From the confusion and complaints of riders, to the frequent collapse of the system, to the many dissatisfaction of merchants, the 100 days of JD takeaway can be described as a bumpy road in the “wild run”. This article will provide an in-depth analysis of JD.com’s performance in these 100 days, explore the practical challenges it faces, and its future development direction.
In the 100 days that JD.com entered the takeaway, it soared, and the number of orders exceeded 20 million, but behind the results, what problems and challenges have arisen?
Confused riders
Since the announcement of its launch on February 11, JD Takeaway has been launched for nearly 100 days. 100 days is a critical time node to observe a new thing and a new entrant, there is a “100-day Restoration” in Chinese history, and Trump’s “100-day New Deal” on the other side of the ocean has been reduced to a “100-day chaos”.
100 days is enough for a new entrant to complete the initial launch, expansion, and adjustment, while gathering enough market feedback.
JD.com Takeaway initially entered the game in a high-profile manner, under the banner of “quality takeaway”, “commission-free throughout the year” for merchants settled before May 1, and proposed to pay five insurances and one housing fund for its full-time riders, which won praise from merchants, riders and consumers for a while.
But these ideas have been in fierce collision with reality in these 100 days.
On social platforms, there are more and more complaints about JD takeaway. First of all, it comes from the delivery rider.
At present, riders who undertake JD.com’s takeaway delivery can be roughly divided into full-time riders, squad riders and crowdsourced riders.
- Full-time riders are “only sending and not grabbing”, the system can send enough orders, there is no need to compete with others, and you cannot pick orders or refuse orders;
- Crowdsourcing riders are free to take orders, not too constrained, the working hours and intensity depend on the individual, and they can also take orders on multiple platforms, that is, they need to constantly grab orders;
- Squad riders are not full-time, but compared with free crowdsourced riders, they have a closer relationship with the platform, and they need to work within a specific schedule period every day, with a fixed amount of tasks, and they also need to conduct individual assessments.
JD Takeaway announced on February 19 that it would pay five insurances and one housing fund for its full-time riders, and then completed the signing of contracts with more than 10,000 full-time riders, and on April 27, it announced that it would recruit 100,000 full-time riders in the next three months.
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Many riders are deeply confused about how to become full-time riders, and JD.com’s full-time rider recruitment adopts an invitation system, however, no one can say what standards can be met to be invited.
In media reports, both delivery workers with 10 years of delivery experience in Dada were not selected, and some were invited less than 1 month after joining JD.com.
At present, most of the riders who have received invitations are “squad riders”, because the distribution intensity and management model of squad riders are closer to full-time riders, and they do not pay five insurances and one housing fund for the time being. However, many of the interviewed team riders could not say how long they would join and what kind of performance they would achieve before they could be invited.
The number of takeaway riders in China has exceeded 10 million, and there are also 1.3 million active riders on the Dada platform that mainly provides delivery services for JD.com, even if more than 100,000 riders are recruited as full-time, accounting for less than 10%, and the platform’s huge daily delivery order volume has to rely on crowdsourcing riders who are “free to come and go” to digest, but crowdsourcing riders seem to have the greatest opinion on JD.com’s takeaway.
A JD takeaway rider in Foshan, Guangdong Province, said that using the crowdsourcing model to deliver food, the number of orders received will continue to drop after the novice period, “As long as it is not the peak dining period, it is difficult for ordinary crowdsourcing to see orders, and even if there are individuals, it is difficult to grab them, let alone dispatch orders.”
On social media, many riders also complained that JD.com’s dispatch rules were not friendly to crowdsourced riders, and the order was tilted to full-time and squad riders, leaving very little for crowdsourced riders.
Full-time riders are employees of the platform, and squad riders are more closely bound to the platform, and it is understandable that there are more order tilts, but the tilt is so obvious that crowdsourced riders are chilled.
Most crowdsourcing riders take food delivery as a temporary transitional job, and they don’t want to do at least 8 hours of full-time work every day (referring to the delivery time from pickup to delivery, not including the time of the order and the time for eating and resting). They are like a tide, surging at the peak of meals, resting on the side of the road or in the car when the order is small, or simply ending the day’s work. They seem to be free, free from the constraints of the platform, but they are the power of important flexibility of the delivery mechanism of the takeaway platform, and the reason why Meituan and Ele.me can maintain stable food delivery is largely due to the “tidal effect” of crowdsourcing riders.
On the JD takeaway platform, while it is difficult for non-newcomer crowdsourcing riders to receive orders, a large number of orders are backlogged by the platform to full-time and squad riders, resulting in the meals prepared by merchants cannot be delivered in time in the store, especially in bad weather such as wind and rain.
On May 22, the Douyin account “He m” released a video showing that it was unfair for a number of JD Dada riders in a certain district of Harbin to send orders in seconds, “The full-time team has orders, and the rest have no orders, and the dispatch is unreasonable!” ”。 The WeChat group chat provided by the rider showed that someone proposed to go to Ele.me to run orders at the beginning of June, “JD.com will let you do it full-time”. The increasingly fierce conflict between crowdsourced riders and JD.com’s full-time riders is actually the result of the platform’s order dispatch mechanism.
(Photo provided by the interviewee)
The most criticized by riders is JD.com’s difficult-to-use system and various restrictions.
When riders race against time to deliver food, the accuracy of system positioning is directly related to the efficiency of food delivery and the degree of collapse of riders, because riders are not necessarily familiar with the destination and can only follow the navigation. However, many riders said that the positioning of JD takeaway is very inaccurate, sometimes it can deviate by four or five hundred meters or even one kilometer.
A rider shared a picture with the author, when he delivered JD.com’s takeaway, there were many doors in the destination community displayed on the map, so many that people collapsed, in fact, most of the doors were not opened or locked all year round, and there was no need to mark so much.
(Photo provided by the interviewee)
A rider said that the advantage of JD.com’s takeaway is that the delivery unit price is high at present, and the same distance delivery fee can be 1-2 yuan higher than Meituan and Ele.me, the second is that the meal is served relatively quickly, and nearly half of the current JD.com takeaway platform are milk tea and coffee shop orders, “but the number of JD.com takeaway orders is less than the other two, and the overall profit is about the same, but the system is not easy to use, and it is tiring to deliver.”
In addition, various rules and restrictions have also been complained by quite a few takeaway riders, JD.com takeaway has a time limit on arrival time, a limit on the time of pick-up and a limit on the time of delivery, and overtime may be punished, while other platforms only require delivery at a specified time, and various restrictions make it impossible for riders to take more orders along the way, “3-4 orders at the same time sometimes overtime”.
A rider from Daxing, Beijing, believes that JD Takeaway is “learning by doing” – first high-profile release, fierce marketing, and then improvement in the operation process, which has led to various problems.
Gradually exposed shortcomings
Not only do rider delivery have some problems that need to be improved urgently, but in the process of JD.com’s takeaway, other shortcomings are gradually being exposed.
When JD.com Takeaway was launched 40 days ago, the number of orders exceeded 1 million, and on April 10, the “10 billion subsidy” was offered, and the order volume exceeded 1 million orders 12 days later, and then exceeded 20 million orders on May 14.
According to JPMorgan Chase & Co., JD.com’s operating loss per order ranges from 5 to 10 yuan, and the annual loss is between 9 billion and 18 billion yuan.
Of course, the investment of merchants is also indispensable in the subsidy, although JD.com Takeaway refuted the rumor that “tens of billions of subsidies should be ‘forced’ for merchants to share 50% of the cost”, and did not announce the specific proportion, but merchants were undoubtedly involved in this “subsidy war”.
The number of orders is skyrocketing, but the operating system has made many stores tired of coping. When JD Takeaway was first launched, many merchants reported that the printer could not connect to the JD system, the merchant system was difficult to use and other infrastructure problems, and with the growth of orders, a series of thorny problems brought by the immature merchant system always tested the patience of merchants.
A merchant said, “You need to operate at least three or four times each time you take an order, and one person doesn’t have to do anything, just taking orders is tired enough to choke”, and the system also shows arbitrariness when the merchant participates in the activity or not, what kind of activity he participates in, “Activities, we don’t count, you set up this system and change it for you at any time, and it’s wrong to look at it again.”
In addition, in the triple jump process of the number of orders from 0 to 1 million, 10 million, and then 20 million, JD.com’s takeaway system also collapsed three times.
The most recent time was at noon on May 14, JD Takeaway once again appeared on Weibo’s hot search due to system failure, and a large number of users said on social platforms that no one took orders after placing orders during the noon rush hour, and even there was no delivery progress after the payment was completed.
This made many users unable to eat breakfast on time, and was complained by a lot of users, and some netizens thought that “I ordered takeaway not to receive subsidies, but to be able to eat on time.” A merchant in Xi’an, Shaanxi Province, said that many orders were not picked up and delivered, and in the end they could only be thrown away. A large amount of food is the first to fall victim to waste in large-scale subsidies and low-price involution.
There is also the “quality takeaway” emphasized by JD.com, which also urgently needs a large number of measures in the implementation process to be truly implemented.
Not long ago, Fujian TV’s “First Gang” column reported that many of the so-called “quality dine-in” launched by JD.com takeaway have problems such as wrong goods and lax platform review.
The reporter found that the store marked with “quality dine-in” and the photos look standardized and tidy in JD.com, but in reality it is snailed in the corner of the second floor of the building, the environment is simple, the signboard is still handwritten on A4 paper, and only takeaway cannot be eaten in, which is very different from the photo. Not only that, there is a takeaway restaurant that also has cats in the kitchen, and cat food and water are placed on the ground.
Some stores have not been in the same place as the platform’s business license address at all, some merchants have launched two stores with the same store photos with slight modifications, and some merchants have taken photos and uploaded their dining tables as dine-in tables.
What’s even more paradoxical is that when the reporter contacted the person in charge of the local area of JD.com Takeaway as a merchant, the other party not only made it clear that he would not come to the store for review, but guided the reporter on how to take photos to pass the review.
Coincidentally, when the reporter of “Dazhong News” visited a number of JD.com’s takeaway quality canteens, he also found that there are still many pure takeaway shops that falsely label dine-in, and some even have large trash cans in front of the door, and the store is dim and messy, including many popular merchants with thousands of orders sold per month.
A JD.com takeaway service provider told the author that this situation occurs because the implementation cannot keep up with the strategic slogan, “The meaning of quality lacks standards, such as the fly restaurant that has been open on the street for many years, does it count?” Not only do external suppliers not know, but internal auditors sometimes don’t know much about “and no one is responsible”.
Barriers to takeaway
There is a Great Wall between business ideals and reality.
Compared with Baidu, Didi and Douyin, which also laid out the takeaway business before, JD.com has strong strength on the fulfillment side and has a certain synergy with its own instant retail, so its entry into takeaway seems to be more logical, but from the perspective of actual implementation, it still faces a lot of challenges.
The reason is that the e-commerce business and the takeaway business seem to have a high degree of overlap, but in fact they are “interlaced like mountains”.
First of all, takeaway requires higher timeliness than e-commerce and will also face greater fluctuations, so the requirements in the fulfillment process are higher.
There is no doubt that meals have the highest timeliness requirements among all retail categories, and customers have the lowest tolerance for their uncertainty, in addition, takeaway demand is the peak period during lunch and dinner hours, which has the greatest impact on riders, systems and other infrastructure.
Therefore, even if JD.com, as an e-commerce, is experienced in dealing with “618” and “Double Eleven”, the system will still collapse three times in the face of faster response speed of the takeaway business.
Secondly, takeaway has a worse scale effect than e-commerce.
The term “scale effect” is familiar to everyone, which means that within a certain production range, the fixed cost does not change much, so as the output increases, the new products can share more fixed costs, so that the average unit cost decreases.
It is important to understand that scale effects are not the same as scale. For example, if you open 100 stores, the scale effect may be worse than opening 50, because the corresponding fixed costs such as rent, management, and labor are increasing, and the cost allocated to each product may actually increase.
Moreover, if you open a store everywhere, you will definitely encounter more fierce competition in each area, and the resulting marketing costs will also be higher, further increasing the cost per product and reducing profits.
We can feel that with the increase in e-commerce orders year by year, express delivery costs are also declining, but after the rider cost drops to a certain stage, it is difficult to achieve significant optimization.
Moreover, as Wang Huiwen mentioned in an early speech, the takeaway business is a “honeycomb scale effect”, that is, “the share of takeaway in Tsinghua University can reach 90%, which has nothing to do with Peking University, and Ele.me can also get a 90% market share at Peking University”.
In other words, if you do it in one place, you still have to fight street battles in the next place, which determines that the development cycle of this business is very long.
Thirdly, the fulfillment infrastructure of the food delivery business has a strong proprietary.
E-commerce distribution has “Tongda system”, J&T, SF Express, they can provide distribution services for all e-commerce platforms, which is considered public infrastructure, JD.com has also built its own logistics, but JD logistics cannot only serve JD.com’s retail business, otherwise the order volume is not enough, the scale effect is insufficient, and the cost is high, so JD logistics has gradually become independent and opened up, becoming a public infrastructure.
Contrary to e-commerce, takeaway fulfillment infrastructure is a process from open to closed. In the early days of development, takeaway platforms basically used the crowdsourcing model, and in 2015, in order to improve the efficiency of distribution, Meituan Special Delivery and Ele.me Hummingbird Delivery began to be established, focusing on their respective delivery links. As major takeaway platforms begin to pay five insurances and one housing fund for full-time riders and complete deeper binding, the exclusivity of the full-time takeaway team will be stronger.
The establishment of the performance system is not only time-consuming and costly, but also tests the operation and patience of the team, which is a more difficult part of the Internet industry.
It can be seen that the intensity of JD.com’s challenges in the food delivery industry is comparable to its rivalry with Alibaba, Pinduoduo and Douyin in the field of e-commerce.
And Liu Qiangdong’s original “rhetoric”, once it is played as a marketing point, will not only win market praise in the short term, but also be examined by the market with a magnifying glass, and it needs to be implemented and improved through solid implementation.
