Ctrip and JD.com, the cake of the online travel market should be redistributed?

The layout of the tourism industry has been a long-cherished wish of JD.com for many years, but the road seems not smooth.

For the unbounded game in the tourism industry, JD has chosen a new playmate for itself.

On August 16, JD.com and Ctrip signed a strategic cooperation agreement. Ctrip’s core product supply chain will be connected to JD’s platform. The two parties will carry out all-round cooperation in user traffic, channel resources, cross-border marketing, business travel development, e-commerce cooperation, etc. .

In addition, the two parties also jointly proposed the "five cooperation visions" covering a wider user group, sharing channel resources, full coverage of online and offline transaction scenarios, brand cross-border marketing, and business travel expansion.

This model of strategic cooperation is not new. In 2017, Liu Qiangdong put forward the strategy of "Unbounded Retail", the core is to connect users, scenes, supply chain, marketing, and products, and then hope to open up the links of people, goods and fields in the hotel industry.

However, with the sale of Tuniu shares this year, the layout of JD's tourism industry has been difficult to be effective. This time the tourism layout is reinvigorated, can Jingdong succeed?

Cake redistribution?

In the faction market of online travel, JD is constantly adding weight to itself.

"Whether it is investing in health or tourism, JD.com's large customer base creates the possibility for its own profit growth point." A person familiar with JD.com said.

For JD's inbound tourism, what is lacking is the integration of offline ecology. As the leader of OTA, Ctrip has opened more than 2,400 travel stores in 26 provinces (cities) across the country, with a provincial coverage rate of over 80%, and the number of stores in Guangdong exceeded 300 and ranked first in the country. This data complements the Jingdong tourism ecology Offline shortcomings. At the same time, it also provides a new path for Jingdong's traffic realization.

In this regard, Liu Bo, the founder of Bokan Cultural Tourism, believes that “online travel is a saturated market. Ali's Fliggy and Meituan both occupy a large market share. Jingdong’s travel sector has less business. This is just the same. Use Ctrip's supply side resources to supplement its own travel business."

For the other partner, Ctrip, as an established OTA giant, has a huge market share in high-end hotels. However, with Meituan’s focus on low-end hotels in recent years, Ctrip’s market share in the field of online travel is receiving erosion.

In this regard, Zou Guangyong, associate professor of Shanghai Business School, believes that the combination of Ctrip and JD.com is a win-win strategy that is conducive to the cross-integration of online traffic. Of course, this also shows the crisis facing Ctrip's development under the new crown epidemic. Meituan's "through train" uses user resources brought by high-frequency consumption to make low-frequency tourism layout, and it also cleverly expands its own more diversified business.

In the second half of the Internet when the traffic dividend is fading, the alliance between oligarchs is accelerating the industry reshuffle. The strategic cooperation between the OTA boss and the Chinese e-commerce giant is also considered by the industry to be the beginning of a battle against Biaomei.

Two days after signing the cooperation with Ctrip, JD.com released the 2020 semi-annual report. While achieving revenue of 2011 billion, the number of active purchase users exceeded 400 million. The significant increase in traffic is also the reason why Ctrip can make more direct profits. A place that can attract Ctrip.

Starting from a booth in Zhongguancun, it has gradually become a c2b e-commerce leader in China. In the development of the Internet era, the advantage of JD’s growth process is that it has accumulated huge traffic.

JD.com said that with this cooperation, 8 million corporate customers and 400 million consumer users will be connected to Ctrip, and the commodity supply chain will be combined with the Ctrip travel product supply chain.

The essence of traffic is profit, and Ctrip's appeal is to obtain higher traffic. Jingdong’s position is to occupy market share in the tourism industry. The two cooperated to get what they needed, and everyone was happy.

However, Liu Bo believes that the complementary advantages of the two and the combination of the strong will have a good role in promoting the business of both parties. However, in the long run, for a company of this size, the future integration and implementation of the two are still issues that need attention.

Long travel road

In half a year, the e-commerce giant JD.com has increased the tourism industry more frequently. On April 25, 450 million yuan invested in Caesars Travel (000796.SZ). On July 8th, 250 million US dollars participated in the "Indonesia version of Ctrip" Traveloka's strategic financing. On July 13th, it signed the "Strategic Cooperation Framework Agreement" with Beijing Tourism Group to jointly promote the deep integration of online and offline and jointly explore strategic cooperation in the tourism industry. .

After some operations, JD.com described its own tourism industry in this way: "JD Travel has always practiced the concept of quality travel. It has now fully operated six business sectors: transportation, hotel accommodation, travel and vacation, scenic parks, local entertainment, and business travel services. "

The layout of the tourism industry has been a long-cherished wish of JD.com for many years, but the road seems not smooth.

In a broad sense, JD's layout of the tourism industry has been involved in hotels, air tickets and other businesses since 2011. The subsequent milestone event was the establishment of the Travel Channel in 2014. With the concept of "Quality Travel", it mainly provides air tickets, hotels, vacations, attractions and car rental services for mid- to high-end people. Through consumer classification, JD’s value attraction strategy, and linkage with suppliers, JD.com also proposed to achieve a win-win situation for users and suppliers without a price war.

In 2015, Jingdong 2.18 billion yuan increased after Tuniu. Tuniu has obtained 5-year commission-free exclusive management rights for the JD Travel-Vacation Channel website and mobile terminal, which also indicates that JD.com will decentralize its tourism development rights.

Back then, it was a highlight moment for this company to travel and find a way out. It also carries the ambition of Jingdong's tourism layout. However, the impact of the epidemic has added to its own business difficulties. Jingdong has transferred all Tuniu shares in June this year for a price of 458 million yuan, which can be said to have recorded a huge loss compared with the previous investment.

Industry insiders believe that several factors such as missing the transition period, late-stage traffic advertising is too expensive, and huge advertising investment make it difficult for Tuniu to exert influence on the C-end audience, and its appeal to businesses on the B-end is also very limited.

In 2018, JD.com announced the four core strategies of hotel scene expansion, membership empowerment, two-way procurement, and panoramic marketing, to fully open up people, goods and markets in the hotel industry. It is hoped to enable its own tourism industry to achieve breakthrough growth.

Throughout the nine-year development strategy, it seems that JD’s tourism industry has been difficult to continue to exert. When building its own channel, it has to put the main force on the strategic partner in stages. This may also be the layout for many years and the difficulty in the industry for many years. One of the reasons.

After going around for nine years, JD Tourism itself seems to be still in an immature exploration period. The final point was the cooperation with Ctrip.