Jingdong Again Overweight Tourism Self + Platform Two Pronged Approach

If a company achieves great success with a certain mode, it tends to copy the pattern to other fields. Jingdong, once again heavily promoting the tourism industry, seems to be trying to replicate its winning mode in the field of e-commerce.

　　 Overweight again

Recently, a wholly owned subsidiary of Jingdong, Suqian, Han state, spent 450 million yuan to subscribe for a private share issue of Kaiser's travel industry. After the completion of the transaction, Jingdong's shareholding ratio reached 7.37%, or became the fifth largest shareholder of Kaiser's travel industry. Statistics show that the main business of Kaiser's travel industry is outbound tourism, domestic tourism business, association award business, tourism e-commerce, aviation and railway catering business, project investment and project management.

This time, Kaiser travel industry has not only been subscribed by Jingdong subsidiary, but also has reached a cooperation agreement with Jingdong. According to the announcement, after that, the products of Kaiser's travel industry will be incorporated into the Jingdong ecosystem, supplemented by the product supply chain of the Jingdong travel two channel "business travel" channel; Jingdong will use the online channels and resources to promote the development of Kaiser's travel industry; in addition, the two sides will take advantage of the offline store advantage of Kaiser's travel industry to explore the marketing mode of "Internet + store".

It can be seen that complementary advantages are the main purpose of the two enterprises' cooperation. In the context of the outbreak of the "May 1" holiday, this is a good time to increase the tourism industry. Jingdong also said that although the epidemic had an impact on the tourism industry, the company has always been firmly optimistic about the potential of China's tourism full recovery and continued to promote the layout of tourism sector business.

It is worth mentioning that before that, Jingdong had a less successful layout in the tourism field. The injection of Kaiser's tourism industry has an impact on the pattern of the whole tourism sector of Jingdong.

　　 A failed investment

In June 2014, Jingdong announced that the Jingdong travel channel was launched on the new line, the first time it had blown the bugle to the tourism industry. However, as a novice in tourism industry, it is obvious that a new channel on line can not be formally entered. So after six months, Jingdong found a breakthrough, that is, the way cattle. In December 2014, Jingdong began to enter the tourism industry with a $50 million stake in the way cattle.

Six months later, in May 2015, Jingdong continued to raise its quota and again injected $350 million into the way cattle. Since then, Jingdong has become the first largest shareholder of road cattle, accounting for 27.5% of the proportion of road cattle. At that time, the way cattle were still one of the tourism giants that caged with Ctrip. Jingdong clearly hopes for the stake, but in the past few years, the way cattle have not taken advantage of Jingdong to occupy the market quickly, but on the contrary, they are becoming more and more difficult in the fierce competition.

Earnings data showed that the operating income of the way cattle fell by nearly 80% in 2017 compared with 2016, after which, 2018 and 2019 revenue growth stagnated, and the growth rate was less than 3%. In the past 2014-2019 years, the net profit of the way cattle has always been negative, of which the net profit in 2019 rose to -272% year-on-year.

As the first major shareholder, Jingdong is the first loser in the low road performance. Judging from the total market capitalization of the current way cattle, which is only 107 million US dollars, and the current Jingdong still holding 21.2% of the way cattle, Jingdong has lost more than 90% of its investment to the way cattle. For now, this is a failed investment. But for Jingdong, what is more unacceptable is the lack of industrial layout.

With the Internet giant, Ali's flying pigs rely on Ali's resources to develop rapidly; Baidu's investment in Ctrip is already a giant in tourism industry; the Hornets nest invested by Tencent has planned to go public in the next one or two years.

The tourism industry with unlimited potential has been very crowded, and the failure of the investment way has made the Jingdong lag behind other Internet giants in the tourism industry. Nevertheless, tourism is still one of the most prominent new businesses in Jingdong's business. During the double 11 period in 2019, Jingdong performed well in the tourism sector. The turnover of parent hotels increased by 290% compared with the same period last year. The turnover of Island hotels grew by 380% over the same period last year, and the number of outbound travel orders increased by 180% over the same period. The turnover of customized travel products increased 6 times compared with the same period last year.

Therefore, whether from the growth potential or growth rate, tourism is an industry that Jingdong can not give up. As for temporarily lagging behind, Jingdong is not the first to face it. They are replanning their investment through a more perfect layout.

　　 Self run + platform two pronged approach

Just like the original electricity supplier, when Jingdong entered the tourism industry, it also faced a choice, that is, to do proprietary tourism business, or to become an internet tourism platform. As in the first place, Jingdong chose two pronged approaches.

If toB is the foundation of Alibaba, self employment is the magic weapon for Jingdong to win. The success of Jingdong's self operated mode in the field of electric business is to use stronger control and efficiency to enable users to have a more perfect experience and form a highly competitive reputation, and finally gain market dominance.

However, unlike the tourism industry, there is an obvious focal point in the mode of self catering business, namely, logistics, which can enhance the efficiency of logistics and enhance the customer experience. However, the tourism industry lacks the immediate focus, which weakens the combat effectiveness of the self operated mode. At the same time, the experience of the electricity supplier field also shows that the self operated mode makes money, but it does not make money. The platform mode receives service fees and commissions to make money.

For all these reasons, Jingdong has adopted a two pronged approach of "self run + platform". This is why Jingdong first set up Jingdong travel and reinvest the way cattle. But for the time being, Jingdong's travel business and tourism platform are far from satisfactory.

At present, in the Jingdong travel website, apart from a small number of products, services such as vacation trips, ticket booking and other services are basically provided by the way cattle. If the head diagram of Jingdong is removed, the services provided can almost be found on the way cattle website.

The embarrassment is that if the products provided by Jingdong travel basically come from the way cattle, then there is no need for users to book products through Jingdong travel. Product diversification and mutual checks and balances are the primary characteristics of the platform, but the simplicity of product service providers is blurring the positioning of Jingdong's travel platform.

In order to get rid of this situation, Jingdong has tried to increase its own mode of operation, and the landmark event is to set up its own travel agency company. In April 2019, Jingdong established Beijing Jingdong Cloud River Travel Service Co., Ltd., which covers tourism consultation, inbound tourism business, domestic tourism business and so on.

At present, some airline tickets and hotel products of Jingdong travel channel have been self operated, and some of them will jump directly to Jingdong flagship store after clicking. Nevertheless, the proportion of Jingdong's proprietary business is still too low, and it is hard to get rid of the impression that most products come from the way cattle.

So after 1 years of setting up a travel agency company, Jingdong once again invested 450 million yuan to introduce Kaiser travel industry. This is very important for Jingdong to strengthen the attributes of Jingdong's travel platform, and is also crucial to the diversification of Jingdong travel products. Moreover, after the baptism of the epidemic, Jingdong's competitors in the tourism industry are in a state of weakness, while the market is on the eve of full recovery. At this point, the increase will achieve twice the result with half the effort.

The changing market has given Jingdong a chance to fight again, in a slightly crowded tourism industry, "self run + platform" mode or shine.

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