Double 11 depth complex, Ali, Jingdong, fight more and more who is the winner

Double11 Ali

qiyanglu4hao· 2019-11-14 11:12:08

In 2007, Chuck Prince, the famous capital of Citigroup and former CEO of Citigroup, said: "But as long as the music is playing, you ' ve got to get up and dance. (As long as the music rings, you must Stand up and dance.)" The words of this interview became the financial verses, often quoted by scholars and the media, describing the splendid carnival of Wall Street around 2007.

After more than a decade, the comments of Citi’s head can be moved to China intact. Double 11 is a feast of consumerism, from platform to business to consumers, "As long as the music rings, you must stand up and dance." Double 11 has risen to the National Shopping Festival, love, hate, wrap it, Nowhere to run.

The 2011 "Electronic Business War" just came to an end in 2019, which seems to be a war without a loser.

Legend: The total sales of the whole network climbed to new heights. Compared with last year's double 11 growth of over 30% (Source: Dongxing Securities Research Report)

Tmall double 11 full-day turnover exceeded 268.4 billion yuan, up 25% over last year; Jingdong double 11 cumulative order value exceeded 2044 billion yuan; more "no more data", but "more than 400,000 new iPhones sold." The satisfied consumers and the soft-selling consumers have been nervous for more than a month, and they have all fought in the first-line e-commerce platforms.

Note: The proportion of double 11 transactions in major e-commerce platforms, the top three are Ali, Jingdong and Jianduo (Source: Dongxing Securities)

Since 2009 For the first time, the cat launched the Double 11 Shopping Festival, which has been a full 11 years. More complicated year-on-year discounts, a longer battle line year after year, a year-old propaganda year after year, and the annual turnover of the record.

The double 11 created in China has quietly entered the "deep water zone".

What's in the "deep water area"? There are invisible capital drivers, traffic disputes with advertising, and fierce competition that cannot be clearly stated between major e-commerce companies.

Each home appliance company is reporting "Double 11 transcripts", but the "transcripts" and financial data are different. There is no uniform calibre and no mandatory disclosure. How much is the price behind the transaction volume to climb new heights? The “10 billion subsidies” were issued. Is the data exaggerated? How much does it cost to sell overwhelmingly?

Phoenix Finance looked through the nearly 1,000-page financial report of Ali, Jingdong and Jianduo, interviewed a number of merchants and ordinary consumers, trying to sort out the "big platoon" of the three giants. Not only must we look at the success of the "Electric Business Wars", but we must also see the increasing sales costs, the increasingly fierce competition in the industry, and the convergence of the marketing model.

Ali: First to enter the "deep water area"

On the eve of the 11th, Guojin Securities released an in-depth research report on the e-commerce industry:

We believe that Hou Mayun The double eleven of the era will become more and more complicated in Ali's hands. Regardless of the complexity and diversity of the user's marketing gameplay from the front, or the KPI assessment dimension of the backstage Ali Xiaoji, it is reflected that Ali's reliance on the double eleven is getting bigger and bigger, "double eleven" has been simple The commodity promotion day becomes a battlefield for multi-stakeholder synergy and game.

"Complex" is a keyword that many consumers have mentioned.

A white-collar lady, Miss Zhang, who is busy with the renovation of her new home, gave her Phoenix Financial to see her "Prepare for Double 11 Cheat Sheet". Half of the notebooks have been filled. "In order to understand these rules and preferences, I have been doing my homework every night and have been studying for two weeks."

This highly educated online shopper sighed: "This year's double 11 algorithm is really too It's complicated, like doing an application."

She is going to buy some appliances in the double 11, such as air conditioners and water heaters. "Don't say that each brand offer is different, even with a different model of air-conditioning offers."

After two weeks of homework, she is like a few treasures: "The air conditioner of the xx brand flagship store." It is pre-sale, the function is almost the same, the price is slightly cheaper, the other one is to reduce the first hour by 500 yuan, and the other two are the first two hundred gifts. Then the shop has to make a single coupon, some big coupons also need to go to the alarm clock. Spike, a ring of deduction. After receiving the coupon, it is also worthwhile to calculate the cross-store allowance (full 400 minus 50 yuan)." She pointed to the notebook with half blank, mentioned "If you grab When you get the gift, you must write it down, because it is not shipped together, but after the double 11 announcement of the gift winning ID, and then contact the customer service newspaper address, in order to receive the gift.

However, half of the notes were made. At 0:00 on November 11th, Miss Zhang, who was preparing early, did not grab a 50% discount on the "Top 100 Only". "At zero, the network is a little bit stuck. I refreshed it. If I go in, it is not a special price." Miss Zhang missed a big discount.

It’s more than a ring-and-loop coupon. It’s a "cover building". At one time, "Latren Building" became the main topic of each group, and it caused a hot discussion on "Knowledge". Some people pursue it and many people call it "viral marketing." There are a lot of ridicules on the Internet: "A single operation is as fierce as a tiger, and finally won a quarter."

What are these more complicated gameplay behind? It is a test of the e-commerce giant in the "deep water area".

As the creator of the Double 11, Ali has built a towering "city wall barrier" in eleven years. Tmall and Taobao occupy home court advantage in the "Electric Business War."

Legend: Tmall double eleven transaction volume Breaking records, the growth rate is over 25% (Source: Dongxing Securities Research Report)

In 2019, Tmall Double 11 turnover exceeded 2684 billion yuan, up 25% year-on-year; Twenty-one Twenty-one in 2018 The total transaction volume reached 213.5 billion, a year-on-year increase of 27%, and nearly 70% of the total size of the industry's double 11 transactions. From 2012 to 2018, the compound growth rate of Tmall Double 11 transactions was close to 50%.

Hundreds of feet, every step forward is like a thin ice, it has to pay a huge cost.

Sales that are faster than the turnover. Ali did not disclose the advertising budget and subsidy fees for Double 11, but the rapid increase in sales expenses in the fourth quarter of each year has leaked. Compared with the "billion subsidies and red envelopes" that cannot be quantified and lack of public data, the "sales and marketing expenses" in the financial report can more accurately reflect the company's expenditure on advertising.

Ali's sales expenses for the fourth quarter of 2018 were RMB 12.1 billion, and sales expenses for the same period in 2017 were RMB 8.542 billion, an increase of over 40%. Looking back at the data for the past five years, the sales expenses in the fourth quarter increased rapidly, and between 2016 and 2018, the annual growth rate was nearly 4 billion yuan.

Note: The list of sales expenses for Ali single season is the highest in the fourth quarter of each year. The sales expense is the expenditure item, and the reaction is negative in the financial report (Cartography: No. 4 Qiyang Road)

Legend: Ali's fourth-quarter sales expenses list for the past five years (Cartography: No. 4 Qiyang Road)

"Home Battle" Ali, facing double 11 and You can't "lie down" and be wary of all kinds of risks. The 2018 annual report is more than 300 pages long and mentions a total of 8 global shopping festivals. Only one of them mentioned the brilliant record of the world's highest single-day sales in 2018, but at least five times mentioned the potential risks of the double 11.

The big risk point mentioned in the annual report: The company's quarterly operating performance fluctuates greatly, so it is difficult to predict future performance. In general, the double 11 shopping promotion has a “pumping” effect on daily consumption activities in other time periods.

" Basically, customers are asking about the activities of Double Eleven in October. The purchase amount in September and October is on the day of November 11, and the delivery is slow, and the customer service is exhausted. In fact, it is not cheap, it is better to buy it earlier, put it on earlier." A Taobao red clothing store operator privately admitted.

Another risk point mentioned in the annual report is technical risk: when a technical facility fails, it may cause system interruption, slow response time, impaired user experience, and delayed financial information. "The risk of these (technical failures) is higher during the peak period of the order, for example before and after the 11.11 Global Shopping Festival or other promotions."

Note: The technical risk is warned in the annual report (Source: Ali 2018 Annual report)

This year, at 11 o'clock, many consumers mentioned that the mobile phone Taobao app appeared short-lived. "It seems that the card is very short, and it will return to normal after I refresh. But this is the case. In a matter of seconds, the cheapest discount is gone."

The data of Ali Double 11 has even caught the attention of US regulators. The potential legal risks are disclosed in the annual report: "In early 2016, the US Securities and Exchange Commission informed us that they have begun investigating whether we have violated federal securities laws." The report mentioned that Ali has submitted relevant documents, including double 11 Operational data for the Global Shopping Festival.

There are some forgotten "minorities" when spending spree. Tmall president Jiang Fan mentioned at the kick-off meeting that "this year's double 11 is dominated by Tmall, Taobao and Juhua are deeply involved." This statement means: Taobao's huge flow to Tmall stores, brand flagship The store tilted, causing some small sellers to have little enthusiasm for the double 11.

" Dear, don't wait for Double 11, now all the products in our store are insured for double 11, you have to look at it that day, if you buy expensive, find me a refund." A Taobao shop selling small ornaments in the double 11 The previous week was enthusiastic. "The price is the same as the double 11 price. You don't have to wait."

" Double 11 No discount, no delivery." When the reporter consulted the discount, one sold fresh fish balls. The owner of Taobao shop responded indifferently, but the reason for not shipping is: "Every year, double 11 will burst, the fish balls are fresh and cold chain transportation, the delivery time is not easy to grasp, and the late delivery has bad reviews and complaints. "He explained that the double 11 will not be shipped for two days, and the courier will resume normal delivery after the 14th.

The reaction of the cool shopkeepers and the overwhelming brand flagship store formed a sharp contrast.

Arri into the "deep waters", the biggest enemy of the future may be yesterday's own.

Jingdong: Two divisions of soldiers

It’s better to open up new battlefields instead of fighting against opponents in frontal battlefields. Instead of "sports and melee" in the double 11 e-commerce war, it is better to make another 618 shopping festival. This may be Jingdong’s tactical strategy.

In the Jingdong 2018 Annual Report, "November 11" (double 11) was mentioned five times, and "June 18 (618)" was mentioned 11 times.

The annual report reads: "China's e-commerce will launch special promotions on November 11th each year. We will also launch a special promotion in the second quarter of each year, June 18th. The company was established. The two major promotions will affect our quarterly results."

Double 11 is an industry behavior, and 618 is its own "birthday".

Why is Jingdong going to prepare for both hands? A big reason is that the double 11 "Electric Business Wars" has already been killed in a red sea. Compared with Ali, JD's advantage is not obvious.

Guojin Securities wrote in the report: "We believe that with the deterioration of the e-commerce war situation, under the double attack of Ali and the fight, it is not dominant for the sinking market and the scale of the transaction. Jingdong, this year's double eleven will be the key battle for Jingdong to stabilize the competitive position of the industry."

Why do financial institutions think this year is the deciding game?

Because the fight is more and more fierce. At the end of October, when the double 11 pre-sale war had started, more market value surpassed Jingdong, becoming the fourth largest Internet company in China after Ali, Tencent and the US Mission.

Jingdong has already felt this pressure and responded --- lengthening the front. On October 15th, Jingdong took the lead in holding the Double Eleven Startup Meeting, six days ahead of Ali. Pre-sale began on October 18th, and Ali was three days ahead of schedule. Marketing promotion revolved around "live, subsidy, and purchase". In this regard, Guojin Securities commented: " Compared with the previous double eleven, the main gameplay has not changed much, and the profit form is similar to that of Tmall. It is not direct."

Although there are 618 big promotion, Jingdong pairs The investment in the eleventh has not been reduced, and there is still an overwhelming number of advertisements. In the large number of elevator advertisements, the "All Stars" lineup, the popular female star Yang Zi and the male star Li Xian are all appearing in the advertisement. Jingdong also named "Qi Yu said". In this highly-discussed network variety show, the advertisements of "Jingdong Global Good Things Festival" are frequently repeated.

From the financial data, the two quarters with the highest annual sales expenses are the second quarter and the fourth quarter. The core promotion in the second quarter is 618. The key point in the fourth quarter is double 11 . Although 618 is the "pro-son" built by Jingdong, its sales expenses are still more than double.

Note: Jingdong single-season sales expenses list, because the sales expenses are expenditure items, and are displayed in negative numbers in the report (Cartography: No. 4 Qiyang Road)

According to the 2018 annual report Jingdong’s marketing expenses for the second quarter were 5.261 billion yuan, and marketing expenses for the fourth quarter were 6.353 billion yuan. From the chart, the sales expenses in the second and fourth quarters of the past few years are high.

2019 double 11 Jingdong's "transcript" How? From 0:00 on November 1 to 23:59:59 on November 11, the cumulative amount of the "11.11 Jingdong Global Good Food Festival" exceeded 204.4 billion yuan.

It is necessary to pay attention to Jingdong’s 204.4 billion yuan and Tmall’s 268.4 billion yuan, which cannot be compared with each other and the data is different. Tmall announced the size of the transaction between 0:00 and 4:00 on November 11, and announced the transaction size from 0:00 on November 1st to November 24th, which is equivalent to "one-day transcript" and A comparison of "ten days transcripts".

A lot of spells: supplementing ammunition

After many years of double eleventh, Ali and have already had "routing". And the many players who turned out to be born are "alternative players who do not follow the common sense."

At 0:00 on November 12, this year's Double 11 battle finally came to an end, and major e-commerce companies began to take stock of merits, merits and rewards, and issued a draft. However, there has been a lot of attention and no data has been released. The propaganda draft reads: "There is no more double data to disclose." The reason for the lack of data is that "we have not even had time to build a real-time data big screen. The company is rushing to replenish goods, prices and subsidies."

Although there is no public data, there are a lot of performances in this double 11 battle. The biggest gain may be I really brushed the wave of the "five rings" crowd.

" I probably never thought of buying an iPhone in the past," a white-collar worker in the financial industry who worked in Beijing told his own journey: "I didn’t say that I didn’t rely on it before. What is the spectrum? The nickname is called Xia Xi. I also spit it out when I went public last year. But their activities are really cost-effective, and the price cuts are also very straightforward. They don’t need to be scraped together.” November 1st to 11th, fight More than 400,000 new iPhones have been sold on the platform.

Another employee of a state-owned enterprise with the same superior income mentioned that when he tried to fight for a long time, he said: "Every family is subsidizing red envelopes. They have worked hard for a long time to lick wool, and the red envelopes cost a few cents. 100 yuan is very sincere."

The "true wool" he mentioned refers to a lot of "friends help" WeChat cash withdrawal. To put it simply, it is to share the red envelope to a friend, and multiple friends can download a lot of apps and help the red envelope to withdraw 100 yuan. "But it is very troublesome to harass WeChat friends every day. I have added a few more help groups and helped each other." Through "WeChat cash withdrawal", I also got a lot of new customers.

There was a lot of listings last year. This year is the second year after the listing, participating in the double 11" war. If we say that last year's fight is more than because the cottage fakes have been questioned, the analysts rated it as "the main sinking market" and "the target group is the five-ring crowd." This year's fight has used a lot of ultra-low-priced brand products to impress many smart consumers in the "five rings".

From the subsidy of the iPhone 500 yuan to the 100 yuan Mac lipstick, the key word behind the high subsidies, extensive publicity, and vigorous promotion is "saving money."

In the 2018 Annual Report, there was a lot of special mention of "Sales and Marketing expenses".

Legend: Spend more sales expenses (red box In contrast, the annual growth rate is 10 times (source: fight more and more 2018 annual report)

from 169 million yuan in 2016, to 1.34 billion yuan in 2017, to 13.44 billion yuan in 2018, from From single digits to tens digits to hundreds of digits, sales expenses are growing at almost ten times a year.

The growth rate of sales expenses even exceeds the growth rate of sales revenue. In 2016, sales expenses only accounted for 33.5% of the sales revenue of the year, and by 2018, sales expenses accounted for 102.5% of total revenue. In other words, the amount of money earned by working hard for a year is not as good as the advertising costs.

Why is the sales cost of a lot of sales growing rapidly? The annual report explains that there are two main reasons for the increase in sales expenses: First, the increase in advertising costs, online and offline brand activities increase brand awareness; second, the increase in promotional and coupon fees, especially on November 11th, During the online shopping festival and platform anniversary on December 12th.

How long does it cost to sell more than the operating income? Will a lot of high sales expenses affect its future performance?

Indebtedness management, using flow for growth, and using growth to "tell the story" to gain the favor of the capital market, this is a very proficient model for domestic e-commerce. The core of this model is: Is it possible to continue low-cost financing? With the continuous flow of funds, you can support e-commerce to save money and increase traffic.

On the eve of the double 11, the fight has just been in the capital market "additional ammunition", financing success.

At the end of September, the company announced that it has successfully completed the issuance of a total of US$1 billion in convertible bonds with “0% yield to maturity and 0% coupon”, and the funds have all been received. Goldman Sachs, Merrill Lynch, Barclays and UBS are joint underwriters of the offering.

According to media reports, due to the active subscription, the interest rate of the convertible bond is priced at 0.00% of the lower limit of the interval, and the conversion premium can be priced at the upper limit of 37.5%, setting the first 0 of the technology companies in the past 15 years. % yield to maturity and 0% coupon issue of convertible bonds.

" From the perspective of interest rates, this price is shocking," said a financial industry insider who had dealt with large-scale private enterprises issuing bonds overseas. "Although the US interest rate is low, the relative financing cost is relatively low." However, the average corporate bond interest rate of 3% to 5% is normal, the credit difference is 7%, and 8% is also quite a lot."

Phoenix Finance interviewed the corporate bond interest rates of Ali and JD. . The coupon rate of Jingdong's 10-year corporate bonds issued in 2016 was 3.875%. Ali issued 20-year, 30-year, and 40-year corporate bonds at the end of 2017, with coupon rates above 4%.

" This is a convertible bond. It is better to say that it is to buy stocks than to issue bonds. International capital is optimistic about this company and wants to start with low prices," the industry insider explained.

The convertible bond refers to the corporate bond that the issuing company can convert into ordinary stock at a specific time and according to certain conditions. According to the closing price of $30.99 on September 24 and the premium of 37.5%, The initial conversion price was approximately $42.61. That is to say, if the stock price of a lot of time is higher than 42.61 yuan, investors can convert into stocks according to this price, and they can get a lot of income.

In this issue, there is a lot of "Issuer Call Option": "Since October 1, 2022, if you fight for more than 30 consecutive trading days, In at least 20 trading days, the stock price will reach at least 130% of the effective conversion price of the convertible bonds, and in many ways, it can redeem all or part of the convertible bonds issued this time in cash." This clause has become a common clause in the issuance of convertible bonds by high-growth technology companies in the United States. However, there has been no attempt by Chinese Internet companies to become the first Chinese Internet company to set up the issuer redemption clause.

After issuing zero-coupon convertible bonds, you can get huge amounts of money with almost zero cost, and fight for a lot of "additional ammunition" in the financial market, and continue to make big efforts to "sell money."

It’s interesting to talk about the $1 billion fundraising use, but not to mention marketing costs, but to emphasize that “the net proceeds from this offering will be used to strengthen and develop Corporate business operations, R&D investment, continued investment and development of technology infrastructure, use of working capital and other general corporate purposes."

" When the music rings, you have to stand up and dance." The music of the double 11 is over. The three major e-commerce giants think they have won, and Ali and JD have made a new achievement in the past. The fight has overcome the inherent prejudice and won the reputation.

Behind this "win-win" war is a double eleven that gradually entered the "deep water zone."

The method of racking the brain, the increase in the cost of the passengers, the balance of the size and flow, and the blessing of the live broadcast method make the business war more complicated. The counter is overwhelmingly advertised, and under the counter is a dark rush. Dynamic game.

On November 12th, the owner of the fish ball shop who insisted on not participating in the Taobao Double 11 promotion was actively promoting: "Double 11 is over, do you still want to buy it?"

" Double 11 After that, do you still buy it? Will you continue to buy the double 11 next year?" This may be the torture of the soul faced by every consumer, merchant, and platform.

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