After the cooperation, the competition environment of Jingdong Home will be more intense.
Joining life without worry, in addition to supplementing offline channels, Jingdong also wants to seize third- and fourth-line users.
It was learned that on August 8, Jingdong Group announced that it had completed its investment in the life of daily necessities chain stores. At the same time, Jingdong will establish a joint venture supply chain company, Beijing Trade Technology Co., Ltd., with no worries about life, with the intention of breaking the barriers of online and offline channels and pushing the home improvement business down the market.
As early as 2011, Jingdong home began to lay out the mid-to-high-end home market. Up to now, Jingdong’s home-use cooperative merchants have exceeded 25,000, and brands such as MUJI, Xiangyin, WMF and Thermos have settled in. According to JD.com, During the 618 period of 2019, JD.com sold more than 36 million items for daily use; only 618 items were sold on the same day, and the transaction amount increased by 68%.
As the traffic dividends gradually peak, JD.com must look for new incremental markets. According to QuestMobile data, the size of users in China’s sinking market is over 600 million, and the income of sinking users is generally lower than that of non-sinking users. The main features are price-sensitive and trustworthy for offline stores.
At the same time, Life is just a low-cost, affordable home chain store that exists mainly in the 3rd, 4th and 5th tier cities, connecting the factory and consumers directly to reduce the middle. Link, improve the efficiency of the supply chain, similar to the foundry model of the famous products.
Life Worry stores mainly sell their own branded products “Life-Friendly LATTLIV”. The existing stores and future expansion plans are all based on low-tier cities. Up to now, shops with no worries have covered 170 counties and cities in 28 provinces in China, and nearly 75% of them are located in cities below the third and fourth tiers.
Jingdong Home has no foundation in the sinking market, and there is no worry about whether the existing store distribution or the future expansion plan coincides with the planning of Jingdong Home. In June this year, Jingdong’s first offline C-class demonstration store settled in Shenqiu County, Zhoukou City, Henan Province. The Jingdong home layout county-level city experience store revealed its ambition to sink.
It is reported that after the two companies realize cooperation, they will jointly build their own branded products. Jingdong mainly provides offline logistics and distribution services and Internet technology, while life care depends on the brand’s deep work in the home industry.
There are precedents for Internet giants to join the home industry. In February 2018, Alibaba became the second largest shareholder of the actual family; in May 2019, Ali invested in the Red Star Macalline. After the two major home furnishing giants held hands with Ali, there was not much time left for Jingdong.
But before the home brand frequently broke the problem. According to media reports such as the “Economic Observer”, the net red home brand NŌME franchise stores are profitable, and some franchise stores have broken supply. Life is worry-free, even if it is backed by Jingdong, the overall risk of the home industry is still not small.