<h2>Under Pressure</h2>
The upcoming &#34;Double Eleven&#34; is the first one for Liu Qiangdong since his return to JD.com.
Unexpectedly, the first thing that went viral was the spat between JD.com and Li Jiaqi and Haishi Roaster. The price of Haishi Roaster on the JD.com website was even lower than the price in Li Jiaqi's livestream, causing a three-way dispute.
Behind this incident is Liu Qiangdong and JD.com's eagerness and ambition to create a &#34;low-price&#34; mindset. Low prices are also the core of JD.com's Double Eleven this year, and it is the most powerful weapon for Liu Qiangdong to rebuild JD.com after his return.
Specifically, during this year's JD.com Double Eleven, there will be a discount of 50 yuan for every 299 yuan spent across different stores, and an additional 20 yuan subsidy can be stacked. The number of products participating in the billion-yuan subsidy will also be twice that of the 618 period. They will be available for sale directly in stock starting at 8 p.m. on October 23rd.
JD Retail CEO Xu Lei said at the JD Retail Ecological Partner Conference: &#34;This year's JD 11.11 will continue to strengthen the concept of low prices by providing 2 billion subsidies, comprehensive traffic support, and improving the merchant experience... The money saved through extreme supply chain efficiency will be passed on to consumers and merchant friends.&#34;
JD's mood to revive its performance can be described as very urgent. In fact, this October can be said to be a busy autumn for Liu Qiangdong and JD.
In mid-October, rumors of a &#34;businessman surnamed Liu suspected of illegal activities&#34; caused JD's stock price to fall. JD denied this and reported the case to the public security organs, but the stock price continued to decline.
As of 10:00 am Eastern Time on October 25th, JD's stock price fell to $24.64 per share, with a total market value of $38.773 billion, less than one-third of Pinduoduo ($144.239 billion), less than one-fifth of Alibaba ($206.952 billion), and 11% of Tencent ($346.843 billion).
This also directly affected Liu Qiangdong's net worth. JD's financial report shows that as of the end of February 2023, Liu Qiangdong holds 12.7% of JD Group's shares. With the decline in JD's stock price, Liu Qiangdong and Zhang Zetian's net worth in the recently disclosed 2023 Hurun Rich List has shrunk to 60 billion yuan, a year-on-year decrease of 43%, and a decrease of 36 places compared to last year.
Zhang Xinmao, a market analyst at Guotai Junan Research Institute, said that the surface reason for the sharp drop in JD's stock price is rumors, but in fact, among the three e-commerce giants, JD is the one that has fallen behind the fastest, with Pinduoduo's market share increasing significantly and its stock price performance being the strongest.
The difference between JD and Pinduoduo in the retail track has already been directly reflected in their performance.
In the first half of the year, JD recorded revenue of 5308.87 billion yuan, a year-on-year increase of 4.65%, but the growth rate slowed down, a decrease of 6.34 percentage points compared to the same period last year. In contrast, Pinduoduo's revenue growth rate in the first half of the year reached 62.79%. According to the financial report, in the past four quarters, JD's retail revenue growth rate has always lagged behind Pinduoduo, with a difference of 45-59 percentage points.
The second quarter of this year was the first quarter after JD's deep dive into billion-dollar subsidies. Investors were looking forward to its performance, but the growth turned out to be weak. After JD's second-quarter report was released, the stock price began to fall again.
Market concerns are also reflected in the ratings. Recently, Morgan Stanley downgraded JD's Hong Kong stocks and JD Group's ADR to neutral; JPMorgan Chase downgraded JD Group's ADR to neutral. On the eve of JD's third-quarter report release, Huatai, CICC, CITIC Securities, and other securities firms also predicted that JD's performance would be under pressure.
As one of the original top e-commerce giants, JD's position in the e-commerce world is gradually being challenged. Tmall, Pinduoduo, Douyin, and even top anchors are forming a blockade against JD with advantages such as low prices. Liu Qiangdong has also begun to fight back.
<h2>Counterattack</h2>
In fact, Liu Qiangdong has long felt the crisis in the market. After returning to JD in November last year, he led a series of personnel and organizational adjustments. Xu Lei, CEO of JD Group, and Gao Liqiang, Vice President of JD Group, have successively resigned and retired this year, leaving JD. Former CFO Xu Ran was promoted to JD CEO, responsible for the daily operation and coordinated development of the group's various businesses.
Reporting to Liu Qiangdong.
Another major change is that JD.com has started to emphasize the &#34;low price&#34; of its products. &#34;Low price is the only fundamental weapon,&#34; he said at an internal meeting at the end of last year. Since then, JD.com's marketing and focus on winning customers' minds have shifted from prioritizing high-quality service and genuine products to emphasizing low prices.
This year, JD.com has launched several new initiatives around low prices, such as billions of subsidies, a 9.9 free shipping channel, and lowering the threshold for free shipping on self-operated products. The upcoming &#34;Double Eleven&#34; is a crucial moment for JD.com to shape consumers' perception of &#34;low prices&#34;.
However, after Pinduoduo implemented billions of subsidies for three years and disrupted the e-commerce industry with its low-price advantage, Taobao and JD.com have also launched billions of subsidies to fight back. The price war in the e-commerce industry has intensified. As a latecomer in the billions of subsidies game, JD.com's massive investment in joining the price war is a risky move.
Morgan Stanley stated in a research report that in the current economic environment, if JD.com fails to successfully implement its low-price strategy, its structural position in the Chinese e-commerce market will be impacted.
Industrial Securities predicts that due to the need for JD.com to digest organizational restructuring and the disappearance of the revenue acceleration brought by the acquisition of Dada in the third quarter of last year, the company's revenue growth may be under pressure in the short term. However, in the long run, Industrial Securities is optimistic about the organizational efficiency improvement brought by JD.com's organizational restructuring and the revenue growth elasticity brought by changes in its product structure.
However, some industry insiders believe that unlike other e-commerce platforms, JD.com should emphasize its own advantages rather than simply focusing on low prices.
For a long time, JD.com has been a symbol of middle-class consumption in China. It is known for its high-priced 3C and electronic products and has built a good reputation through high-quality service.
Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, believes that the essence of a price war lies in cost control capabilities. JD.com's low prices are based on its supply chain and logistics, which means lower supply chain operating costs and higher operational efficiency. Pinduoduo's cost advantage lies in operational efficiency, with lower sales costs for merchants on the platform.
Therefore, what JD.com needs to do is to amplify its supply chain and service advantages, rather than becoming another Pinduoduo.
For the past 20 years in the Chinese e-commerce industry, JD.com and Liu Qiangdong have always played the role of challengers. He snatched users from Suning, Dangdang, and Gome, gradually establishing JD.com's market position as a winner.
This time, Liu Qiangdong is more like a defender. He faces greater challenges than ever before. In addition to the plateauing user growth and increasing competition, the trend of consumer downgrading has put JD.com's &#34;middle-class consumption&#34; model in a growth dilemma, and the lower-tier market is not a path where JD.com excels.
However, Liu Qiangdong still possesses passion and ambition. Four months ago, JD.com proposed the &#34;35711&#34; goal for the next 20 years, which includes achieving three companies with revenue exceeding one trillion RMB and a net profit exceeding 70 billion RMB, and five companies entering the Fortune Global 500.
For JD.com and Liu Qiangdong, this autumn is particularly important. China's internet and e-commerce industry should be diverse and colorful, not only needing low-price platforms like Pinduoduo but also needing the light of middle-class consumption like JD.com. After all, people's desire and longing for a better life will always exist.

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JD.com's market value is now only one-third of Pinduoduo's.

Liu Qiangdong faces a challenging autumn