China’s online retailer JD said it will hold a one-day 2 yuan ($0.28) campaign for millions of goods with free shipping during this year’s 618 event, set to begin on Friday, as cheap remains a main theme across the country’s e-commerce marketplaces and consumers care priorities.
Why it matters: The market pressure that JD faces has now intensified as Pinduoduo, which operates on the principle of low prices and user-friendly after-sales service, continued to nibble away at what was once China’s second-largest e-commerce retailer by market capitalization.
- Rarely seen in public, founder Richard Liu has recently returned to media headlines for his wolfish statements within the company. As JD rushes for its most important 618 event, Liu’s remarks on the company’s tendency to fire underperformers who don’t work hard have raised concerns about its ability to maintain growth.
Details: The company had a press conference about the 618 mid-year shopping festival on Tuesday, where JD promoted it will provide “saving to the extreme and cheaper shopping experiences” to customers.
- When JD and Taobao try to provide more cash subsidies to shoppers, Pinduoduo more straightforwardly implements its low-price advantage by urging merchants to cut prices, with those who do so getting higher search rankings during the shopping festival. The price war that has permeated the industry in the past two years seems like a bottomless pit for e-commerce participants.
- At the press event, JD invited several of its sales and procurement staff, a group responsible for finding products that cater to users’ interests, to bargain at minimal cost with suppliers, and finally promotes to shoppers, to share their work publicly. The sales and procurement employees have been frequently thrust into the public eye by JD after livestreaming conducted by some of them last Singles Day found initial success for the company that had seldom participated in live-commerce before.
- JD said in the latest official WeChat post that rich commodities, affordable prices, and careful services of its 618 festival are the result of the “tireless efforts” of this group of employees, just one day after the company announced a gradual annual fixed salary for procurement staff to 20-month pay.
Context: Sandy Xu, the current CEO of JD, revealed that its “10 billion yuan subsidy” channel has amassed over 100 million users since launched last March, while more than one million third-party sellers have operated online stores on the platform, which is in contrast to itself in previous years when JD’s self-operated stores the main within its ecosystem.
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