Can the Jingdong reclaim its stores under the line?

Can the Jingdong reclaim its stores under the line?

Recently, Jingdong announced that its fresh supermarket 7FRESH3-5 years to open 1000 stores, showing the ambition of Jingdong plus yardage line. Can online retail become a new hope for Jingdong after online business is sluggish and stock prices are plummeting?

Author Dong Jie, editor, Ye Lili

In 2018, it can be said that the Jingdong is in a difficult year.

According to the second-quarter results released in August, Jingdong posted a net profit of 478.1 million yuan ($72.3 million) based on non-GAAP, down 51.04% from 976.5 million yuan a year earlier. From the operating data, although 618 promotions, the second quarter of the total commodity trading volume (GMV) growth was almost the same as the previous quarter, showing that the growth rate of GMV is weak.

Coupled with the recent news of founder Liu Qiangdong's negative news, Jingdong's share price has plummeted. By the end of October 11, Jingdong's share price had fallen to $23.48 / ADS, 53.8% from its peak of $50.68 at the beginning of this year, equivalent to a waist chop.

The "J" in the "BATJ" has now been surpassed by the US group and millet. For Jingdong, how to restore stock prices and enhance investor confidence is the most important thing at present. With the increasing difficulty of online traffic growth, actively expanding offline retail channels may become a new choice for Jingdong to get rid of the sluggish growth.

On September 25, after more than half a year of silence, Wang Xiaosong, senior vice president of Jingdong Group and President of Jingdong 7FRESH, announced that "7FRESH will open 1,000 stores in the country in the next 3-5 years" and formally signed contracts with 16 well-known real estate developers in China, such as Poly and Dayuecheng. It was also the first time Jingdong opened its store plan after opening 2 7FRESH earlier this year.

As the main "fresh + restaurant" selection supermarket, 7FRESH has been considered to be in the target Ali's box of fresh horses.

At the same time, as an important part of off-line retail, Jingdong convenience store also recently spread news. According to the Beijing business daily, Jingdong is planning to open direct outlets outside Jingdong convenience stores. For this reason, Jingdong has also recently removed 5 managers from Beijing 7-11.

Although Jingdong denied this, the ambition of Jingdong's power line was highlighted.

The reality is not optimistic. In addition to the new store just opened in Langfang City, Hebei Province, 7FRESH so far only three stores, compared with the box Ma Xiansheng gap is far; Jingdong convenience store in Liu Qiangdong shouted out "million convenience store" after the frequent outbreak of closure rumors, its collection of couples store's refurbished franchise model has also been questioned.

For offline retail, Jingdong dreams of fullness, but reality is not easy.


High hopes for 7FRESH

Earlier this year, after two years of nationwide distribution, the 7FRESH in Jingdong finally took the first step, opening two stores in Beijing's Qinghe Colorful City and Dazu Square.

Over the past 7 months, what kind of transcript has 7FRESH delivered? The answer is a total of 3 shops. Among them, third stores in Langfang are newly opened by Jingdong after announces the 7FRESH shop plan.

There is a lot of speculation about why Jingdong 7FRESH has opened up shop so slowly.

Previous media reports said that 7FRESH was not Liu Qiang Dongli's project at first, he was convinced by Jingdong management, so he hesitated to push forward.

E-commerce analyst Li Chengdong told All-weather Technologies that he had talked to Jingdong executives a few months ago about why Jingdong didn't have all in 7FRESH, and the answer was that "7FRESH is still in the testing stage, and senior executives in Jingdong are divided on the value of 7FRESH."

Since Jingdong put forward unbounded retailing last year, Jingdong has many plans in the field of offline retailing, and 7FRESH is only one of them.

Fresh supermarket business is not easy to do, even if Ali as a new retail sample of the box of fresh horses, is not yet fully profitable.  

"Before the project was fully validated, Liu didn't mean to throw money at quick replication, because Jingdong had a lot of money to spend," Li said.

Wang Xiaosong has explained the doubts of the outside world. At the 7FRESH September 25 press conference, Wang Xiaosong said that the Beijing East internal for 7FRESH is fully supportive, but it is also more cautious, conservative, the reason why there is no large-scale replication shop, because the previous model has not yet run.

"In order to make the store model as easy as possible, in the past few months, the 7FRESH Grand Clan Square store alone has carried out 3-4 store iterations, from selection to shop decoration to moving line design, and so on, have made large-scale changes," Jingdong insiders told all-weather technology.

In fact, the slow progress of 7FRESH has a great relationship with its personnel adjustment. In March this year, 7FRESH's operator Du Yong took the founding team out of the group, has recently created its own new retail outlet brand T11. Although the reason for their leaving is unknown, it also affects the process of 7FRESH expansion to a certain extent.

In addition, according to 7FRESH Brand Manager Yu Leiqi, at the beginning of this year, the entire "Four Seasons Optimizer" (7FRESH parent company) had only two or three hundred people, "insufficient staff preparation, many people do not have experience in offline retailing, so that the first two stores opened were criticized by many professionals," which made the 7F. RESH had to slow down.

Yu Leiqi said that the "Four Seasons Optimal" headquarters in Beijing has more than 1,000 employees, the store performance has begun to take shape. Wang Xiaosong revealed that the existing two stores "a single store daily sales of nearly 700,000 yuan (yuan), the average unit price of about 100 yuan, online orders accounted for 40 percent."

Prior to the announcement, Boxed Horse Xiansheng had more than 800,000 sales per day, more than 50,000 market efficiency per store, and more than 60% of online sales. In contrast, there is a gap between 7FRESH and the performance of box horse, but it is not big. 7FRESH said that two stores opened earlier this year are expected to break even at the end of this year.

Yu Leiqi told all-weather technology that 7FRESH was established at least two years later than a box of fresh horses, and is not as mature as the latter, but after six months of exploration, the company believes it has reached the stage where it can run fast. Starting in 11 and December this year, 7FRESH will speed up shop opening. "Jingdong is determined to do this, now our team has reached thousands of people, there is a lot of technical input, from the offline selection of a lot of elite soldiers, is to prepare for the next rapid opening of stores."

In addition, a person familiar with the matter disclosed that 7FRESH has gradually merged into the group from a more independent innovation department.

Yu Leiqi believes that this means that Jingdong attaches more importance to 7FRESH, which will be supported by the Group's stronger logistics, technology and supply chain in the future.

However, at present, only 7FRESH of three stores has no advantage in brand awareness and quantity. It is difficult to make a strong contribution to the retail sales of Jingdong, and how it will be unknown after large-scale replication.


Jingdong convenience store

As another part of off-line retail, Jingdong convenience store, like 7FRESH, carries Jingdong's off-line ambitions.

7FRESH is positioned to select supermarkets, aiming at high-end urban consumer groups, the main layout of the future will also be in the first and second-tier cities. Jingdong convenience store positioning is very different, Liu Qiangdong mentioned that Jingdong convenience store will mainly open in the vast number of third, fourth, fifth-tier cities and even rural areas, and 7FRESH complementary.

In April last year, Jingdong announced the "Million Jingdong Convenience Store Plan" and said it would open more than 1 million Jingdong convenience stores nationwide in the next five years.

However, the specific promotion of the store target, Jingdong has not released specific data.

In order to quickly seize the market, Jingdong convenience store is now taking the "remake" mode, that is, through the collection of wives and wives shop, hanging on the brand of Jingdong convenience store, the store type is divided into flagship store, boutique store, boutique store, among which the number of boutique stores is the majority.

According to Jingdong, 50% of all convenience stores with Jingdong brand have to purchase through Jingdong treasure store. But few of the convenience stores in Jingdong, visited by all-weather science and technology, comply with this rule, where they get their goods cheaply and from anywhere.

Under the "reshuffle" model, Jingdong quickly seized the market, but the management challenges are also gradually amplified. As the order, management and so on basically rely on the owner's personal feelings and experience, directly led to poor store image, traditional marketing methods, backward business practices and other shortcomings. Many convenience shopkeepers reflect to all-weather technology that their operating performance has improved only a limited amount compared with the previous, and even a loss has occurred.

According to Jingdong convenience store owners revealed that most of the goods on the treasure are brand goods, wholesale prices have no advantage, profit is extremely limited. This is in the "Kang Shuai Fu", "Xiao Bai Mian", "Lei Bi" and other Shanzhai brand flooded low-line market, Jingdong convenience store is not competitive, its price is even higher than other convenience stores around.

Because most flagship and boutique stores need to pay a deposit of 10,000-20,000 yuan, and the store decoration and shelf renovation costs need to be borne by the shopkeeper, which makes the original small profit shopkeepers difficult to accept. Starting in August this year, news of the closure of Jingdong convenience stores was reported.

From the current point of view, although the beginning of the good intentions of Jingdong, but in the supply chain, personnel training, to shop diversion, brand empowerment, etc., does not seem to give the shopkeeper substantial help.

Xiao Xin, CEO of Fresh Life, once said in an all-weather technology interview that the "remake" model is more of a supply chain-side improvement, and can not connect tens of millions of wife-in-law stores to achieve business synergy; without large-scale business synergy, it is difficult to fundamentally improve the operating efficiency of stores. It is impossible to achieve "one game of chess" and "one lot of goods".

Jingdong's dream of "million convenience stores" just looks beautiful at the moment.


Jingdong line dream: folding wings or take-off?

According to all-weather technology, 7FRESH has begun to enter the expansion stage, Beijing will soon open three new stores.

However, there is still doubt about the future of 7FRESH. Li Chengdong believes that staffing and management will be the biggest challenge for 7FRESH. After opening more than 70 stores across the country, the operation and management of fresh boxes and horses have begun to bear fruit, which 7FRESH needs to catch up with. And compared to the box Ma Xiansheng, 7FRESH "not abundant on hand", compared with Ali's large capital investment, the capital provided by Jingdong is not sufficient.

Moreover, the gap between 7FRESH and box horse is also reflected in independence and discourse power.

7FRESH from the innovation sector to the return of the group can be said to be the focus of the Jingdong Group on 7FRESH, but in the view of some insiders, this will also greatly affect the independence of the Jingdong 7FRESH.

At present, 7FRESH is at the helm of Jingdong group, vice president of Jingdong group and CEO of Jingdong fast business group. Within the group, Wang Xiaosong has devoted much of his energy to the maturity of Jingdong.

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