The e-commerce industry is increasingly entering an era of stock competition. As a high premium and high profit category in the retail industry, the fashion track is a battleground for major e-commerce platforms. Traditional e-commerce giant JD.com is attempting to seize more of the market's "cake".
"Overall, it's pretty good."
On March 26th, Kong Xiangying, Vice President of JD Group and Head of JD Retail Fashion Business Unit, stated in summarizing the business development situation for 2023. On the one hand, it is due to the continuous increase in the number of users; On the other hand, indicators such as traffic, operations, and conversion have been optimized.
Over the past year, attracting more third-party merchants to attract more users has become one of JD's important measures to enhance its competitiveness. According to Kong Xiangying, the number of third-party merchants in JD's fashion division has increased by over 200% year-on-year, and the number of new products in hundreds of categories has increased by more than five times year-on-year.
In 2024, the business unit stated that it will continue to strengthen its "1+1+N store matrix" layout, which includes "1 brand official flagship store, 1 self operated official flagship store, and N dealer systems". It will harvest core explosive products through self operated channels, focus on low prices in dealer channels, and complement each other.
JD Group CFO Shan Su stated during the financial report conference in March that the rapid monetization of 3P (third-party merchants) business is not JD's top priority in the short term. "The focus of 2024 is still to attract more merchants, especially small and medium-sized businesses in the industrial belt."
In the fashion industry, JD.com has faced relatively difficult challenges. Since entering e-commerce in 2004, JD.com has been labeled as 3C, and consumers often think of purchasing mobile digital products and appliances on JD.com, which makes beauty and fashion brands more inclined to open flagship stores on Tmall.
It was not until around 2015 that JD.com began to strengthen its connection with fashion, such as participating in fashion week events in New York, Milan, London, and other places. In 2017, it established its own fashion business unit and invested in luxury e-commerce such as Farfetch.
In early May 2022, the company integrated its clothing, home, beauty, sports, luxury watches and other businesses to form "JD New Department Store". In an organizational restructuring at the end of the same year, the original fashion and home furnishing business group was renamed as the fashion and beauty business group, and the first position was also changed from Feng Yi to Kong Xiangying - the former was a contributor to the rapid growth of JD Supermarket's business, while the latter had previously served as the general manager of JD Digital POP (Open Platform) business department and the head of JD Retail Platform Ecology department.
Liu Qiangdong once said, "If JD.com wants to do well, it must do well in fashion." One of the reasons is that the clothing and fashion category that female users purchase the most frequently is what JD.com lacks the most.
In recent years, the gender imbalance in platform customer groups has gradually improved. JD Fashion has disclosed relevant data this time, and its female population accounts for 44%, with an average annual purchase of 6.6 items, which is more than men's, and the average page views per person are 50% higher than men's.
As the dividend of e-commerce traffic reaches its peak, searching for new supplies, exploring segmented products and audiences has also become one of the platforms' driving points.
According to data disclosed by JD.com, consumer demand for segmented tracks has significantly increased. Last year, the demand for domestic beauty and Hanfu reached 46.03 million and 21.3 million, respectively, with a year-on-year increase of 105% and 55%; The demand for gifts and gift boxes reached 74.73 million and 305 million, a year-on-year increase of 54% and 44%; The demand for assault suits and cycling increased by 156% and 160% respectively.
In order to cope with low price competition, JD.com officially launched the flagship Olay channel last year, and currently has over 300 brands and over 70000 products. The company hopes to attract more consumers to purchase fashion products on JD.com through mechanisms such as minimalist promotions, billions of subsidies, free shipping at a low price, and double compensation for expensive purchases.
Unlike last year, JD.com did not mention a "sinking market" this year. In the data disclosed last year, more than 70% of JD Fashion's new users in 2022 came from third to sixth tier markets, with a large portion of users having purchasing power comparable to those in first and second tier cities.
Kong Xiangying also stated last year that the consumption power of JD's fashion users is higher than that of JD's main website, but in the middle and low consumption groups, high-quality transformation and penetration have not been achieved.
The change in business line promotion is a microcosm of the company's strategic focus shift.
Compared to 2023, JD's three must win battles this year no longer mention the "sinking market". According to insiders cited by LatePost, this does not mean that JD Retail is no longer offering low prices, but rather that it is internally aware that first and second tier users also value low prices. In the first and second tier cities, Jingdong is facing a fierce attack from rivals such as Pinduoduo and Tiktok.
With the overall slowdown in consumer demand, competition among major e-commerce platforms is becoming more homogeneous. For JD.com, it is more important to leverage the platform's differentiation advantages.
Zhuang Shuai, founder of Bailian Consulting, told Interface News that the competition in the fashion category is fierce. Due to non-standard and high profits, as well as numerous merchants, it is the core category that major e-commerce platforms compete for. JD.com Fashion can leverage its high proportion of male users and high average customer value consumption habits, as well as self operated logistics and distribution, to form a differentiated competitive advantage.
As for the sinking market that has already formed a habit of online shopping, Zhuang Shuai believes that as long as JD Fashion has products and brands that meet the consumption needs of the sinking market, coupled with good return and exchange services, it is expected to win the recognition of users.