Dangdang chose to launch a third-party flagship store on JD.com, flagging a sign of cooperation for the old rivals. It all seemed a bit dramatic to the public, but judging from the immediate launch of the flagship store right after the press conference, Dangdang must have been planning for a long time. The lack of visitor traffic blocked the development of Dangdang, and the presence of JD Books may also be a last resort.
According to industry sources, on January 5, Dangdang and JD Books reached a strategic cooperation agreement: Dangdang will be officially stationed in JD.com, and open their own third-party flagship store. On the evening of January 9, JD’s book recommendation unit issued an article, announcing a 15% commission from external recommendations to the Dangdang flagship store.
A rival for over a decade has become a partner, and one can only lament that cognition cannot catch up with change quickly enough.
Dangdang's presence in JD Books can be seen as a new move in seeking traffic cooperation for many years or interpreted as a follow-up to its "scenario-based revolution" in recent years.
The thirst for visitor traffic has always been a sore point for Dangdang. Despite being one of the earliest e-commerce platforms in China, Dangdang's market strength has been limited to books. It had tried in department stores and other business extensions, but all failed. Operating department stores with the same mindset of selling books also proved to be a road not taken. Dangdang later began to cooperate with other platforms: launched a store in Tmall in 2012, and eventually became the deservedly first Tmall bookshop; in 2017 launched stores in Suning e-commerce platform, combined with Suning's offline resources, O2O model, hoping to further strengthen the competitiveness in the vertical platform; in 2018 stationed in Pinduoduo, opened more than 20 online stores in a short period. At a time when its own traffic was scarce, Dangdang chose to join its rivals and share their traffic.
With the rise of graphic self-media, short-form videos, live-streaming, and other private domain traffic platforms, Dangdang chose to create its own private domain traffic. In 2018 Dangdang started launching a "scenario-based revolution", reorganizing the previous publications division into three scenario-based groups and focusing on visitor traffic.
Dangdang also started a wide range of cross-industry collaborations. It joined forces with merchants such as Didi Rider, McDonald's, Yaotai Hanhai Cultural Tourism, Wan Long Ski Resort, and Hema Fress in an attempt to attract traffic from these merchants to its own platform.
Dangdang opened a large number of accounts and established communities on other private domain traffic platforms such as Douyin (Tictok), Kuaishou, Xiaohongshu, and WeChat Official Account to form its own traffic conversion pool. In 2021, Dangdang established nearly 1,000 communities on WeChat with 500,000 group members. At the same time, Dangdang also strengthened its cooperation with more self-media social influencers from Douyin (Tictok), Kuaishou, Xiaohongshu, WeChat, and Bilibili. The live streamings and short-form videos through these channels ensured content distribution in large quantities and traffic flowing into Dangdang’s private domain pool. Since 2018, Dangdang has been opening up through official accounts and community channels to link up with authors for book sales. By 2022, Dangdang had established cooperation with 50,000 self-media.
The year 2018, when the "scenario-based revolution" was launched, was a very unique year for Dangdang. At the beginning of this year, Dangdang integrated and cut down the digital business department, which was previously in parallel with the publications division, and took away the new business department to optimize the data for its own acquisition report. In May of the same year, the long-rumored acquisition by HNA disappeared for various reasons, and Dangdang was rejected by the capital after having rejected Baidu and Tencent.
The failed acquisition of Dangdang needed more stories to continue its market position and valuation and kept seeking more capital opportunities. In this mobile internet era where traffic means everything, Dangdang's own traffic value is not ideal: in many third-party e-commerce apps daily and monthly activity lists, Dangdang couldn’t even make to any of them. According to its insiders, Dangdang App’s DAU is only over 1 million, and Dangdang Cloud Reading App’s DAU is less than 200,000. In contrast, the average DAU of JD App in 2022 is over 100 million, and the DAU of Douyin (Tictok) exceeds 700 million.
Integrating into a competitor’s or potential one’s platform is something that Dangdang has to do right now. According to Amazon’s law of competition: if you can't beat your rivals, you will acquire them with huge money. In 2020, Peggy Yu revealed in a media interview that Dangdang's revenue was in the region of 10 billion yuan, with a net profit of 400 to 500 million yuan, of which 70% of revenue still came from books. On the contrary, JD’s three-quarters of 2022 revenue was 243.5 billion yuan, Douyin (Tictok) reached a unit sale of 250 million books in 2022, with merchant channels bringing book GMV growth of 315% year-on-year. What does Dangdang take to compete?
The so-called "scenario-based revolution" is still the essence of traffic acquisition. In 2023, Dangdang’s integration into the traffic pool of JD Books in a low-key manner is a choice of no choice. Book sales made through Tmall, Pinduoduo, Douyin and other traffic platforms have contributed important revenue growth to Dangdang. Sales gained over 100% growth in 2022 in Dangdang stores in Douyin and Pinduoduo. Dangdang also set its sales target on Tmall at 3.5 billion yuan for the year 2022.
JD is becoming an open platform, with traditional book distributors such as wenxuan.com and Zhejiang Bookuu growing rapidly on JD. In the words of Zhang Wei, head of the Literature & Education unit from JD Books, " As JD’s book business has maintained in good shape, the future of JD Books should go beyond the book circle and look at a broader field, whether it is cross-border integration or following up on cutting-edge marketing approach".
When rivals are raging and have marched towards a higher and distant world, Dangdang has got no other options. Although the original intention of the book business has constrained Dangdang for many years, there is only one road ahead for now. Dangdang has to stick to it while waiting for new market and capital opportunities. Dangdang's submission to JD is a matter of time. According to industry insiders, as early as 2013 when JD Books opened up the platform to third parties, Dangdang has been interested in joining. The two sides claimed to have also conducted a face-to-face meeting, but finally did not work out.
The signing ceremony of this partnership between Dangdang and JD Books and the launch of the flagship store was extraordinarily low-key, with no news of any outreach before or after the launch, and no official notification released. This is actually not Dangdang's style, according to their record, former bosses can be sacrificed in exchange for traffic. This lowkey only shows that they have not yet thought of a good way to explain to the outside world how two companies that were once at an industry-stirring price war have come to today's hand in hand.