Why does Tmall compete with JD.com for the hard work of large-scale logistics?



On Double 11 every year, the timeliness of express delivery and after-sales issues have always been a concern of consumers and businesses.


If the domestic express delivery industry has experienced years of industry precipitation, digital upgrading and intelligent transformation, the express delivery of small commodities can be fast, stable and accurate to reach consumers. Then, for the current bulk commodity logistics, there are still many difficulties that need to be solved urgently.


Tianfeng Securities pointed out that the logistics services of large-scale commodities usually include trunk line transportation, warehousing and distribution, door-to-door delivery, installation and construction, after-sales maintenance and reverse logistics, etc., with a long service chain, large trunk line transportation, no transit, and standardization. Due to low-level characteristics, the operation process is more difficult than express delivery, and the degree of automation is lower, but due to the additional requirements such as timeliness requirements and end-user assembly, it has strong requirements for service professionalism.



The existence of these problems has caused the cost of large-scale logistics and express service providers to continue to increase, and the profitability has continued to decline.


Taking Debon as an example, Debon’s revenue and attributable net profit in 2021 will be 31.36 billion yuan and 142.9 million yuan respectively. Although Debon’s revenue increased by 14.02% year-on-year, its net profit plummeted by 74.69% year-on-year. Deducted non-net profit dropped from 210 million in 2020 to -210 million in 2021, the first loss after listing.


In the end, Debon Logistics sold itself to Jingdong.


But there is still a “head iron”. In the difficult matter of large-scale logistics, there is another participant – Tmall.


Recently, Tmall and Cainiao jointly announced that in the next three years, consumers who buy wardrobes, beds, washing machines and other large electrical home improvement products on Tmall will achieve 100% “one-time door-to-door and free delivery”. It will use 3 years to become the best large-scale delivery network in China.


Why does Tmall cooperate with Cainiao to provide large-scale logistics services, knowing that large-scale logistics is “difficult to do and make money”? What is the value to consumers, merchants, and platforms of the new forces making great efforts to develop large-scale logistics services? After 3 years of devotion to attacking large-scale logistics services, what are the odds of winning Tmall’s attack on the hinterland of JD.com? This article will mainly discuss these issues.


Not a sudden raid?


For Tmall to provide large-scale logistics services, both industry insiders and consumers are inevitably a little surprised.


Hu Liang, who has been in the e-commerce industry for 10 years, told us, “I was shocked to hear that Tmall is going to do large-scale logistics. I always thought that large-scale service was a shortcoming of Tmall. Now Tmall chooses to make a sudden attack to make up for this. I’m really surprised. This year’s Double 11, I have already booked a sofa on Tmall, just to experience how Tmall’s service is in express delivery of bulky goods.”


In fact, Tmall’s slogan is by no means groundless. Similar to JD.com’s acquisition of Debon Logistics, Tmall has been investing, cultivating and deploying large-scale commodity services for many years before fully expanding its large-scale logistics services.


As early as 2013, on the basis of Cainiao Logistics, Alibaba has successively invested in companies such as Rishun, Suning Logistics, and service providers in the home improvement industry, such as “Shengong 007” and “Artisan Duoduo”.


Coupled with the logistics capabilities of Cainiao itself that have been continuously built in recent years, Tmall’s large-scale products have the basis for high-quality contract performance. At the same time, Tmall uses data algorithm prediction to help merchants realize intelligent replenishment, sub-warehouse, allocation, and output the optimal product layout plan to improve the efficiency of supply chain management.


Based on these long-term investments and layouts, in fact, the shopping experience of Tmall’s large-scale products has been greatly improved. This improvement can be seen from the evaluation of express delivery and installation services given by many users on the Tmall platform after purchasing large pieces of furniture.


Source: Tmall


It is undeniable that JD.com has long relied on its self-operated logistics system and strong logistics capabilities to walk the e-commerce arena for many years. It has accumulated a good reputation for logistics services and a stable logistics brand mentality on the consumer and business side.


However, Tmall’s attack will still make consumers, merchants and other e-commerce platforms start to re-examine its strength and accumulation in large-scale logistics services.


Is the large logistics track going to be rolled up?


To do big-ticket logistics services, compared to JD.com, “Tmall + Cainiao” is a new force. What can the entry of new forces bring to the entire large-scale logistics service track?


In the scope of market economy, more intense industry competition generally brings about the improvement of the quality of goods and services, the decline of prices, the iteration of technical level and the evolution of the industry as a whole.


At present, in the field of domestic large-scale logistics services, from the merchant side, to the distribution side, to the consumer side, there are still many pain points that need to be improved.


On the merchant side, a furniture merchant, Zhao Wei, told us that many platforms in the industry do not have the ability to provide large-scale logistics services, and they can only use third-party service providers to complete the delivery of furniture by themselves. But the problem is that the third party not only has a huge disparity in price, but also cannot keep up with the after-sales service capability.


Because of these things, Zhao Wei often has a lot of trouble with third-party logistics service providers, which also affects the user evaluation and repurchase rate of his store.


On the distribution side, there are also many problems with large-scale logistics services.


The courier Luo Tao told us that the problem of not delivering large items to the door is very common, and it is not that they are unwilling to deliver. Behind this, there is actually an economic account that has to be calculated.


At present, the delivery cost of express delivery for large items is basically the same as that for small items. However, items such as refrigerators, mattresses, and furniture can be delivered to the door by one person, and if the customer’s residential area is a traditional old residential area without elevators, the delivery will be more difficult.


As Luo Tao said, with the rapid development of domestic e-commerce, the supporting infrastructure of large-scale logistics has developed slowly, and it is far from meeting the delivery needs of large-scale products. A typical case is that due to the limitation of funds, intelligent distribution equipment such as elevators has not been popularized on a large scale, and there has been no good solution to the problem of difficulty in going upstairs.


The problems exposed by the merchants and the delivery side have also caused consumers to criticize large-scale express delivery a lot. Problems such as slow timeliness, arbitrary charges, frequent door-to-door visits, damaged goods, difficult returns, and difficult handling of used goods are the problems that many consumers often complain about.


Liu Liyun, who has been used to online shopping for many years, told us, “I like to buy everything online. Furniture, home appliances, bedding are all very large and heavy. Some platforms can’t deliver to my home, which makes me miserable, and some even deliver to my door. It does not include installation. Some of the installation packages need to be re-booked or very expensive. In short, every time I buy a large item, I have a headache, and I don’t feel refreshed when I usually buy daily necessities and clothes.”


From the merchant side to the delivery side to the consumer side, everyone seems to be dissatisfied with the existing large-scale logistics services and think there is room for improvement. This gives the emergence of competitors, providing enough room for growth and market gaps.


Since 3 years ago, Tmall has deployed a “one-time door-to-door, free delivery” service. Alibaba Chuixue described, “At present, this service has covered consumers in 300 cities across the country. We hope to use another 3 years to achieve one-time door-to-door delivery of electrical home improvement products in more than 2,800 counties. As a platform, Taobao Tmall hopes to help merchants do things that cannot be done by a single merchant, and build the next generation of shopping experience for big-ticket items through innovations in technology, fulfillment network and consumer experience.”


As a high-frequency online shopping consumer, Liu Liyun’s idea is, “It is always good to have one more platform to deliver large items to your door. The more the better. Just like Tmall, JD.com and Pinduoduo, we can buy more prices. Like cheap and high-quality things, competition is not always a bad thing.”


Taking on the official logistics of Tmall’s large-scale products, Cainiao’s responsibility is not small. Regarding the current specific layout of Cainiao in large-scale logistics, Cainiao CEO Wan Lin said that Cainiao has initially established a professional logistics solution for large-scale commodities, and opened its own collection and distribution centers in Foshan, Ganzhou, Chaozhou and other industrial bases , and implement the “fixed-point shuttle” mode, which shortens the delivery time of consumers in 70 cities by 2-3 days.


In the last mile delivery link, Taobao, Tmall and Cainiao have established their own team of delivery masters, which have achieved standardized operations in terms of advance reservation, cleaning and protection, door-to-door delivery, integrated delivery and packaging, and take-away packaging. . It is reported that the current one delivery completion rate has reached 98%.


According to the new goals released by Taobao, Tmall and Cainiao, in the next three years, Cainiao will continue to invest in building a team of 10,000 terminal delivery masters, so that large-scale logistics services can be guaranteed with more certainty, and the breakage rate is the lowest in the industry. , the highest level of digitalization in the industry.


As a bridge connecting B-end merchants and C-end consumers, the continuous upgrading of the logistics field can also empower and feed back merchants. Zhang Qunfeng, founder of furniture brand Genji Muyu, said that since the cooperation with Cainiao, the seller’s service rating system score has reached 4.95, and the absolute satisfaction of returning consumers has reached 94%.


For merchants, distribution and consumers, it is definitely not a bad thing for the large-scale logistics track to reignite the war. But for e-commerce platforms, how valuable is it to fully expand large-scale logistics services?


Why do you have to do hard things to earn a little money?


Data shows that the market size of the national electrical home improvement products exceeds 5 trillion yuan, of which Taobao Tmall is the first platform for electrical home improvement consumption. In the past year, 267 million consumers have purchased home appliances on Tmall. In the first 10 months of this year, consumers have bought more than 24 million beds, more than 22 million sofas, and more than 18 million pieces on Taobao and Tmall. Dining table and chairs.


Undoubtedly, Tmall is the main e-commerce platform for consumers to buy big-ticket items.


Looking back at the development history of domestic business for so many years, the relationship between business flow and logistics has always been complementary and mutually reinforcing.


Zhang Yong said, “There are no packages that are generated for no reason in the world, and the evolution of business forms affects the development of logistics forms”, that is, business flows are driving the development of logistics.


On the one hand, changes in consumer demand lead to changes in business flow patterns, which lead to the development of logistics. The immediacy of catering has given birth to instant logistics, that is, the takeaway model of platform crowdsourcing and forwarding. The characteristics of commodity transportation of home appliance and furniture companies have given birth to the large-scale logistics and distribution model.


As the main battlefield for large-scale commodity consumption, Tmall is fully expanding its large-scale logistics services, which is a timely choice to meet the demands of consumers on its own platform, and let it take its course.


On the other hand, the front-end of the supply chain cooperates with consumers, and can obtain forward-looking production plans to provide guidance to enterprises in the back-end of the supply chain. Therefore, transportation suppliers and infrastructure service providers can focus on providing professional warehousing and transportation services, promoting the division of labor in the supply chain and improving circulation efficiency.


In addition to business flow driving logistics, and vice versa.


The development of logistics and the reduction of transportation prices can also bring price advantages to the development of business flows. As a supporting facility for business flow development, logistics has high logistics efficiency and low logistics cost, which can improve consumer satisfaction and sense of gain, thereby improving the platform’s sales reputation and promoting business flow development.


Therefore, Tmall and Cainiao have deepened their layout in the field of large-scale items, which can not only dilute the cost of Cainiao’s early commercial infrastructure construction through the growth of platform consumers’ purchases, the development of consumption habits and the development of brand mentality, but also can continue to increase Penetration of Tmall in big-ticket items.


With the current peak of domestic Internet traffic, domestic e-commerce has entered the era of “stock” competition from the previous era of traffic dividends. For e-commerce platforms, the future test is not only the platform’s transaction capabilities, but also how the platform focuses on user experience, serves consumers well, creates value for merchants, and enhances differentiated category service capabilities.


To put it simply, the platform’s in-depth operational capabilities for consumers has become the key to the current e-commerce platforms to maintain their own advantages, and also affects the lasting development and stability of the e-commerce industry in the future. The premise of achieving these is to help merchants on the platform reduce costs and increase efficiency.


Especially when this year’s epidemic has caused supply chain disruptions and commodity raw materials have continued to rise, business operations on major platforms have been impacted to varying degrees, and platforms should empower businesses in a variety of ways.


In the past year, Taobao and Tmall have more than one million users in nearly 200 categories, and the growth rate has exceeded 100%. In May of this year, Dai Shan, president of Alibaba’s domestic digital business sector, said, “It is the most important thing this year to help merchants stabilize the market and grow.”


To build a more comprehensive and complete large-scale logistics service, that is, Tmall, through the construction and improvement of the underlying infrastructure, helps the merchants of large-scale commodities such as home appliances, furniture, and home improvement to solve the real pain points, and realize the growth and development of the platform and the merchants together. Serving consumers well together.


This may be the reason why Tmall does a large-scale logistics service, which does not seem to be a “sexy” business.


Insight into market gaps


In the past, when it came to Taobao and Tmall, the categories of products that consumers and merchants often thought of were mainly beauty, clothing, and food.


Such consumption and brand mentality are the same for domestic mainstream e-commerce platforms. Jingdong started from 3C and home appliances, and it has been very good as a book publication.


Today, Tmall and Cainiao are striving to do large-scale logistics, which seems to be breaking through its own comfort zone and the inherent cognition of the outside world. In fact, behind this may be Tmall’s observation and insight into the future growth space of the large-scale commodity market.


In terms of home appliances in several major categories of large-scale products, JD.com is the strongest among domestic e-commerce platforms. However, in home improvement and home furnishing, there is still a large gap in the market.


From the merchant side to the delivery side to the consumer side, the large-scale service of home improvement and home furnishing may be the hardest bone at present. However, once there is an e-commerce platform that can provide logistics services for home improvement and home furnishing, the barriers to competition will be extremely stable.


Throughout the development history of the domestic home improvement and home furnishing industry, the industry has previously completed marketing transformation through offline stores scattered across the country. However, due to the impact of the epidemic, the rising rents of large-scale stores, the rising cost of personnel, the refined decoration and fully-furnished residences proposed by real estate developers, and the inertial thinking of traditional stores that emphasize performance, ignore word-of-mouth, and have a weak connection with old users, domestic furniture and home improvement stores At the crossroads of industry development.


Home improvement and home furnishing enterprises “touch the Internet” and go online, which has almost become the only way to find new increments. However, due to the high requirements of logistics for large-scale products such as home improvement building materials and furniture, this has brought many problems to home improvement and home furnishing enterprises and businesses online sales.


At present, when searching for home improvement building materials and furniture products on major e-commerce platforms, there are still only a few brands in them, and many well-known brands and small and medium-sized brands of home improvement and home furnishing companies are hard to find.


Consumers at the other end have already had great consumer appeals for buying home improvement products online.


Wen Qing, who bought a house at the beginning of the year, emptied his family’s savings, and did not dare to think about customizing the whole house. In order to choose suitable home improvement and home products, she has visited many offline furniture cities and home stores, and has taken a fancy to many products. She always wanted to compare prices online before placing an order, but after searching, she found that many products could not be found online at all, and some even manufacturers could not find it online.


In the eyes of many consumers, the home improvement and home furnishing industry is not much different from the offline era 20 years ago, and it is completely unable to keep up with today’s consumption trends and consumption habits.


This reality has left a lot of market space for the online operation of the home improvement and home furnishing industry, and also left a development opportunity for the future of large-scale logistics.


According to the data released by Magic Mirror Market Intelligence, the most important points for consumers to pay attention to furniture products are installation and logistics.


Source: Magic Mirror Market Intelligence


The realistic demands of consumers show that whoever occupies the advantages of the installation and logistics of home improvement and home furnishing will take the lead in home improvement and home furnishing e-commerce.


Tmall and Cainiao are launching large-scale logistics services at this time, and the goal should be very clear, that is, after in-depth industry observation, analysis and insight, targeting the online market gap in the home improvement and home furnishing industry.


Of course, such a market space is an opportunity for the platform, and it is also where the new growth of merchants lies in the future. For all industry competitors, the opportunity is equal.