Liu Qiangdong wants to push low prices to the limit

Author | Liu Baodan

Editor | Zhou Zhiyu

As the e-commerce battle intensifies, there is a divergence in the attitude of e-commerce platforms towards low prices, with Alibaba no longer emphasizing absolute low prices while JD.com continues to ramp up.

Wall Street News has learned that JD.com recently revised the "JD.com Open Platform Buy Expensive Double Compensation Service Rules," with adjustments including the scope of price comparison platforms, the definition of same products, and price definitions, with the core being the expansion of the "Buy Expensive Double Compensation" service scope. This rule will take effect on August 8th.

This means that JD.com is still continuously ramping up its low-price strategy in order to gain a larger market share.

The "Buy Expensive Double Compensation" service refers to when consumers purchase products marked with this service label, if the actual amount paid is higher than the actual amount paid for the same product transacted on JD.com or other specific platforms, consumers can apply for compensation equal to twice the difference within 24 hours of the order. This rule mainly targets the millions of merchants on the JD.com platform.

JD.com further expanded the price comparison platforms. Previously, the platforms included: Pinduoduo's Hundred Billion Subsidies, Taobao's Hundred Billion Subsidies, Vipshop, Tmall, JD.com, and Tuhu Car Maintenance APP. After the revision, JD.com not only covers Douyin but also expands Taobao and Pinduoduo from the Hundred Billion Subsidies channel to the entire platform.

Regarding the definition of same products, JD.com has lowered the threshold, as long as the front-end displays sales volume ≥30 and front-end displays reviews ≥30, they can participate in the comparison, whereas previously these requirements were 100 pieces and 100 reviews, respectively.

JD.com also updated the definition of the price of same products to the actual amount paid by consumers, with a focus on including shipping costs.

Compared to Taobao, Douyin, and Pinduoduo openly comparing prices, it can be seen that JD.com has confidence in its low-price strategy, which also demonstrates Liu Qiangdong's determination to regain the low-price mindset in the current e-commerce market.

In fact, since the end of 2022 when Liu Qiangdong proposed to resume the low-price strategy, JD.com has been continuously deepening its efforts in the low-price strategy.

From launching the "Hundred Billion Subsidies" to vigorously supporting small and medium-sized merchants, from major personnel changes to promoting the procurement and sales team, JD.com's series of actions are centered around low prices, as Liu Qiangdong attempts to regain the initiative in competition by increasing the supply of low-priced goods.

From the first quarter financial report, it can be seen that JD.com's low-price strategy has begun to take effect. JD.com executives stated during the conference call that in the first quarter, the group achieved positive performance in various aspects such as user growth, user behavior, and user experience, with strong growth in quarterly active users year-on-year and accelerated growth in users from lower-tier cities.

In 2024, JD.com's core strategy remains to enhance user experience and services, and consolidate core competitiveness. Management stated during the conference call, "JD.com will advance the low-price strategy, reduce procurement costs, provide more low-priced goods, improve the efficiency of low-price subsidies, and allow users to feel the advantages of saving money more."

The revision of the "Buy Expensive Double Compensation" rule is just one manifestation of JD.com's low-price strategy. In fact, JD.com has implemented the low-price strategy at multiple levels.

For example, in July, JD.com launched the "JD Super 18" event, where JD.com will showcase major domestic and foreign brand products on the 18th of each month, including TCL TVs, Bvlgari perfumes, and other big-name products worth over a thousand yuan, as well as "Super Family Buckets" worth thousands or even tens of thousands of yuan, all priced at only 18 yuan In May, Liu Qiangdong stated that he would give all employees in JD.com's procurement and sales department a raise. Starting from July 1, 2024, the annual fixed salary for JD.com's procurement and sales department will increase from 16 months to 20 months, with no cap on performance incentives. Prior to this, Liu Qiangdong had already given multiple raises to the procurement and sales team, which represents JD.com's competitive advantage in low prices.

Over a decade ago, JD.com was known for its low-price strategy and emerged victorious in offline battles against companies like Suning, establishing its position as an e-commerce giant, until Pinduoduo reshaped the landscape years later.

This is also why Alibaba has begun to scale back its low-price policy, while JD.com continues to intensify its efforts. Even before Pinduoduo, JD.com rose to prominence as a platform based on low prices. Liu Qiangdong has a strong belief in low prices, as evidenced by his criticism of subordinates at the end of 2022, stating that "JD.com's retail business culture is gradually losing focus on the advantage of low prices."

However, times have changed, and for JD.com to regain its competitive edge through low prices, especially in the context where Pinduoduo has already captured the low-price mindset, the challenge is considerable.

One thing is certain, Liu Qiangdong is determined to fight this low-price battle to the end