Teaming up with Xiaomi, JD.com has come up with a big move

Author | Liu Baodan

Editor | Zhou Zhiyu

With the strong rise of Pinduoduo and Douyin e-commerce, the e-commerce industry has entered a phase of major reshuffle, and JD.com's position has declined accordingly. JD.com is seeking to strengthen its competitiveness in the 3C product field through strategic alliances.

On May 13th, JD.com announced that it has recently reached a new strategic cooperation with Xiaomi, setting a target of 200 billion yuan in total sales for Xiaomi on JD.com's omni-channel platform over the next three years. This is a high-profile cooperation, with JD.com's CEO Xu Ran and Xiaomi's partner, president, and president of international business Lu Weibing personally appearing on stage.

In the future, Xiaomi will contribute over 60 billion yuan in sales to JD.com annually, mainly from 3C digital products, home appliances, automobiles, and other products. For JD.com, securing the products of the world's third-largest smartphone manufacturer in advance will undoubtedly further solidify its competitive advantage in the electronics product race.

In fact, JD.com is embarking on a large-scale alliance. In addition to Xiaomi, JD.com has also established new strategic partnerships with industry giants such as Midea and Lenovo this year, setting sales targets of 210 billion yuan and 120 billion yuan over the next three years respectively with Midea and Lenovo. In other words, with just Xiaomi, Midea, and Lenovo, JD.com will lock in nearly 200 billion yuan in sales annually over the next three years.

As the largest self-operated e-commerce platform in China, JD.com started with electronic products and home appliances. By teaming up with household appliances, mobile phone brands, and other giants, it aims to strengthen its e-commerce advantage in the 3C category and take the initiative in the fierce market competition.

Currently, JD.com is in a stage of climbing performance. According to financial reports, JD.com's Non-GAAP net profit was 8.4 billion yuan in the fourth quarter of 2023, reaching 35.2 billion yuan for the full year, exceeding market expectations. This is mainly contributed by JD.com's self-operated business. Additionally, under Xu Ran's leadership, JD.com has further strengthened its cost control efforts, significantly reducing research and development as well as administrative expenses.

Since Liu Qiangdong's return to China over a year ago, JD.com has returned to a low-price strategy and shifted its strategic focus to the merchant ecosystem, emphasizing the introduction of third-party merchants. However, the low-price strategy has had limited impact on performance improvement so far. If JD.com wants to achieve results in performance quickly, it ultimately needs to focus on its self-operated business.

However, this is not easy. JD.com's self-operated e-commerce mainly includes electronic products, home appliances, and daily necessities, with a contribution ratio of approximately 6:4. In fact, since 2022, JD.com's advantage in the category of electronic products and home appliances has weakened. According to financial reports, JD.com's revenue from electronic products and home appliances in the past two years was 516 billion yuan and 538.8 billion yuan respectively, with a growth rate of less than 5%.

In addition to its own growth bottleneck, JD.com also faces uncertainties in the consumption environment and fierce market competition.

According to data from the National Bureau of Statistics, the total retail sales of consumer goods in the first three months of 2024 reached 12.0327 trillion yuan, with a year-on-year growth rate of 4.7%, and the growth rate of household appliances and audio-visual equipment was only 5.8%.

Fierce market competition also poses a threat to JD.com's core advantages, as besides traditional rivals Taobao, Tmall, and Pinduoduo intensifying their efforts, the rapid rise of live-streaming e-commerce is shaking JD.com's foundation in the 3C field On March 10th, Dong Yuhui started a Huawei special live broadcast on Douyin, and the popular Mate 60 Pro was sold out, with total sales exceeding one billion.

One reality that JD.com must face is that with the improvement of e-commerce industry infrastructure and service capabilities, JD.com's once proud logistics and services are being caught up by competitors. For consumer electronics and home appliance giants, the trend is towards omni-channel layout, in this situation, JD.com chooses to "deeply bind" with the giants.

JD.com has indeed made great efforts. In this round of giant alliances, JD.com is not only focusing on retail. JD.com will further deepen cooperation in products, marketing, services, etc. with Xiaomi, Midea, Lenovo, and extend to the industrial and AI levels.

For example, JD.com and Xiaomi will further expand cooperation in industrial, production, insurance, and other fields to achieve deep integration and coordinated development across multiple industries; JD.com and Lenovo will deepen cooperation around full-stack AI products, and collaborate with Lenovo Tianxi to provide an AI application ecosystem experience through ecological co-construction.

JD.com is also offering substantial subsidies. In March, JD.com announced that it will invest 6.5 billion yuan with partners for "trade-in", equivalent to 18% of the annual profit. As planned, JD.com will invest 3 billion yuan in subsidies in the 3C digital and home appliance categories respectively.

It is worth mentioning that Liu Qiangdong personally appeared in the live broadcast in the form of an AI digital person. In less than 1 hour of broadcasting, it attracted over 20 million viewers, and the total transaction volume of the live broadcast exceeded 50 million.

Over the past decade, JD.com has built a unique competitive advantage through self-operated e-commerce and logistics construction, forming a stable dual dominance with Alibaba. However, by 2023, JD.com has lost its position as the industry's second, overtaken by Pinduoduo, with new forces such as Douyin, Kuaishou, and Xiaohongshu's e-commerce platforms following closely behind.

JD.com has indeed reached a moment where it must fight back. At the end of last year, Liu Qiangdong vowed not to lie down, and the alliance with giants such as Xiaomi, Midea, and Lenovo may just be the beginning. An unprecedented e-commerce battle has begun