JD.com App undergoes a major revamp, revealing three important business signals | Exclusive

Written by Ren Cairu

Edited by Qiao Qian and Yang Xuan

36Kr exclusively learned that JD.com initiated an app revision project in the second half of 2024. The internal testing began in mid-to-late October, and it is currently in the gray testing stage. A person from JD.com stated that the priority and significance of the revision project can be ranked among the top three in the second half of 2024. After its launch, a notification was issued to all employees to collect feedback.

In this revision, the most significant change that reflects the business logic is the redistribution of the primary entrances.

Previously, on the opening page of the JD.com app, the two main entrances, Home and Second Delivery, were centered. Currently, for some users who have been selected for the gray test, after opening the JD.com app, there are four main entrances in the upper left corner of the homepage, namely "Special Deals", "Home", "Second Delivery", and "New Products". However, for some other users, the interface shows only three main entrances - removing "Special Deals" from the above.

In summary, Special Deals and New Products have become the anchors for JD.com to enhance the vitality of its retail business, while Second Delivery remains the hope for creating incremental growth. Second Delivery is particularly worth mentioning. Since it came under the direct jurisdiction of former Meituan executive Guo Qing, many industry insiders believe that Second Delivery is comprehensively benchmarked against Meituan Flash Purchase. However, from the latest business layout, Second Delivery seems to be benchmarking against all of Meituan's core businesses - food delivery, in-store group buying, instant retail, and various other local life functions, which have all been integrated and launched.

In terms of visual design, the "My" interface of JD.com and the display page of a single product have been evaluated by many users as "becoming more and more similar to Taobao and Tmall."

JD.com, which seeks incremental growth and vitality, is jumping out of the main framework of shelf retail and attempting to become a "super app". What kind of company will it eventually become?

Visual Comparison of the Product Pages of the New JD.com and Taobao (Left: JD.com, Right: Taobao)

Low Prices Are a Complicated Question, Not a Simple Choice

"Low prices" have returned to the top priority of JD.com's retail business for two years, but the uncertainty is increasing.

On one hand, the "Special Deals" in the new version of JD.com have become more prominent. For some users in the new version, "Special Deals" has become the first main entrance. Under this entrance, there are several featured sections such as "Big Brand Outlets", "Snack Square", "Clearance Sale for Near-Expiry Products", and "5 Items for 5 Yuan". Continuing to scroll down, many products from the "10 Billion Subsidy" channel are recommended.

However, for some other users in the new version, the "Special Deals" entrance is nowhere to be found.

After the revision, some users have the "Special Deals" entrance (Left), while some do not (Right)

At the end of 2022, founder Liu Qiangdong initiated a transformation within JD.com Retail, and the "low-price strategy" emerged at that time. At the Q4 performance meeting of that year, the "10 Billion Subsidy" became the most concerned issue.

However, JD.com has been relatively restrained in pursuing low prices, and the management has repeatedly expressed an attitude of restrained investment - to control the impact of low prices on the financial report and profits. "The 10 Billion Subsidy relies on the joint efforts of the platform, merchants, and suppliers."

A merchant participating in the 10 Billion Subsidy told 36Kr that when the activity was initially launched, the participation threshold was relatively high. Products needed to meet certain sales and discount requirements to be listed, and the platform would also give some commission rebates and product subsidies. But about three months later, due to the difficulty in controlling the threshold and the reduction in subsidies, the products in the 10 Billion Subsidy began to become chaotic.

"From the current objective facts, the platform subsidies and traffic support have not brought too obvious effects. It can only be said that the conversion rate of products with the '10 Billion Subsidy' logo will be slightly improved." The above-mentioned merchant told 36Kr.

What is the actual effect of the 10 Billion Subsidy? JD.com Retail CEO Xu Ran stated at the earnings conference that it "has a positive driving effect on users' shopping frequency and the activation of low-frequency users."

Another representative action of JD.com in pursuing low prices is Jingxi Self-Operated. The investment attraction logic of Jingxi is to cooperate with source factories, which provide products at extremely low prices, and JD.com sells them in a self-operated mode. "But the wool comes from the sheep. Currently, the main way for purchasing and sales to control quality is still to monitor bad reviews. Pursuing low prices in this way can easily lead to the phenomenon of bad money driving out good money." A merchant who has been in contact with Jingxi Self-Operated told 36Kr.

This merchant sighed and said, "For Taobao, Douyin, or other platforms, the trust of users is more endorsed by the brands or live-streaming hosts入驻 within them. But from our many years of practice, the JD.com platform itself is the endorsement, and users are willing to pay for its credibility."

Therefore, in his view, although the Jingxi business focuses on low prices, for JD.com, quality control is more important compared to similar platforms. Otherwise, users' trust in JD.com may be gradually eroded.

The uncertainty about low prices is not only reflected in this revision. Another interesting detail is that before the 618 promotion in 2024, Liu Qiangdong remotely issued an instruction from Dubai to change the promotion theme from "Good and Cheap" to "Cheap and Good". And for the recent New Year Festival, JD.com's theme has returned to "Good and Cheap".

For JD.com, which needs to open up incremental growth, low prices are not a simple choice of "whether to do it or not", but a more complex question - under the premise of "doing it", how to balance the quality mindset that has been established for a long time. It is far from being just a slogan issue, but requires more thorough changes in organizational capabilities, assessment indicators, and quality control in purchasing and sales.

JD.com Needs "New Products", and More Importantly, to Counter Inertia

Compared to the fluctuation of the "Special Deals" entrance, the upgrade of the "New Products" entrance in the new version of JD.com is more determined.

New products mean a continuous source of vitality and trends. Not only JD.com, but almost all e-commerce platforms want to seize this high ground.

As early as 2019, JD.com established "JD.com Cube" to focus on the launch of new products. At the 2024 JD.com Cube Annual New Product Gala, JD.com's senior management mentioned, "New products are the most important part of the product life cycle. JD.com will invest heavily, and this is also the direction we will focus on in 2024."

But what is the actual feeling of merchants?

When talking about their perception of the JD.com platform, more than one merchant told 36Kr that JD.com is still dominated by search in general, and the proportion of "big links" with high sales is more significant. A tea brand merchant told us, "In the tea field, too cutting-edge products often do not have good activity and effect on JD.com. Its overall product rhythm is one to two generations slower than other platforms."

Besides search, effective recommendation is another source of vitality for new products. The recommendation flow on the platform's homepage and the "Guess You Like" are both entrances. However, JD.com's search mindset has always been stronger than the recommendation.

Because of this, for merchants, "To launch a product, you must do search, but relying on natural traffic for search is not that fast." - A merchant told 36Kr that JD.com's traffic distribution rules tend to protect the existing inventory. Almost all the products with high search rankings are big brands and old links with extremely high sales. "In this case, how can new products compete?"

This merchant gave an example, saying that after Tmall adjusted its traffic rules, the competition in search ranking has become more intense. The sales competition is approximately in a 1 - 2 week cycle. Douyin is even more "competitive", with the transaction density in the live - streaming room competing in minutes. "You need to constantly increase sales." In contrast, JD.com's mature links have a greater advantage in the ranking. "It is the success accumulated over many years, and the competition difficulty for new merchants will be greater."

In the opinion of the above - mentioned merchants, "JD.com still values products with historical precipitation more. Such products have a higher conversion rate and are more helpful to the platform's sales and income." In other words, behind its search ranking mechanism, there are more path dependencies and inertias.

This time, the "New Products" entrance is separately proposed and placed on the same level as the "Home" entrance, which fully shows JD.com's expectation to revitalize new products and new brands. However, in addition to the action of setting up a new entrance, whether the subsequent recommendation algorithm and traffic distribution rules can keep up will more determine whether JD.com can finally cultivate a new product mindset and bring user stickiness and consumption frequency dividends to the platform.

Second Delivery Benchmarks Against Everything of Meituan, But Let's Wait and See

If "Special Deals" and "New Products" are to enhance the core retail business of JD.com, "Second Delivery" is to open up a new battlefield.

As early as May 2024, the Second Delivery section appeared in the core position of the JD.com App's opening page. However, in the past period, the merchants入驻 in Second Delivery were mainly chain supermarkets and coffee and tea brands, focusing on instant retail and a part of "drink" takeout.

Recently, the business of JD.com Second Delivery has quietly expanded to the entire field. In some cities, food delivery, in - store group buying, instant retail of fresh produce, daily necessities, medicine purchase, flower delivery, etc. have all been launched, which can be called a "full coverage" of local life.

The functions of Second Delivery have covered supermarkets, fresh produce, takeout, group buying, etc.

In terms of benchmarking against Meituan, Second Delivery almost includes all of Meituan's main businesses. Besides Second Delivery, the local life and JD.com Travel sections on the "Home" page also cover functions such as train tickets, air tickets, scenic spot tickets, and hotel reservations.

36Kr learned that in terms of takeout, JD.com's current idea is "quality takeout". Therefore, almost all the merchants入驻 in the takeout section are large chain catering brands, including Papa John's, Haidilao, etc.

Focusing on large chains is a way that does not require a heavy upfront investment. A founder of a catering brand analyzed to 36Kr that big brands usually consider factors such as revenue and energy input when facing a new channel, and are prone to a hesitant attitude; on the contrary, if a large number of small merchants are to be recruited, the advancement speed may be faster, but the platform needs to build a heavier ground promotion and sales team.

"This is a dilemma. Choosing to start from big brands means less human investment, and then the platform must show sincerity in exchange for resources and traffic. If there is not enough concession and traffic as an attraction, it may be difficult to advance." The founder said.

According to 36Kr's understanding, the commission rate currently offered by JD.com Takeout is indeed very low. A brand merchant入驻 revealed that the commission rate of JD.com Takeout is about 3 to 5 percentage points, which is about 10 percentage points lower than the comprehensive cost ratio of Meituan and Douyin.

However, after a period of practice, the overall daily order volume of this brand is still relatively low, and some stores even have a situation of zero orders in a single day, and the fluctuation of the total order volume is extremely irregular. The reason is that the user mindset has not yet been established on one hand, and the inaccurate traffic distribution in the initial stage of the business may be another main reason. "Internally, there is no clear understanding of which traffic should be distributed to whom."

Therefore, for the brands入驻, the current stage is more like "accompanying the run" for JD.com Takeout, and the actual effect in the future depends on the richness of the supply and the stable distribution of traffic.

Besides takeout, in the in - store group buying section, JD.com's interface is very similar to Meituan's - presented in the logic of "products", highlighting the discount advantage of the "price after discount" and the mindset of "snatching". However, JD.com's current supply is still relatively small, with only some recommended single items, and does not support active search. As we understand, in the group buying section, JD.com's entry point is still chain merchants.

The group buying pages of JD.com and Meituan are very similar (Left: JD.com, Right: Meituan)

Whether it is takeout or all - category instant retail, JD.com has sufficient fulfillment conditions to do it. As of the second quarter of 2024, the annual active riders of Dada Second Delivery are nearly 1.3 million, and the cumulative number of registered riders has reached tens of millions. This is a valuable capability that is difficult to be quickly replicated. However, the challenge is not small for JD.com to extend from the low - frequency e - commerce business to the high - frequency businesses such as instant retail and takeout.

The current proposition for JD.com is that in the Internet era where every business has numerous competitors, can it move from its previous segmented advantages to a more comprehensive market while adhering to its own characteristics?