce websites are vigorously promoting the promotion, which can dilute the users' awareness of JD.com's “big promotion†and disperse the brand promotion of users to JD.com. Second, B.T.C. and Suning.com and other B2C products are conducted in different categories. Big promotion has put pressure on JD’s profit space.
It is understood that in order to tie in with this big promotion, Suning's Tesco and Kuba mainly focus on home appliances and large 3C categories. Tmall's strategy is a random bonus of 40 million yuan on the whole platform.
And this is only the second round of price sieges of domestic B2C since this year. In April this year, Jingdong, Tmall, and Suning Tesco launched a price war around home appliance categories.
Gong Shanbin said that the domestic B2C platform's price war will continue at least until the end of the year. The two price wars in the first half of the year are only a partial manifestation of the entire campaign. In the future, there will be more headlong price wars.
Gong Shanbin believes that the reason for the price war is the weakness of the consumer market, which has caused traditional manufacturers to be forced to ship; on the other hand, the pattern of domestic online shopping platforms has not yet emerged, and it is still at the stage of separatism and needs to adopt a price war approach. To contribute to the stability of their respective market share. Both internal and external reasons make it impossible for the major players in the industry chain to stand on their own. One side initiates a price war, and other players can only follow suit. Otherwise, some market shares will be lost.
This kind of logic is similar to the price fighting in the traditional channels between Gome (Weibo) and Suning in the early years. But now, Gome and Suning have joined hands to jointly block the online purchase platform Jingdong.
Zhang Yi also agrees with this view. He said that only when the consumer market recovers and the company’s backlog of inventory decreases, the supply and demand relationship will gradually become balanced and the price war will be eased.
On the channel side, evenly matched commercial opponents will always use the “price war†as a direct and fierce way to break the current market balance based on competition orientation.
However, this method is not suitable for all players in the industry chain. If the scale of the game is too far away from the competitors, the bargaining power of the upper reaches of the manufacturers will not be achieved. Instead, the price war will become worse. Gong Shanbin suggested that small and medium-sized B2C online shopping platforms should adopt a goal-oriented or shrinking cost-oriented competitive strategy and consider sticking users by deepening vertical services.
Before the IPO exam
Some people think that Jingdong's price war is a battle that must be won before its IPO. It is intended to prove to investors that Jingdong has the ability to fight traditional channels such as Gome and Suning. Jingdong is also expected to use this price war. Financial indicators prove that their bargaining power is limited by other B2C e-commerce.
From the perspective of big promotion effect, though, JD.com has not disclosed the sales data for the current day of June 18th. However, JD officials stated that on June 18th this year, the sales of JD appliances increased by 5 times compared with the same period of last year, and the main categories of daily necessities increased by at least 5 times.
In 2010-2011, Jingdong's sales growth on the 6th and 18th days was in line with the annual sales growth rate, which were both 2 times. In 2010, Jingdong’s sales amounted to 100 million yuan on the day of June 18; in 2011, it was 200 million yuan. Correspondingly, Jingdong had sales of 10.2 billion yuan in 2010 and 21.2 billion yuan in 2011.
This shows that the price war of JD.com has not been affected by other B2C price encumbrances. In addition, investors have also seen the growth of JD.com after the opening of daily department stores.
Plateau Capital Partners Tu Hongchuan told Tencent Technology that the price war is beneficial to JD's expansion of sales, which will increase its valuation in the capital market, and Jingdong is still valuing based on the model of scale rather than net profit.
Tencent Technology was informed by other sources in the investment community that although JD.com has been externally stated that it will not be listed this year, there is a very high probability that Jingdong Mall will be listed this year.
Some investment bankers pointed out that Jingdong currently holds cash for cash flow, but if it takes into account the need for development of blood supply next year, Jingdong must prepare in advance. However, due to the overvaluation of Jingdong's last round of financing, it is difficult for the private equity market to provide funds for Jingdong. Therefore, Jingdong only shifts to the secondary market.
According to this person, referring to the valuation level of China's e-commerce market by the current capital market, even if the 6 billion US dollar valuation price (equivalent to 2 Sina or 11 Dangdang) is still too high, but he also said that this is only The issue of market prices does not affect the listing of JD.com.
Zhang Yi said that no matter whether Jingdong chooses to go public this year, it is still good for sales and profits immediately. Several rounds of price wars are down, and what transcripts should be handed over to prove that it is the key.
June 18th, Jingdong Mall’s anniversary. By convention, Jingdong Mall will start the year's biggest promotional campaign every year on the anniversary of the anniversary. Yesterday, Jingdong Mall announced that it invested 618 million yuan in cash coupons to reward its open platform buyers. In May, Jingdong announced that it invested RMB 1 billion for the franchise of the anniversary.
According to this calculation, Jingdong Mall's total profit for this time is as high as 1.618 billion yuan. This figure has exceeded Jingdong Mall's gross profit in 2011. According to the unaudited financial data of Jingdong Mall, which was flown by the investment bank, Jingdong Mall reported revenue of RMB 21.2 billion in 2011 and gross profit of RMB 1.16 billion, accounting for 5.5%.
What puzzles the industry is that Jingdong who is in IPO rumors will really do profitable business?
The "big promotion" without money?
16.18 billion yuan is more like the gimmick used by Jingdong Mall to attract users.
According to Tencent Technology's understanding from multiple sources, from the beginning of May, Jingdong has made a big push this time. The cost of investing in the offline market in Shanghai is only 5 million yuan, and the national offline market cost is estimated to be less than 30 million. Yuan; Online, Jingdong has stopped CPS advertising, mainly using microblogging reds hanging "Jingdongdianqingyue" portrait of the publicity, to 10,000 / day / number calculation, the cost of investment not exceeding 200,000 yuan. In other words, Jingdong Mall only spends more than 30 million yuan for the investment in the store.
According to an industry source who did not wish to be identified, Jingdong Mall did not subsidize the price reduction of any of its products. It is entirely required that its manufacturers lower their retail prices.
Gong Shanbin, chairman of Wuyicheng Electric Appliance Network, said that the usual non-profit sales promotion method is that the channel side and the manufacturer jointly bear the cost of commodity price cuts. However, this year, due to the cooling of the domestic consumer market, manufacturers' voice is weak, and manufacturers have shown more tolerant acceptance of price wars.
Especially in the home appliance industry, affected by the real estate downturn, the nationwide home appliances products sold 30.11 million units from January to May of this year, a year-on-year decline of 5.7%. And this trend of decline in the middle of May this year, the Ministry of Finance issued a subsidy of home appliances energy-saving subsidies of 265 billion yuan, before turning.
The downturn in the consumer market has led to a backlog of vendor inventory and a shortage of funds. Gong Shanbin said that this is also one of the reasons that prompted the home appliance category to play a big price war on major online channels this year. And Jingdong Mall, which occupies 17.2% of the domestic online channels (including platform B2C), naturally has greater bargaining advantages.
Jingdong's model is to dilute the cost through scale growth. It is not difficult to understand Jingdong's strong attitude toward manufacturers. There is an unconfirmed case in which Jingdong had sought cooperation with Digital China to increase its market share in category 3C and pledged to use a property as collateral, but after a period of cooperation, Jingdong unilaterally lifted the property. Mortgage commitments, but Digital China also because of Jingdong's larger volume, has not been investigated.
In addition, Gong Shanbin believes that Jingdong Mall's sprinting demand for IPO has also led to further price wars by depressing manufacturers' prices.
According to the unaudited Jingdong financial data which has been circulated in the market, Jingdong Mall reported a revenue of RMB 21.2 billion in 2011 with a gross margin of 5.5%. Liu Qiangdong (microblogging) recently said that Jingdong Mall's revenue in 2012 will grow to 45 billion yuan, gross profit margin will rise to about 8%. The price war will be a "double income" means that Jingdong not only sells and drinks but also benefits.
In this big promotion, it is worth noting that Jingdong's 618 million yuan is mainly used to invest in department stores on its open platform. Some industry insiders believe that, unlike the standardized products, the personalization of department store categories is strong and the gross profitability is relatively large, and it is not easy to compare prices. Jingdong is also expected to use this to increase its own sales and gross profit margin.
According to official data provided by Jingdong, on June 18 this year, Jingdong's sales of fitness equipment and pet staple foods increased 500% year-on-year; golf sales increased by 600%; furniture and daily necessities increased by 800% year-on-year; home textile brands on Jingdong platform rose by 600%. Luxury goods sold 1.01 pieces per minute on average, and the unit price was nearly 2,000 yuan.
On the other hand, Jingdong’s price cuts have also been questioned, and even some of its peers have accused it of “false price cuts.â€
An e-news.com operator expressed to Tencent Technology that originally Yixuan was worried about the price war led by JD. However, the monitoring found that JD’s promotional efforts in the big 3C and home appliance industries did not even have low commodity prices during the week. Therefore, Easy News gave up its follow-up strategy for Jingdong's vigorous promotion.
Price war: optional or required?
The original anniversary of Jingdong was smashed into a promotional festival for online shopping. This makes flattering online shopping people who often find themselves on the Internet.
Just after JD.com announced that it would open a promotional campaign on June 18th, online shopping platforms such as Tmall, Suning, Kuba, etc. had also launched various promotional slogans.
Ai Yi CEO Zhang Yi believes that Tmall, Suning Tesco and other B2C have played in the JINGDONG store on the day of the promotion of promotional cards, mainly for the purpose of “encircling and hunting†JD. First, all major e-commerce websites are vigorously promoting the promotion, which can dilute the users' awareness of JD.com's “big promotion†and disperse the brand promotion of users to JD.com. Second, B.T.C. and Suning.com and other B2C products are conducted in different categories. Big promotion has put pressure on JD’s profit space.
It is understood that in order to tie in with this big promotion, Suning's Tesco and Kuba mainly focus on home appliances and large 3C categories. Tmall's strategy is a random bonus of 40 million yuan on the whole platform.
And this is only the second round of price sieges of domestic B2C since this year. In April this year, Jingdong, Tmall, and Suning Tesco launched a price war around home appliance categories.
Gong Shanbin said that the domestic B2C platform's price war will continue at least until the end of the year. The two price wars in the first half of the year are only a partial manifestation of the entire campaign. In the future, there will be more headlong price wars.
Gong Shanbin believes that the reason for the price war is the weakness of the consumer market, which has caused traditional manufacturers to be forced to ship; on the other hand, the pattern of domestic online shopping platforms has not yet emerged, and it is still at the stage of separatism and needs to adopt a price war approach. To contribute to the stability of their respective market share. Both internal and external reasons make it impossible for the major players in the industry chain to stand on their own. One side initiates a price war, and other players can only follow suit. Otherwise, some market shares will be lost.
This kind of logic is similar to the price fighting in the traditional channels between Gome (Weibo) and Suning in the early years. But now, Gome and Suning have joined hands to jointly block the online purchase platform Jingdong.
Zhang Yi also agrees with this view. He said that only when the consumer market recovers and the company’s backlog of inventory decreases, the supply and demand relationship will gradually become balanced and the price war will be eased.
On the channel side, evenly matched commercial opponents will always use the “price war†as a direct and fierce way to break the current market balance based on competition orientation.
However, this method is not suitable for all players in the industry chain. If the scale of the game is too far away from the competitors, the bargaining power of the upper reaches of the manufacturers will not be achieved. Instead, the price war will become worse. Gong Shanbin suggested that small and medium-sized B2C online shopping platforms should adopt a goal-oriented or shrinking cost-oriented competitive strategy and consider sticking users by deepening vertical services.
Before the IPO exam
Some people think that Jingdong's price war is a battle that must be won before its IPO. It is intended to prove to investors that Jingdong has the ability to fight traditional channels such as Gome and Suning. Jingdong is also expected to use this price war. Financial indicators prove that their bargaining power is limited by other B2C e-commerce.
From the perspective of big promotion effect, though, JD.com has not disclosed the sales data for the current day of June 18th. However, JD officials stated that on June 18th this year, the sales of JD appliances increased by 5 times compared with the same period of last year, and the main categories of daily necessities increased by at least 5 times.
In 2010-2011, Jingdong's sales growth on the 6th and 18th days was in line with the annual sales growth rate, which were both 2 times. In 2010, Jingdong’s sales amounted to 100 million yuan on the day of June 18; in 2011, it was 200 million yuan. Correspondingly, Jingdong had sales of 10.2 billion yuan in 2010 and 21.2 billion yuan in 2011.
This shows that the price war of JD.com has not been affected by other B2C price encumbrances. In addition, investors have also seen the growth of JD.com after the opening of daily department stores.
Plateau Capital Partners Tu Hongchuan told Tencent Technology that the price war is beneficial to JD's expansion of sales, which will increase its valuation in the capital market, and Jingdong is still valuing based on the model of scale rather than net profit.
Tencent Technology was informed by other sources in the investment community that although JD.com has been externally stated that it will not be listed this year, there is a very high probability that Jingdong Mall will be listed this year.
Some investment bankers pointed out that Jingdong currently holds cash for cash flow, but if it takes into account the need for development of blood supply next year, Jingdong must prepare in advance. However, due to the overvaluation of Jingdong's last round of financing, it is difficult for the private equity market to provide funds for Jingdong. Therefore, Jingdong only shifts to the secondary market.
According to this person, referring to the valuation level of China's e-commerce market by the current capital market, even if the 6 billion US dollar valuation price (equivalent to 2 Sina or 11 Dangdang) is still too high, but he also said that this is only The issue of market prices does not affect the listing of JD.com.
Zhang Yi said that no matter whether Jingdong chooses to go public this year, it is still good for sales and profits immediately. Several rounds of price wars are down, and what transcripts should be handed over to prove that it is the key.
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