Reborn in 08, a heretical cultivator starting a business

Chapter 144 JD.com's Exclusive Monopoly? Wang Junshan's Capital Suppression!
"Great! It's only the beginning of November, and JD.com has already given me such a big surprise, launching an unannounced attack on Vipshop!"

Wang Junshan's expression turned stern; the other party's domineering attitude exceeded his expectations.
"They even engage in monopolistic practices, signing exclusive agreements that force brands to prevent them from directly cooperating with Vipshop!"

"Alright, then let's go to war!"

What are your plans?

"No holding back, let's take down JD.com!"

Previously, Paipai.com made a fatal mistake, but Wang Junshan ignored it and waited to win without lifting a finger.

Unexpectedly, JD.com jumped out and launched an attack without warning.

They even forced brands to sign exclusivity agreements and blocked Vipshop!
That would be disgusting; we can't do without JD.com.

Tang Zhi was prepared:

"Chairman, we want to offer exclusive discounts and subsidies to brands in the 3C and home appliance sectors!"

"For any 3C or home appliance brand that joins Vipshop and opens a brand-operated store, the commission will be reduced by 20%, to only 4%!"

"For 3C and home appliance brands and small and medium-sized brands that have joined Vipshop's self-operated platform, the settlement cycle of JD.com is unstable. Sometimes it is T+60 days, and sometimes it is T+90 days. This makes small and medium-sized brands suffer from long payment delays."

"We'll offer a flat T+30 policy to secure these small and medium-sized brands!"

"JD.com is quite friendly to key brands like Lenovo and ASUS, with a settlement cycle of T+30. We're even better, with a T+20 settlement cycle for everyone!"

Wang Junshan nodded: "This move is feasible; let's target JD.com's weaknesses!"

"JD.com's biggest problem is its small size and high cash flow pressure. It has to exploit small and medium-sized brands by using T+60 and T+90 settlements in order to maintain JD.com's cash flow and settle with large brands on T+30."

"But Vipshop is different. We have money; we have 18 billion yuan in cash flow in our accounts!"

Since Sanniu's financial collapse in September, YouTuan International's profits have plummeted.

In October, the sales of mother and baby products alone reached over 1 billion yuan, with a profit of over 500 million yuan!

In addition, other categories on Vipshop, YouTuan Group Buying, and YouTuan International, as well as "WeChat Farm," have all been incredibly lucrative.

Profits exceeded 10 billion in October!
Adding to the 900 million earned in the previous few months, Future Technology's cash flow has reached 18 billion, even after investing over 100 million in its flagship company.

U-Tuan's group buying business has expanded rapidly, burning through even more money.

Wang Junshan laughed and said, "What does it mean to have 18 billion in hand?"

"Exceeding JD.com's annual transaction volume!"

"You could kill him by throwing money at him!"

"Isn't it a lack of martial ethics? Isn't it about making exclusive agreements?"

"Let's use money to convince them."

"For major brands in 3C and home appliances, we no longer need T+30 or T+20, we can go straight to T+15!"

"JD.com settles accounts in 30 days, while we only need 15 days, which is twice as fast."

"Smash JD.com to death!"

“Okay, that way, even Chairman Liu will have to yell at people.”

Tang Zhi laughed: "If JD.com were to follow suit, they wouldn't have the money to keep up. Unless they continue to squeeze smaller brands, turning T+60 customers into T+90 customers, and T+90 customers into T+120 customers, but that's not realistic."

"If we don't follow suit, with Vipshop's settlement cycle nearly doubling in speed, even the big brands that have signed exclusive agreements will be tempted and have their own ideas. They'll also be considering whether to continue signing exclusive agreements next year!"

"If JD.com wants to maintain its exclusive agreement, it will have to pay an even heavier price!"

Wang Junshan nodded: "That's right, this is a well-intentioned strategy! I actually hope JD.com will follow suit!"

"Yes, I hope so too."

Tang Zhi smiled knowingly, understanding what Wang Junshan meant.

If Heaven intends to destroy someone, it will first make them arrogant.

If JD.com doesn't follow suit, that's fine too; the exclusivity agreement will end early, and we'll return to fair competition.

The period from 2007 to 2011 was a time of JD.com's exclusive monopoly.

At this stage, Tmall was not yet called Tmall. It had just been separated from Taobao and named "Taobao Mall". It was a B2C platform with an annual transaction volume of only a few billion to several billion yuan.

Taobao's annual transaction volume is 1000 billion yuan this year and 2000 billion yuan next year.

But all that money was created by millions of sellers and doesn't belong to Alibaba.

Only a tiny fraction of Taobao Mall represents Alibaba's direct revenue.

Currently, Taobao Mall's revenue is similar to JD.com's, but in the 3C and home appliance sectors, it lags far behind.

Therefore, major brands have signed exclusive direct sales agreements with JD.com.

Until 2012, when Taobao Mall was renamed Tmall and fully focused on B2C, everything changed completely.

Seeing Tmall's aggressive expansion and large user base, major brands have changed their attitudes.

Despite repeated pressure from JD.com, they refused to renew the exclusive agreement with JD.com.

From 2012 to 2015, major brands signed direct sales agreements with JD.com and Tmall on dual platforms.

After 2015, things changed again, and the company signed multi-channel direct sales strategies with platforms such as JD.com, Tmall, and Pinduoduo.

However, we are currently in the first phase.

JD.com has a monopoly!

Based on the development of the previous era, even Taobao Mall, which had just started as a B2C platform, was unable to shake JD.com's monopoly, and it took them four years.

Even Wang Junshan wouldn't dare say that he could shake JD.com or change the current landscape in just a few months.

But it doesn't matter.

Even if it can't shake the position, it can still make JD.com pay a higher price!

We also need to make things difficult for JD.com.

As a result, JD.com lacks sufficient resources and funds to develop other areas and become a comprehensive e-commerce platform.

They can only cling to their tiny piece of land in the vertical e-commerce market of home appliances and 3C products!

This kind of vertical e-commerce is still doing well in the last few years, but it will be obsolete in a few more years.

The future belongs to comprehensive e-commerce.

This is why Vipshop is constantly adding product categories.

Even if we don't do C2C, we should gradually increase the number of product categories, take it one step at a time, and achieve full category coverage within two or three years to become a comprehensive e-commerce platform.

Unfortunately, vertical e-commerce can get off to a good start, but its potential is too limited and it has no future.

Upgrading to a comprehensive e-commerce platform is the only way out.

Whether it's forcing JD.com to abandon its exclusive monopoly and compete fairly.

This forces JD.com to expend all its resources on locking in monopoly agreements with key account (KA) brands, leaving it with no resources to develop other businesses or become a comprehensive e-commerce platform.

JD.com's future will become very bleak.

The latter, in particular, may seem like JD.com has won temporarily, but it has lost the future.

It can be said that no matter what choice JD.com makes, Wang Junshan has won.

This wave of Wang Junshan is in the atmosphere!

The difference in funding and scale is enough to crush everything.

Just like the food delivery wars of the past.

JD.com is making a strong push, offering discounts to merchants and paying social security contributions for delivery riders.

However, with the rise of Meituan and Taobao Flash Sale, JD.com was the first to fall behind and had to scale back its operations across the board.

Meituan can burn through billions.

Alibaba can burn through 50 billion yuan.

How much can JD.com burn through?

Billions!

There's nothing we can do; the size difference is just that.

With limited funds, JD.com simply can't afford to burn money. Given this disparity, all strategies and techniques are meaningless; the only option is strategic contraction, relegating them to the role of bystanders.

Similarly, JD.com will also be in a very difficult position facing the settlement cycle war initiated by Wang Junshan.

Soon, Vipshop's latest policy spread across the entire internet:

Vipshop's brand direct-sale stores offer all transactions settled in T+7 days, with a 5% commission. Limited-time offers on 3C and home appliance brands, with a 4% commission!

Vipshop's self-operated stores all have T+30 day settlement. Key Account (KA) customers have T+15 day settlement. Second-tier customers of 3C and home appliance brands can also enjoy KA customer benefits with T+15 day settlement!

This news shocked major brands.

Brand-owned stores settle accounts on T+7, that's fine.

Taobao Mall is just as efficient.

But Vipshop's self-operated stores have T+15 and T+30 rates, which is impressive.

In contrast, JD.com charges T+60 or T+90, and only KA (Key Account) clients can have T+30!

Vipshop offers a T+30 payment plan for all its customers, while key account (KA) customers and even second-tier customers of 3C and home appliance brands can enjoy a T+15 payment plan!

This is fatal!
For anyone doing business, the most important thing is cash flow!
This is especially true for branded companies.

While a 15-day cycle and a 30-day cycle may seem to differ by only a factor of two, the actual capital turnover rate is several times higher!
Especially for top-tier brands, their daily transaction volume is a huge sum of money.

If every huge sum of money is tied up for an extra 15 days, the impact will be enormous.

For small and medium-sized brands on JD.com, the T+60 and T+90 delivery times are delayed by one to two months compared to Vipshop!

That would have a greater impact.

The biggest problem for small and medium-sized brands is cash flow.

Many of them take out loans to purchase goods, pay salaries, and operate, just waiting to sell the goods, collect payments, repay the loans, and pay the interest.

Unexpectedly, JD.com delayed the process for two months, three months, or even longer.

Many small brands have been dragged down and killed in this way.

But now things are much better. Vipshop is also operating its own stores, and all of them are T+30, while second-tier brands in 3C and home appliances can strive for T+15. This is really a benefit.

In no time, all small and medium-sized brands were excited and contacted Vipshop to cooperate.

Vipshop treated all of these matters amicably.

Not only will the settlement cycle follow T+30, but special support will also be provided.

For example, slow-moving or unsold products can be cleared out through Vipshop's brand flash sales at 70% or 50% off.

Help brands monetize their inventory!

The comprehensive services have greatly pleased small and medium-sized brands.

Their products have low brand awareness and few distribution channels. Every year, they have a lot of unsold products that are stuck in warehouses and cannot be sold. They also lack the resources to open their own stores to sell their products.

Now things are much better. We can package the products and consign them to Vipshop for quick sales and timely payment.

The T+30 settlement period makes it even more attractive.

As a result, many small and medium-sized brands, fed up with JD.com's T+60 and T+90 settlement cycles, switched sides and partnered with Vipshop.

Some second-tier 3C and home appliance brands are being pressured by JD.com to sign exclusive agreements.

I was all ready to sign, but then I realized that Vipshop had a better future and better policies!

Although Vipshop is not as good as JD.com in terms of 3C products and home appliances, Vipshop has ten times the number of users as JD.com!
In 2008, JD.com had a limited product range, its users were mainly male, and its scale was only two million.

Vipshop has not released its user numbers for a long time, but industry insiders speculate that they are over 2000 million!
There's nothing we can do about it; WeChat's user base is just that big.

The explosive popularity of "WeChat Farm" has undoubtedly attracted a large user base.

This size is ten times that of JD.com.

Even though Vipshop isn't as good at 3C products and home appliances as JD.com, its user base is undeniable.

Coupled with the allure of T+15, these second-tier brands abandoned JD.com and instead signed agreements with Vipshop to join Vipshop's self-operated platform.

More importantly, Vipshop does not impose any restrictions or require exclusivity.

If you sign with Vipshop, you can also sign with Taobao Mall.

That makes it much more tempting.

As a result, small and medium-sized brands that haven't signed contracts yet are all rushing to join Vipshop for T+30.

Second-tier brands and major brands that hadn't signed contracts were also tempted and joined Vipshop.

Even brands that had already signed contracts, such as Lenovo, Dell, HP, and Acer, have some regrets.

They are also starting to hesitate about whether to continue signing JD.com's exclusivity agreement next year.

This change has put JD.com under considerable pressure.

Chairman Liu was furious: "T+30 for all! T+15 for KA and second-tier 3C and home appliance brands!"

"Okay, really okay!"

"This is aimed at JD.com's Taiyang acupoint!"

That's fucking ruthless!

"Wang Junshan is formidable; when he strikes, it's deadly!"

The vice president strongly agreed:

“In October, we started working on signing the exclusive agreement for next year, which was originally going to go very smoothly. But now, because of Vipshop, all the brands are hesitant.”

"Small and medium-sized brands, needless to say, have all turned to Vipshop because of the two-month settlement cycle difference."

"Second-tier 3C brands are also aiming for T+15."

“Even major key account (KA) clients who were certain to renew their contracts are hesitant.”

"Including ASUS, HP, and Acer, who have had exclusive partnerships with us for two years, all have indicated that they will postpone signing contracts and are waiting to see what happens."

"They're practically saying it outright: Vipshop offers T+15 days for settlement, should JD.com follow suit?"

"Go with it, we'll continue with the exclusive contract. Don't go with it, then we won't sign!"

"Sigh!" Chairman Liu sighed, "With Wang Junshan's actions, JD.com has suffered heavy losses."

"Difficult!"

"It's too difficult."

"What do you think about whether to follow or not?"

The scene fell into dead silence; no one dared to speak.

"Speak freely; in this situation, we must pool our wisdom."

Seeing that Chairman Liu had said this, everyone then began to speak:
"Exclusive partnerships are key to building JD.com's competitive advantage and cannot be lost. Even if it means following suit with T+15, we must sign such agreements!"

"That's right, we must lock in our key account (KA) clients, otherwise how can we compete with Taobao and Vipshop?"

"Lock it up, lock it up, you make it sound nice. But what will you use to lock it up?"

"Vipshop is ruthless, T+15. We need to lock in those big clients and follow suit with T+15. How much money would that cost? Where would JD.com get that kind of money?"

"Even if we don't have money, we have to lock it up. We have to sell everything we own to lock it up, otherwise JD.com will be finished!"

"In terms of transaction volume, JD.com's monthly transaction volume is only around 100 million yuan, which is similar to Taobao Mall (B2C). But Taobao's monthly transaction volume is over 8 billion yuan, and its annual transaction volume is over 100 billion yuan. We are far behind!"

"And then there's Vipshop. Even though it's far inferior to Taobao, and even though its sales volume has dropped, its monthly transaction volume is still three to four hundred million yuan, which is something that JD.com can't compare to."

"If we can lock in our key account (KA) customers through exclusive agreements, we can still hold onto the 3C and home appliance sectors, where we can compete with Vipshop and Taobao Mall. If we can't lock them in, then we're finished; we'll even lose our last foothold in the competition with Vipshop."

"That's what you say, but where will the money come from?"

"There's no other way. On the one hand, we continue to raise funds and get shareholders to invest money. On the other hand, we continue to squeeze small and medium-sized brands, extending their settlement cycle to T+90 or T+120! We use their money to settle accounts with major KA clients on T+15 to fill the hole."

"The operation is simple. We won't go into details. We'll extend the settlement period through some reasonable means later."

"For example, we can find some areas where the brand is not in compliance and delay the settlement period to 90 or 120 days in accordance with regulations."

(End of this chapter)