JD.com has another killer feature: the business secrets behind the PLUS membership upgrade

After Liu Qiangdong returned to JD.com, he restarted the low-price strategy. Recently, JD.com has comprehensively upgraded the benefits of PLUS members, further strengthening the low-price advantage. The author analyzes in detail the low-price concept reflected in the design of the new benefits, and points out that low prices are actually a way to make money, and to obtain higher profits through volume increase. This article analyzes JD.com's business strategy and is also of great reference significance to other companies.

After Liu Qiangdong's return, JD.com restarted its low-price mentality strategy.

Dong Ge has repeatedly stressed that low prices are the most important weapon for JD.com's success in the past and will be the only basic weapon in the future. He really keeps his word and does what he says. So far, it seems that initial results have been achieved.

On August 16, JD.com released its second quarter report for 2023, with revenue of 287.9 ​​billion yuan, up 7.6% from the same period last year. Compared with the 1.4% growth rate in the previous quarter, the growth momentum of performance has further strengthened.

Now that the first half of the year has passed, what big moves does JD.com have in the second half of the year?

01

Recently, JD.com has comprehensively upgraded the benefits of PLUS members. In one sentence, it can be summarized as: lower prices to the end! !

What adjustments has JD.com PLUS made to its low-price strategy? What business logic is behind it? And what inspiration can other retail brands get from it to help them compete?

Let me help you analyze it.

First of all, we need to make one thing clear. Many people always think that when they say low price, they mean losing money and not making money.

In fact, low prices do not mean selling at a loss, nor do they mean not making money. Low prices are just a slight reduction in price, sacrificing some of the current profits. You can make more money later.

Here, let me do the math with you:

Take selling power banks as an example. In the past, I sold them for 69 yuan and made 15 yuan. I could sell 100 units a month, making a profit of 1,500 yuan. Now I have started the low-price strategy. I sell them for 64 yuan, making 5 yuan less and 10 yuan per unit. However, I can sell 200 units a month, so my profit next month is 2,000 yuan.

So, you see, low prices can still make money.

But we must know that low prices are always what consumers are most sensitive to and like most.

Brother Dong is always very smart. In the past, his low-price strategy was liked by all users.

But JD.com’s most important core user assets - 34 million PLUS members, each of whom has nine times the spending power of an ordinary user. That means for every 100 yuan an ordinary user contributes, they contribute 900 yuan.

Now everyone enjoys low prices and is treated equally. Ordinary users are happy, but PLUS members may not be happy. So what sense of superiority do I have?

The loss of PLUS members is definitely much greater than that of ordinary users. Therefore, a major upgrade of PLUS member rights is inevitable.

Here, everyone should remember one thing: in business, whoever spends more money should be treated preferentially. Don't treat everyone equally, but treat them differently. Treating everyone equally is unfair to high-value users.

02

I am an old member of JD.com and I know my annual benefits very well. I renewed my membership right after seeing the reminder. (This is not intentional advertising. A few days ago, JD.com customer service handled a business for me. The whole service process was remarkable and I was very satisfied.)

This is a killer feature that makes PLUS members feel that the price is even lower. It completely matches JD.com’s low-price mentality strategy.

There are many rights and interests, and we will focus on analyzing several rights and interests designed around low prices.

1. PLUS unlimited free shipping

In the past, PLUS members only had 5 shipping coupons per month, but now they can get free shipping for any purchase. The psychological hint given to users is that they can earn at least 6 yuan (basic shipping fee) for each purchase, which is the lowest price for saving money.

In the past, when I bought a product, I would consider the shipping cost and put it aside for a while. Now I have no worries at all.

The more you buy, the more you earn. Invisibly, PLUS membership will increase the frequency of repeat purchases. The more repeat purchases, the more money JD.com earns.

At the same time, JD.com lowered the threshold for free shipping for ordinary users from 99 yuan to 59 yuan. Free shipping is available for purchases over 59 yuan. This is also the first time that JD.com has lowered the threshold for free shipping. What does this mean?

This means that JD.com will further consolidate its low-price mentality strategy through adjustments to such rights and interests, which will actually increase user loyalty and repurchase rate and strengthen user stickiness on the platform.

2. Up to 3% shopping rebate

In the past, the return was in the form of Jingdong Beans, and there was an exchange ratio (100 Jingdong Beans = 1 yuan). The maximum rebate you could get was 10 times JD.com (100 Jingdong Beans equals 1 yuan), which is equivalent to a shopping rebate of 0.5%-2% of the actual payment for the goods. The calculation was complicated and difficult to understand.

After the upgrade, the cashback ratio is increased to 3%. The amount of Jingdou received is only more, which makes it easier to highlight the low-price strategy and can undoubtedly stimulate the shopping consumption of PLUS members.

3. 5% off on millions of products

This benefit replaces the previous "monthly 100 yuan coupon package" benefit. Previously, 100 yuan coupons were available every month, including 5 yuan, 10 yuan, 20 yuan and 50 yuan. Each coupon has a usage threshold, which is troublesome to use. The process requires you to receive it before using it, and you need to grab large amounts.

Now the products are directly upgraded to "95% off on top of discount". For example, the retail price of a product is 100 yuan, and the previous price was 80 yuan, but now it is only 75 yuan after the discount.

This low-price method is simpler, more direct and has a high perception.

4. Free physical examination once a year

The first three types of upgraded benefits are to provide users with targeted benefits in three consumption scenarios: shipping fees, rebates, and discounts on discounts, and they are always centered around interests.

I think that for PLUS members and super members, we should not only talk about benefits, but also about feelings, which should reflect the brand's care and affection for them. We should grasp both benefits and feelings.

Well, this time JD.com has added a new benefit, giving PLUS members a free physical examination once a year.

From caring about your spending and your possessions to caring about your health, which comes first. This is a transition from interests to emotions. This rights design is thoughtful, which means that JD.com will pay more attention to "you".

I have also applied for a lot of paid membership cards and found that this benefit is a first for JD.com. It is easiest for users to remember and the first person to try it is the best to spread it.

Other core rights and interests of JD PLUS members also continue to exist, such as 24-hour exclusive customer service, free returns and exchanges, free consultations, etc., which will continue to be retained.

After analyzing this, we can clearly see that the core point of this PLUS membership upgrade is "low price". It's just that around the low price, JD.com designed different benefits to meet user needs.

Finally, the newly added "free physical examination" cleverly takes into account the interests and emotions of PLUS members, which is a very smart approach.

03

After analyzing JD.com PLUS membership, what can we think about and learn from its practices for different companies? This is the key to seeing this.

I believe that Brother Dong has understood the secret of the second half of retail, which is not to compete on user scale, but to compete on user assets.

Only those users who can increase value, generate profits (can make you money), and have a certain willingness to consume can be considered assets. Therefore, members are user assets, PLUS members are high-value assets, and users who take advantage of others are negative assets.

In this way, by investing in high-value users, offering discounts and services, these users will increase in value and the investment can be stably earned back.

Don’t think that just because you have a bunch of users, they are all assets. What is in the public domain is not your asset, it is a public asset, and your private domain is your asset.

I mentioned in "20 Thoughts of Private Domain Masters":

The end of the private domain is membership. The private domain is to actively retain customers, and membership is to actively lock in customers. After locking in customers, your transaction cost becomes extremely low each time. At this time, you have the right to earn long-term profits.

So what is a member? The company gives up a part of its profits in exchange for the user's "letter of participation", and from then on you are authorized to make profits from him for a long time.

Many people do not see the real value of membership or think about the profit model involved. This is where they lack understanding.

Even Lei Jun once said that what he envied most was Costco's membership business.

However, I must say that those who do not even have the ability to operate private domains cannot operate membership well. On the contrary, companies that used to have the ability to operate memberships find it very easy to operate private domains, such as Kidsland, Baiguoyuan, Starbucks, and Huazhu Club.

Private domain is the simplest user operation. Its essence and logic are consistent with membership, but the membership system is more complicated than it.

So I suggest you follow this path:

Public domain - Private domain - Ordinary member - Super member (paid member)

If you are not good enough in any of the links, you need to make up for it as soon as possible. I don’t recommend you to figure it out on your own unless you can recruit an expert, get external training, or ask for a consultant to accompany you.

Let’s get back to the topic we are discussing: low price.

Dong Ge’s low-price mental strategy is smart, but the upgrade cooperation of PLUS members is brilliant.

So I boldly predict that in this round of war, JD.com’s data by the end of the year will definitely be better than it is now.

Looking at business competition, low prices are inevitable, and business competition is always running between low prices and efficiency. But is your low price a one-time transaction, or is it a closed-loop strategy that combines the low-price strategy with the membership model, turning a one-time transaction, even a loss-making one, into a mechanism that can obtain long-term profits? This is a wise approach.

Avoid blindly falling into price war competition.

When you take the price war to the level of a low-price strategy, membership is a very good killer weapon for you. By locking in users through membership, you can earn profits from them in the long term.

However, many companies have not yet realized this secret and the true value of members. This is an opportunity in the era of internal circulation.

Author: Yan Tao Sanshou