Alibaba and JD.com shake hands and make peace

Alibaba and JD.com shake hands and make peace

How did Alibaba and JD.com, two heavyweight players in China's e-commerce sector, break the long-term competitive landscape and move towards unprecedented cooperation? The article reveals in detail the strategic intentions behind this cooperation, the implementation details, and the profound impact on the future direction of the industry, and deeply explores the logic behind this change and the industry changes it has brought.

After more than a decade of open and covert fighting, Alibaba and JD.com, the two giants in the e-commerce world, have embraced each other unprecedentedly.

Wall Street News confirmed on September 26 from an insider that Taobao Tmall APP will soon be officially connected to JD Logistics; in addition, JD will also be officially connected to Alipay. Both parties provided each other with their most core capabilities.

This means that the stage where Internet giants each built high walls and established business barriers to form their own competitiveness has become a thing of the past. Now, the barriers have been torn down and all businesses are competing on the same stage.

Sub-businesses that were once protected by the huge system of Internet giants will also form more extensive business cooperation and find their best partners to tap into business potential and further improve efficiency.

This is destined to be a brutal elimination match. Whoever can form their own alliance will survive in this competition.

1. Openness

Unexpectedly, Alibaba and JD.com, which had been engaged in an almost all-out war in many areas including merchants, prices and services, would open up their most important business to each other after years of fighting.

This handshake between the two parties is the largest cooperation between the two platforms since their establishment more than 20 years ago. Whether it is Alipay to Alibaba or JD Logistics to JD, they are the foundation of their respective ecosystems.

Specifically, when consumers shop on Taobao in the future, merchants can choose to use JD Logistics to ship their goods. This cooperation is expected to be implemented in October; JD Logistics will also be connected to Cainiao Express and Cainiao Station.

This will provide more flexible options for merchants and consumers, and will also stimulate business growth for JD Logistics and Cainiao Logistics.

First of all, for platform merchants, the turnover rate of goods can be further improved and the management complexity will be greatly reduced.

Previously, merchants who had stores on JD.com and Taobao Tmall needed to manage their products on both platforms separately. Now that Taobao is connected to JD Logistics, there is no need to prepare and arrange inventory separately. The integrated supply chain solution provided by JD Logistics can also expand the customer base of more brand merchants from Tmall.

The delivery costs of JD.com merchants are also expected to further decrease as JD Logistics connects to Cainiao Express and Cainiao Station.

In March last year, JD.com fully opened its logistics interface, allowing merchants to use third-party logistics other than JD Logistics to obtain third-party logistics with sufficient carrying capacity and flexibility to cope with the consumption trend of increased transaction frequency and lower average customer unit price on the platform.

When the e-commerce industry shifts from competing solely on low prices to competing on service, a more diversified service system will help the platform create a better environment for merchants and meet their diverse needs. Only then can the platform achieve more growth and be reflected in data such as GMV.

In addition to express delivery, this cooperation also extends to the payment field. JD.com has also opened its e-commerce platform to Alipay. In addition to JD.com Pay, Cloud QuickPass and WeChat Pay, JD.com can also use Alipay.

To a certain extent, this can alleviate the impact of Taobao and Tmall's previous integration into WeChat Pay.

Shen Meng, director of Xiangsong Capital, told Wall Street Journal that the interconnection between JD.com and Alibaba, like the previous interconnection between Alibaba and WeChat, is the implementation of previous policy requirements and can reduce consumers' usage costs.

Some consumers said that they used to buy things on JD.com mainly because of the speed. Now that JD.com’s express delivery has entered Taobao, it will be even faster to receive the goods they buy on Taobao. In addition, Alipay can also be used on JD.com, so there is no need to go back and forth, which is much more convenient. In short, Alibaba and JD.com moving in opposite directions is a good thing for the platform, merchants and consumers. The purpose is to create greater value through deeper cooperation.

2. Remove the wall

It has become an industry trend for Internet giants to start interconnecting with each other.

Over the past two decades, my country's Internet industry has experienced fierce competition and confrontation, and is now finally moving towards openness step by step. This is an inevitable development of the industry and an important practice of the Internet spirit.

In the early competition, each company wanted to extend its tentacles further and try its best to draw users into its own ecosystem. Then, in the decade after 2010, e-commerce giants quickly emerged, and each developed its own payment method. For convenience, users had to use them together.

Before 2011, JD.com also supported Alipay, but Alipay was discontinued due to fees and other factors, and the relationship between JD.com and Alibaba took a sharp turn for the worse. Especially as the competition between the two sides in the e-commerce field intensified, they even went to court for forcing merchants to choose between two payment methods.

After the incompatibility between the companies reached a certain level, the regulatory authorities also took action. In 2021, the Ministry of Industry and Information Technology proposed to ensure the normal access of legal website links. In the same year, Alibaba was fined 18.2 billion for violating the Anti-Monopoly Law.

Since then, each company has also emphasized the need for openness at the macro level, but this is only about sharing links with each other. It is no longer extremely outrageous garbled or blocked, and it is far from the level of openness.

In recent years, the openness of each company has expanded, including not blocking each other's links, advertising appearing on the opponent's platform, and providing jump functions for core businesses, but it has not touched core businesses such as payment. For example, Feizhu ads began to appear on QQ Music. Starting in 2021, apps such as Tencent Video and Tencent News will have ads, and Taobao links in WeChat can jump directly to Taobao, etc.

However, this year's big companies have opened up their businesses to more core businesses. Before joining hands with JD.com, Tencent and Alibaba also took the lead in shaking hands and making peace. In early September, Taobao released the "Opinion Collection on Adding WeChat Payment Capabilities". In order to improve consumers' shopping experience, Taobao plans to add WeChat payment capabilities.

Compared with the superficial opening in the past, the opening of core businesses today is still driven by the underlying business logic.

For Alibaba, this cooperation and the introduction of JD Logistics can provide consumers with a better shopping experience, which is consistent with its development philosophy of “user first”.

Wu Yongming, Alibaba CEO who took office in September last year, wrote in his first letter to all employees that users should be the strategic focus, and if they want to create the best user experience, they must seek the broadest openness and cooperation, including with companies that are traditionally in competition with them.

This is especially true for JD.com. Taobao's annual e-commerce transaction volume is in the range of 8 trillion yuan. JD.com has the opportunity to take over the orders of the largest e-commerce platform in the country, which will greatly benefit the development of JD.com Logistics.

This will allow Internet giants to improve efficiency by providing users with greater convenience after entering the stock era and user growth reaches a bottleneck period. It is both open and extending its tentacles into the territory of the target.

Large companies are splitting up their businesses and growing independently, which requires breaking down previous barriers. Introducing another absolutely powerful competitor is also conducive to more adequate competition, and companies can squeeze out more water in reducing costs.

After payment barriers are removed, competition will naturally return to the quality, price, and service of the products provided by each company. To a certain extent, openness has brought a fairer competition environment and provided more choices for users and merchants. To grow further, each company needs more pragmatic capabilities to attract users.

Especially when the rapid rise of new giants such as ByteDance and Pinduoduo has broken the inherent pattern of the Internet world, former big brothers such as Alibaba, Tencent and JD.com have to join forces and move forward rapidly towards their respective business goals.

Times have changed, and the relationships among the bigwigs have also changed. The Internet industry has entered a new era of openness, cooperation, and efficiency.

Author | Wang Xiaojuan and Liu Baodan Editor | Zhou Zhiyu This article is written by the author of Operation Party [All-Weather Technology], WeChat public account: [All-Weather Technology], original/authorized to be published in Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.

<<:  Public account articles now support modifying cover images!

>>:  Data analysis implementation process

Recommend

What should I do if I don’t know English when opening a store on Amazon?

For merchants who do not understand English, langu...

What should I do if my Shopee store is frozen? What are the common types?

Shopee sellers need to understand what is account ...

How much does it cost to open a store on eBay? How can I make a profit quickly?

eBay is a well-known e-commerce website with a lar...

55 Proposal Skills That Planners Must Know in 2024

Hurry up and save it! Master the art of proposal a...

Is it suitable for individuals to build independent websites? Specific answers

With the development of modern information, more a...

An ugly hat went viral! Is Maimen a brainwash marketing campaign?

What kind of hat caused the Internet craze? What i...

Can the refund amount on Shopee be modified? How to modify it?

Now some sellers on Taobao and Tmall feel that the...

Wang Po stopped, but Henan did not

This article explores in depth how the "Wang ...

Where is the entrance to Shopee live streaming? How to set it up?

There are many marketing promotion methods on the ...

Where does brand value come from?

Introduction: This article is a detailed answer to...

eBay Germany Buyer Protection Policy Update

eBay Germany announced that from December 12, 2023...

There are no winners in the drinking water price war

This summer, Nongfu Spring ignited a price war in ...