Daily orders exceed 5 million, JD.com opens a gap in the takeaway market

Author | Liu Baodan

Editor | Zhou Zhiyu

As one of the most representative battlegrounds of the mobile internet era, the takeaway market is experiencing new variables after the fierce competition between Meituan and Ele.me. With JD.com entering the fray with a strong investment of billions in subsidies, this trillion-level market is once again filled with smoke.

On April 15th, JD.com announced that the daily order volume for its quality takeaway would exceed 5 million orders that day, as all orders are from quality dine-in restaurants, with GMV surpassing 10 million orders of "ghost takeaway." This comes just 22 days after the official announcement on March 24th that it had surpassed 1 million daily orders, indicating that JD.com's takeaway order volume has achieved a fivefold increase in about three weeks.

JD.com also pointed out that due to the rapid development of its instant delivery service, the company will recruit no less than 50,000 full-time delivery personnel this quarter, with all five social insurances and housing fund fully covered by the company.

At the same time, JD.com has launched its "self-operated instant delivery" e-commerce service, with over 100,000 JD brand offline stores nationwide already connected to instant delivery, with an average delivery time of less than 30 minutes. JD.com's self-operated instant delivery service has now basically achieved full-category coverage, ensuring the best user experience with self-operated quality and instant delivery services.

In a conversation with Nio CEO Li Bin, JD Group founder and chairman Liu Qiangdong stated that JD.com is serious about its takeaway business.

Recently, Xu Ran, Vice Chairman of JD Group SEC and CEO of JD Group, told Wall Street Insights that JD.com is not considering just one quarter or one or two years, but is focused on building a long-term sustainable business. "This is a long-term layout." It seems that JD.com is making every effort to undertake a "difficult yet valuable task."

Gearing Up

JD.com has been preparing for the takeaway business for many years.

In May last year, JD.com launched coffee and tea beverages. Xu Ran stated that at that time, JD.com had already begun to test the waters in takeaway and was preparing in terms of system and team capabilities. By the beginning of this year, JD.com felt that its capabilities were ready and began to expand into the dining segment.

On February 11th, JD.com officially launched the recruitment of "quality dine-in restaurant merchants," offering commission-free entry for merchants who join before Labor Day. As of March 24th, JD.com takeaway has launched in 142 cities nationwide, with over 450,000 dine-in restaurants joining, and daily order volume exceeding 1 million.

Riders are also an important part of JD.com's takeaway business. On March 20th, JD.com announced that it had signed formal labor contracts with over 10,000 full-time riders, and JD.com would bear all costs of these riders' five social insurances and housing fund.

Unlike the pure e-commerce model, the takeaway model involves merchants, riders, and users, making the business model heavier, and the market already has mature players like Meituan and Ele.me. To carve out a differentiated path, JD.com's positioning is to provide quality takeaway.

Xu Ran admitted that providing quality takeaway is challenging, and JD.com is still in the process of continuous exploration.

In terms of specific practices, JD.com has pioneered the industry's strictest merchant entry review standards and management systems. It employs a three-tier mechanism to ensure the authenticity of dine-in quality for the merchants that join. The so-called dine-in requires offline foot traffic, not just pure takeaway stores.

Additionally, in terms of the entire product system functionality, JD.com is gradually connecting with the dining data interfaces of regulatory authorities in various provinces and cities. "Currently, the approval rate for merchant entry is relatively low, at less than 40%, with 60% being unqualified stores that we absolutely do not allow to go online." "Xu Ran emphasized.

In addition, after the store settles in, JD.com conducts regular inspections through various methods such as photo verification, video patrols, and manual reviews to identify individual stores that are trying to take advantage of the situation. At the same time, for merchants supporting "kitchen live streaming," the JD.com platform will also provide traffic weighting and recommend them to more users.

The entry of JD.com into the food delivery market at this time can be attributed to an important reason: it saves the time needed to cultivate user habits while accurately addressing the pain points of the food delivery industry.

For example, with the 10 billion subsidy launched on April 11, users can draw large coupons such as "25 off 20" and "15 off 10," covering all participating dining stores. By opening the JD.com app and clicking on the "Instant Delivery" channel at the top, users can see a large number of low-priced quality dine-in meals recommended in the "Food Delivery 10 Billion Subsidy" section.

Xu Ran stated that merchants and users are already very familiar with food delivery consumption and do not need huge subsidies to cultivate user habits, transitioning from offline dining or self-pickup to online food delivery. Therefore, the subsidy efficiency is higher, and the company focuses on quality food delivery, making the categories relatively more controllable.

Breaking the Deadlock

In the business world, opportunities often arise from unmet needs or pain points, which is also the core driving force behind JD.com's layout in food delivery.

Regarding the reasons for entering the food delivery market, Xu Ran stated that if only one reason is to be discussed, it is to solve the industry's pain points and meet user needs.

In her view, the food delivery industry has indeed developed very rapidly in recent years, with the market scale growing quickly. The number of consumers has approached 600 million, and the number of participating food delivery merchants has increased, which has also boosted employment for delivery riders. However, the food delivery industry also has many problems, such as food safety hazards, high commission rates for merchants, and poor employment benefits for riders.

"Currently, the platform concentration in the food delivery market is very high, which is not a very healthy development state for the industry," Xu Ran stated. JD.com's own users also have strong demands for food delivery and instant retail.

From a strategic perspective, JD.com's food delivery business is equivalent to invading Meituan's territory, which may mean that the two giants will engage in fierce competition in the instant retail business.

When discussing competition, Xu Ran stated that successful business models in the world are not centered around competition but around users. Competitors are merely a reference standard; 99% of JD.com's time is focused on user needs and solving unmet pain points to build core capabilities.

Xu Ran stated: "The food delivery industry is inherently a broad track, with a large market scale and rapid growth, fully accommodating the joint development of multiple platforms."

On April 15, JD.com announced that it would recruit no less than 50,000 full-time delivery riders this quarter, with all costs for social insurance and housing fund covered by JD.com.

Regarding the cost issues of riders that have attracted public attention, Xu Ran stated that paying full-time riders social insurance and housing fund, and providing accident insurance and health insurance for part-time riders, will increase JD.com's costs to some extent. However, this will also enhance the satisfaction of the riders, improve stability, and thus provide a better experience for JD.com users, forming a positive cycle Xu Ran further stated: "The number of full-time riders depends on the speed of business development. Currently, the speed of business development is actually far beyond our own imagination and expectations. By the end of the year, the number of signed full-time riders may also be higher than we expected."

Standing on the foundation of millions of daily orders, the next core task for JD.com, in addition to growth, is to continuously match user demand with quality merchants, as well as to ensure user retention and repurchase. This is key to whether JD.com’s food delivery can open up new opportunities.

Xu Ran mentioned that JD.com has established the ability to identify quality merchants and provides better traffic and commission policies for quality dining merchants, reducing their marketing costs on the platform, allowing them to focus on providing quality dining services, thus creating a situation where good money drives out bad