This article explores how Taobao Flash Sale achieved a leapfrog increase in order volume in a short period of time, as well as the strategic layout behind this achievement. By analyzing the different strategies of JD Takeaway and Taobao Flash Sale, it reveals the fierce competition and respective advantages of e-commerce giants in the instant retail battlefield for your reference.
“Only subsidies are not nonsense, such an unpretentious business war, I like it so much.”
0.1 yuan coffee, 1.6 yuan cudi, 4.9 yuan jasmine milk white…… When the takeaway war between Meituan and JD.com entered a white-hot stage, Taobao flash sale came with “100 million cups of free milk tea”. In the past two days, the blood sugar of young people across the country may be soaring, after all, who can refuse single-digit milk tea?
Reminiscent of the previous takeaway war between Meituan and JD.com: JD.com’s Liu Qiangdong personally self-service takeaway business, opened a 25-20 yuan super subsidy model online, and earned enough topicality on the Internet; Meituan, which is forced to “defend”, distributes large takeaway coupons on time every day. Ele.me plays the role of “spectator”, saying “no war of words”.
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At that time, the industry had two predictions about Ele.me. The first type: If Ele.me continues to be so invisible, the status of the “second child” will be impacted; The second is that Ele.me will take action sooner or later, either looking for an opportunity or waiting for reinforcements.
Taobao flash sale offline “free milk tea shop”, photo/almighty Taobao official Weibo
In a word, when JD.com’s Meituan subsidies were weak, Ele.me, which had been silent for a long time, joined forces with Taobao to open a traffic harvesting mode: Taobao upgraded its “hourly delivery” business to Taobao’s “flash sale” and joined the instant retail battle with JD.com and Meituan. The essence of this battle is the in-depth layout of instant retail by e-commerce giants.
01 6 days to complete JD.com’s 70-day performance
When the war between JD.com takeaway and Meituan’s takeaway subsidy war came to an end, Taobao flash sales kicked off the counteroffensive.
On April 30, Ele.me announced a high-profile plan to “make up for more than 10 billion yuan”. After that, the instant retail business “Hourly Delivery” belonging to Taotian Group was officially upgraded to “Taobao Flash Sale” and launched on the homepage of Taobao APP.
On May 6, the first day of the holiday rework, Taobao launched the second wave of offensive, launching the “Free 100 Million Cups of Milk Tea” campaign and continuing to spend money. Enter Taobao flash sale or Taobao search for “milk tea free order”, or click on the buoy to grab the free order. At the same time, the free order activity is superimposed on large subsidies such as 15-10 yuan, and the subsidy scenario focuses on the high-frequency demand side such as milk tea and meals, which is also the key direction of the previous takeaway subsidy war.
Flash sale event milk tea free single card, photo/Taobao APP
The marketing gameplay of Taobao flash sales is full of “caution”. First, in the hospitality mode, when the user gets a free single card, the system will randomly attach 1-9 invitation cards; Second, users who draw the “free single card” will not only receive a countdown prompt for the red envelope to expire for 3 hours, but also be reminded to “send all the invitation cards, and you can get a free single card tomorrow”.
Milk tea and coffee naturally have social sharing properties, and the extreme price of a few yuan a cup is more likely to trigger users to spontaneously post orders. This set of play kills three birds with one stone: it not only consolidates the user mentality of Taobao flash sale “real subsidies and very affordable”, but also stimulates users’ enthusiasm to continue to click into Taobao flash sale to grab a free single card, and also by giving full play to the social currency effect of the “guest card”, forming a viral spread and saving and reducing the cost of platform delivery.
In this process, based on the advantages of a mature merchant supply system and offline performance capabilities, Ele.me undertook the sky-high traffic, doubled merchant orders, and smoothly fulfilled logistics. The synergistic advantages of Alibaba’s internal ecology also burst out at this moment.
Taobao’s “raid war” can be described as remarkable. On the evening of May 5, according to official data, Ele.me’s single-day takeaway orders from Taobao flash sales exceeded 10 million, and the number of Ele.me’s takeaway logistics orders in 63 cities, including Chongqing, Shenzhen, and Guangzhou, exceeded the historical single-day peak, and more than 1,500 brands refreshed their historical peaks in Ele.me’s business.
Taobao flash sale “more than 10 million takeaway orders in a single day”, photo/Taobao official Weibo
This demand-side outbreak forced the supply-side to upgrade, triggering a carnival of channel ports. Taking Nai Xue’s tea as an example, its orders increased by more than 200% year-on-year within 24 hours of the flash sale, and the distribution capacity of some stores was close to saturation; Jasmine Milk White disclosed on social media platforms that on May 3, the turnover of 1,275 stores across the country broke a record high, reaching 21 million, the number of cups produced reached 1 million+, and the number of orders reached 757,000+.
Although sales data is good, instant retail is ultimately a battle of resources and efficiency. From this point of view, it is also 10 million orders, but the meaning of Taobao flash sales and JD.com takeaway is different.
For Taobao flash sales and Ele.me, the genes of instant retail have long existed, and takeaway orders have started quickly. What Alibaba needs to do is to open up the business collaboration between Taobao flash sale and Ele.me, realize the connection of resources to the ecological closed loop, and weave a three-dimensional battle network covering the entire link of instant retail. Taobao’s flash sale exceeded 10 million daily orders in six days, which is a confirmation of this ecological synergy.
For JD.com’s takeaway, it is a slow time-consuming and costly road: it took 46 days to complete the breakthrough of 5 million orders per day from the launch, and then doubled the order volume to 10 million orders within a week.
02. The perfect moment, a well-planned raid
Business competition is often called “business war” because it requires tactics and strategies. This time, Alibaba’s business war played the effect of “four or two thousand pounds”.
In terms of admission time selection, Taobao Flash Sale and Ele.me chose to end up on the eve of May Day, which can be said to be a perfect moment:
On the one hand, the previous “war of words” between JD.com and Meituan has stirred up the instant retail market; At the same time, JD.com’s APP, which is also an e-commerce platform, has implanted a consumer mentality that e-commerce platforms can also order takeaways, and Taobao flash sales have harvested this part of the residual heat.
On the other hand, on May 1, JD.com’s commission-free policy for merchants will end, and the subsidies on the consumer side have gradually weakened; Meituan’s subsidies are also receding. Taobao flash sale ended at this point in time, directly transferring the expenses originally spent on marketing to the subsidy side, so that consumers can feel the subsidy of “real money and platinum”, which is very useful for price-sensitive users.
This timing choice reflects Alibaba’s control of the pace of business wars – not only avoiding the head-to-head confrontation between JD.com and Meituan, but also undertaking user attention and accumulating strength for the summer takeaway season. At the same time, Taobao’s flash sale concentrates tens of billions of subsidies on the demand side, so that consumers have a stronger price perception, and also reflects the principle of “user first” that Alibaba has been emphasizing in the past few years.
But this is an embarrassing moment for JD.com: JD.com is in a moment when the old power of “declining again and again, three and exhausting” has declined and the new power has not yet been born. If the follow-up inevitably falls into the “money-burning mode”, the continuous high subsidies will directly impact the confidence of the capital market, and then affect the performance of the securities market; If you “don’t follow”, then the market education achievements such as user mental cultivation and consumption habit development in the early stage will be quickly harvested by competitors.
Photo/JD Takeaway official Weibo
In fact, JD.com has long been in a dilemma of either advancing or retreating. As a “novice” in the food delivery market, it is almost the only one that requires a lot of investment for merchants, users, and riders.
First, it entered the takeaway industry with a “0 commission” model to attract merchants to settle in; Subsequently, tens of billions of subsidies were launched to compete for users, and large coupons such as 25-20 were issued to consumers, which reduced the average price of takeaways, and 15 Starbucks, 4 yuan Luckin coffee, and 8 yuan brand lunches continued to emerge.
In addition to the real subsidy for each order, JD.com, which raises the industry standard for food delivery workers, has also increased the additional cost invested in riders. For example, for full-time riders, five insurances and one housing fund are provided, a guaranteed salary of 5,000 yuan is provided for full-time riders three months before joining the company. In addition, in order to adhere to the moat of “delivery timeliness”, JD.com has also launched a free order system of more than 20 minutes, which is bound to bring about a surge in costs.
This seemingly glamorous subsidy model is actually a double-edged sword for JD.com. DoorDash, an American food delivery service platform, once mentioned: “Food delivery is a cost-intensive, low-profit and scale-oriented business”, with complex operations and long investment cycles. Taking Meituan as an example, Meituan launched takeaway in 2013 and did not start making profits until 2019.
The capital market values growth. The key to whether JD.com can win the favor of shareholders lies in whether it can transform the money-burning subsidy war into sustainable ecological capacity building, some experts said, “Under the competitive pressure of Meituan and Ele.me, new entrants even need to invest more than 100 billion yuan to have the opportunity to achieve a trillion scale.” “The huge investment means that JD.com’s stock price may continue to fluctuate in the future.
03. “E-commerce + local service”, Alibaba’s “best partner” plays high frequency and low frequency
In the past two years, the development of instant retail has long become the consensus of Internet giants.
From the demand side, as Generation Z becomes the main consumer force, the buy-and-use consumption model has become the general trend. According to Nielsen IQ’s report, young consumers have a relatively weak sense of stockpiling and are more inclined to the buy-as-you-go model; And the younger generation pays more attention to “speed”, with more than 50% of the post-95s hoping to receive the goods on the same day of shopping and willing to pay extra for faster delivery.
From the supply side, far-field e-commerce is getting deeper and deeper, and has moved towards the bottleneck of stock game and efficiency, and in this impasse, “instant retail” is still one of the few new additions that are still growing.
The market is also supporting this view. According to the “Instant Retail Industry Development Report (2024)” released by the Academy of International Trade and Economic Cooperation of the Ministry of Commerce, the scale of instant retail in our country will reach 650 billion yuan in 2023, a year-on-year increase of 28.89%, 17.89 percentage points higher than the growth rate of online retail in the same period, and the market size is expected to exceed 2 trillion yuan in 2030.
During the period of demand change, the instant retail track has moved from “traffic competition” to the “ability competition” stage, and the future instant retail competition will focus on ecological integration, supply chain integration, fulfillment efficiency, scene innovation and other aspects.
This time, Taobao Flash Sale and Ele.me are undoubtedly the strategic layout of Alibaba’s instant retail ecology – compared with the platform that started with subsidies, Taobao Flash Sale and Ele.me can be called the best partner, because it is not from scratch, but stands on the system of “instant retail exploration” for more than ten years, and it comes naturally.
In the past few years, Alibaba’s exploration and layout in the instant retail track has been accelerating. In 2018, it acquired Ele.me, upgraded the Tmall supermarket business group to the intra-city retail business group in 2020, and entered the Taobao homepage in July last year, and opened all categories across the country; Three months later, Ele.me announced an important strategic plan for the next three years, planning to open 100,000 official flagship stores of near-field brands.
In July 2024, the Taobao Hourly Delivery entrance will be fully opened on the Taobao homepage, and in August, more than 3,000 Apple authorized franchise stores across the country will be fully connected to Taobao Hourly Delivery. After upgrading to Taobao flash sale, the goal is to accelerate the coverage to 200 core chain brands, including fashion brands such as JACK&JONES under Ayazhi Group, sports brands such as Decathlon, and more than 3 million stores have opened Taobao hourly delivery services, covering clothing, 3C, sports and other high-customer unit price categories.
Taobao can fill the shortcomings of Ele.me on the supply side of instant retail, and use the instant fulfillment capabilities provided by Ele.me as its core business support, which will also further strengthen the moat of Taobao’s instant retail.
In terms of capacity, Taobao flash sale will be mainly guaranteed by Ele.me, which can achieve 30-minute delivery nationwide, behind which is the maturity of Ele.me’s capabilities in social warehousing, instant performance, supercomputing platform, map and other capabilities.
The core goal of Taobao Flash Sale and Ele.me is to embed instant retail into the ecology of traditional e-commerce, and by integrating the brand merchant advantages of Taobao and Tmall, transforming the circulation chain of “goods” and the inventory system of “goods” to ensure the best supply of goods and cost performance, and to walk out of a “high-quality instant retail” battlefield strategy.
Looking deeper, for Taobao flash sales, Ele.me assumes the role of super entrance with its high open rate, which is a super lever to leverage the instant retail ecology – through high-frequency and just-needed catering orders, it drives low-frequency and high-customer unit price e-commerce business, and finally realizes the dual improvement of user activity and business efficiency.
Looking back, when Meituan was busy holding the basic market and JD.com was obsessed with business expansion, these strategies were not wrong, they were “difficult and correct things”, but they became the opportunity point of Taobao flash sales.
However, it also needs to be noted that JD.com’s increase in instant retail is essentially that traditional e-commerce stories are no longer sexy. According to a number of media and securities companies, in 2024, JD.com’s GMV will be lower than that of Taotian, Pinduoduo and Douyin e-commerce, falling to fourth place (note: the GMV statistics of each company are different, and the value of horizontal comparison is not great).
JD.com challenged the market boss and the second child with the “third child” and the newcomer, and found that the price was not small – the boss and the second child fought, and JD.com’s “third child” wanted to get a piece of the pie, but found that it had entered the quagmire of war and was attacked from both sides.
In essence, instant retail is a hard business that is more difficult to do than traditional e-commerce, and all participation will eventually return to the battle for the comprehensive capabilities of instant retail based on goods, prices, and services.
JD.com provokes public nerves through the money-burning model, which is not a long-term way after all. For JD.com, the transformation from the warehouse distribution model to instant retail, under the flood, can bring a wave of wool parties, but the real barrier still lies in the richness of the supply side, the ability to coordinate business logistics and the performance ability of instant logistics, which is not within the reach of “cramming” pre-exam make-up classes for a while.
With the withdrawal of subsidies, the increase in merchant marketing costs, the impact on rider capacity stability, and the efficiency of algorithm scheduling will come, and whether it can lose money for a long time will be a long-term problem. If JD.com wants to break through industry barriers, it also needs to rely on consumer habit data insights and iterate logistics technology iterations, so as to build an intelligent retail system of “demand prediction – accurate supply – minute-level response” – this is the underlying ability to cross the subsidy cycle.
