Source | BohuFN

Following the substantial interconnection between Taobao and WeChat Pay, further cooperation has emerged between Taobao and JD.com. Currently, both parties have reached a consensus on logistics and payment cooperation.

As the Double 11 shopping festival approaches, the friendly handshake between these two e-commerce giants has attracted significant attention in the industry, as it may significantly impact the upcoming market competition.

01 Taobao and JD.com Join Forces, Benefiting Each Other

According to LatePost, Taobao and Tmall will soon officially integrate JD.com Logistics, expected to go live in mid-October. After this integration, merchants on Taobao and Tmall will have an additional option for JD.com Logistics when selecting shipping methods in the system. Concurrently, JD.com will also integrate Cainiao Express and Cainiao Post.

In addition to logistics cooperation, there has also been progress in payment interconnection. JD.com will officially integrate Alipay, with the integration expected to be launched just before Double 11.

Zhuang Shuai, an expert in the retail e-commerce industry, believes that "this is another new development in interconnection. It will benefit Taobao and Tmall in terms of user experience enhancement, Alipay's revenue growth, JD.com Logistics' revenue, and JD.com Mall's growth."

For Taobao, the experience of both merchants and users will be significantly enhanced. Previously, merchants had to manage their inventory separately on Taobao and JD.com. In the future, there will be an opportunity to integrate their inventories.

JD.com's integrated supply chain network, with warehousing and distribution capabilities, has always had a differential advantage in the industry. JD.com Logistics helps customers forecast sales, manage orders, and handle warehousing and distribution, thereby reducing fulfillment costs and delivery times.

Currently, JD.com Logistics operates over 1,600 warehouses and more than 2,000 cloud warehouses in China, including over 40 highly intelligent Asia One smart logistics parks.

After Taobao's cooperation with JD.com Logistics, merchants on the platform will also be able to share JD.com's logistics capabilities, meeting the diverse logistics needs of consumers on the platform.

JD.com implemented this concept last March. At that time, JD.com fully opened its logistics interfaces, allowing merchants to use third-party logistics providers in addition to JD.com Logistics. Partnering with third-party logistics providers with sufficient capacity can better handle the increasing frequency of platform transactions and the decreasing average order value.

For JD.com Logistics, this cooperation is also beneficial. On the one hand, it can increase the number of express delivery orders; on the other hand, it can increase the scale of merchants using JD.com's warehousing, further increasing JD.com Logistics' market share in warehousing and management services.

02 Platform Interconnection: Cooperation and Competition Simultaneously

In 2011, JD.com severed the in-app payment link with Alipay. At the time, Liu Qiangdong, JD.com's founder, responded with two reasons: firstly, Alipay's fee rate was too high, costing JD.com an additional 5 to 6 million yuan annually; secondly, 80% of JD.com's transactions were cash on delivery, and about 10% were paid online through UnionPay, so severing the cooperation with Alipay would not affect users.

Behind the renewed cooperation, the market environment facing these two platforms has undergone tremendous changes.

This year's e-commerce environment is more challenging than ever. According to industry reports, sales during this year's 618 shopping festival declined for the first time in 16 years.

Data from StarChart shows that the total sales during the 2024 618 shopping festival reached 742.8 billion yuan, representing a year-on-year decline of nearly 7%. Among the reasons, the price war among comprehensive e-commerce platforms leading to a decline in sales was the primary factor, while the growth rate of live streaming e-commerce has also begun to slow down.

The industry as a whole has entered an era of stock competition, and internal competition has become inevitable. Earlier this year, platforms competed fiercely to deepen their low-price labels, attempting to attract more consumers. However, the results were not entirely satisfactory.

To reverse this trend, Taobao has introduced a series of measures, such as weakening the focus on price competitiveness and shifting to GMV-oriented strategies; and introducing initiatives like "Refund Guarantee" to replace the previous sole focus on refunds. Its ambition for growth through transformation is evident to all.

JD.com, on the other hand, insists on promoting its low-price strategy, aiming to enrich the platform's product offerings and cover a wider range of consumer groups.

At this critical juncture, actively promoting interconnection is, to some extent, a new attempt by e-commerce platforms to break the deadlock. Some even believe that this will profoundly transform the competitive landscape in the e-commerce industry.

Interconnection is not a new topic. As early as 2021, the Ministry of Industry and Information Technology held an "Administrative Guidance Meeting on Blocking Website Links" and proposed compliance standards for instant messaging software, requiring platforms to lift blocks by September 17.

Over the years, however, there has been no substantial progress in interconnection. Since the beginning of this year, we have seen Taobao enable WeChat Pay and then reach a cooperation on logistics and payment with JD.com. Behind these moves lies the platforms' eagerness to break through.

It is worth noting that both of these significant interconnection moves this year occurred just before Double 11. In the view of BohuFN, platforms may intentionally stimulate market demand through a series of interconnection initiatives, thereby injecting vitality into the industry. This Double 11 will serve as an important test.

Daniel Zhang, former CEO of Alibaba, once mentioned the value of interconnection: "Interconnection is the original intention of the Internet, and openness is the foundation of the digital ecosystem. The social value generated by the grand cycle between platforms is far greater than that within a single platform's small cycle. The interconnection and openness between platforms will result in a win-win situation for all parties involved."

Moreover, the "difficult progress" of interconnection is essentially due to the complexity of bridging platforms, which involves coordinating the interests of various parties.

This is also evident in the cooperation between Taobao and JD.com. Industry insiders point out that JD.com's use of Alipay can mitigate the impact of Taobao and Tmall's integration with WeChat Pay. It is clear that the interconnection between platforms is still based on the development tone of "mutual counterbalance." While interconnecting, they are also engaged in a game of competition.

In the future, this will remain an important aspect of interconnection between platforms, as they seek new growth opportunities through cooperation while inevitably maintaining their respective competitive discourse in the game of competition.

Reference Materials:

1. Hong Kong Stocks Research Society: China's Internet E-commerce Has Finally 'Connected'

2. LatePost: Alibaba and JD.com Open Up to Each Other: JD.com Logistics Enters Taobao, Alipay Enters JD.com

3. Jiemian News: Major Companies Continue to 'Tear Down the Wall,' This Time It's Taobao and JD.com

4. QuantumRun: Taobao, WeChat, and JD.com 'Embrace Each Other,' Forced by 'Pinduoduo'?

5. AllTechAsia: Alibaba and JD.com Shake Hands and Make Up

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