On August 16, Ctrip signed a strategic cooperation agreement with Jingdong. The core product supply of Ctrip was linked to the JD platform, and provided real-time product inventory and product prices with market competitiveness for JD.
at the same time, it was reported that Liang Jianzhang, chairman of Ctrip’s founder and board chairman, met with ALI group CEO Xiaoyao Zi in Hangzhou, covering the cooperation between Ctrip and Ali based on Alipay, but neither side has responded to it. It is unusual for Ctrip to seek cooperation with ALI and JD at the same time. Since its establishment for 21 years, Ctrip has always been a closed system and seldom seeks cooperation with other platforms. This time, Ctrip will supply chain access to e-commerce giants, embrace external forces, is really rare. < p > < p > Ctrip’s 2020 is not a good one. On the one hand, Ctrip needs to deal with the suspension of overseas business and the reduction of domestic business brought about by the epidemic; on the other hand, competitor meituan is eyeing. In order to keep the first place of Internet wine travel platform, Ctrip needs new growth, and the new growth comes from new traffic. Since the outbreak, Liang Jianzhang has made a series of actions to find new traffic. In addition to the most well-known “national tour live broadcast with goods”, from the perspective of the helmsman of the country’s largest liquor travel platform, Liang Jianzhang also promoted ocean link, an affiliated investment institution, to issue an invitation for privatization to 58 cities in April this year. In addition, Liang Jianzhang seems to want Ctrip to take a completely different road from that in the past 21 years. < / P > < p > in order to find out why Ctrip needs external traffic, we should first talk about the nature of liquor travel business. As a vertical service, the liquor and tourism business lacks the ability to actively stimulate the flow of patronage. Users seldom take the initiative to go shopping on the platform. Generally speaking, users only use the platform when they need to arrange their itinerary. < / P > < p > for the previous Ctrip, this is not a problem. With 20 years of industry accumulation, M & A expansion, and brand effect, Ctrip (including qunar and Tongcheng Yilong) has accounted for more than 60% of the transaction volume and nearly 50% of the room volume in the hotel industry (industry terminology, the statistical sum of the number of rooms rented in a certain period of time and the corresponding days). And because of Ctrip’s main promotion membership system, brand viscosity is very high, so the repurchase rate is not a problem. < p > < p > according to the financial report in 2019, meituan’s “store, hotel and tourism” business revenue was 22.3 billion yuan, compared with that of Ctrip’s annual net operating income of 35.7 billion yuan. Although meituan’s 22.3 billion yuan includes the “to store” business which is not in the scope of Ctrip’s business, we can still roughly see that meituan liquor brigade is already an important competitor of Ctrip. < p > < p > meituan focuses on life services, including low-frequency wine travel business, medium frequency to store business, and high-frequency catering delivery business. In meituan’s flow pool, high-frequency business can drive low-frequency business, which Ctrip does not have. What’s more, in 2019, meituan’s overall revenue is 97.5 billion, nearly three times that of Ctrip. For such a huge strategic crush, Ctrip must be prepared. < / P > < p > when meituan began to play “high frequency drives low frequency”, the nature of wine and tourism business changed. It used to be a vertical class, but now it has become a traffic parasitic service. Under the supply of flow creation business, the “parasitic” wine travel business can develop better. The history of Internet business also proves this. With the development of Ota industry, the head players still present have large flow partners, such as Feizhu relying on Ali, Tongcheng Yilong relying on wechat, and meituan travel relying on meituan. < / P > < p > the way the industry plays has changed, so does Ctrip. Before the epidemic, the need for transformation is not urgent. As the largest player in the industry, Ctrip has its own capital, but the fight against the epidemic forces it to find new growth points. < p > < p > in the first quarter of 2020, Ctrip disclosed that its quarterly revenue decreased by 42% year-on-year. Although domestic cross provincial tourism has been gradually restored, there is still no clear timetable for the recovery of overseas business. Before the outbreak, Ctrip’s overseas business accounted for more than 35%, and the epidemic almost completely stopped overseas business. < / P > < p > the epidemic situation became the driving force for the transformation of Ctrip. Like other platforms, Ctrip also needs to open up and cooperate to attract more traffic to reduce the losses caused by the epidemic. < / P > < p > the traffic partner Ctrip is looking for needs to meet two conditions: high-frequency business and large volume. As a listed company with revenue of 10 billion US dollars, Ctrip has few choices to find a matching flow pool and have high-frequency business. < p > < p > Ali and Jingdong are reasonable options. In the cooperation agreement that has been signed with Jingdong, Ctrip cooperates as a merchant and links the core supply into JD. This is to carry Cheng, have give up have gain. What you get is traffic, naturally, you don’t have to say much, but in order to get traffic, Ctrip also made some trade-offs. < / P > < p > first of all, after accessing Jingdong, the sales of products on Ctrip platform will inevitably be paid by JD. And because the traffic does not exist in Ctrip’s own system, the acquisition cost of Ctrip in Jingdong platform is continuous. That is to say, every time users buy Ctrip products through Jingdong platform, Ctrip will be paid. Although the number of customers has increased, in the long run, the utilization rate of traffic is decreasing. < / P > < p > in addition, as a platform, Jingdong naturally hopes to weaken the presence of Ctrip brand in JD. Just like in Wal Mart, Coca Cola has been marginalized. Jingdong hopes that consumers can buy high-quality and low-cost goods on the Jingdong platform, instead of finding out that this product is “produced” by Ctrip, it will turn to Ctrip’s platform to buy it. On the issue of brand, the cooperation between Ctrip and Jingdong will not be a win-win situation. Fortunately, the cooperation with Jingdong is not the only way for Liang Jianzhang to find traffic. During the epidemic period, the products were packed and sold at low prices. In addition to these actions in front of the stage, behind the scenes, one thing may be more important, that is, through the associated investment agency ocean link, the offer of privatization to 58 cities. In the industry, the action of ocean link is called the embodiment of Ctrip’s will. < / P > < p > for 58 cities, the biggest headache is that it is difficult to realize the huge traffic, while Ctrip is the opposite. According to Ctrip’s financial report, the gross profit rate of wine and tourism business is as high as 88%, which is a natural cash cow. < / P > < p > before throwing olive branches to Ali and Jingdong, Ctrip tried to obtain 58 intra city traffic by privatizing 58 cities. And because the latter’s traffic is concentrated in the sinking market, and Ctrip focuses on high-end user groups such as business travel, 58 intra city traffic can make a good supplement to Ctrip’s user pool. What’s more, it’s also the market where meituan travel is located. However, after the invitation for privatization was put forward in April, Reuters reported in June that 58 cities had offered $8.7 billion, and no more information has been published since. < p > < p > Ctrip is not Jingdong’s first partner in the wine and tourism industry. In 2015, JD invested US $350 million in tuniu, becoming the largest shareholder, accounting for 27.5% of the shares, with a seat on the board of directors. Since then, Jingdong and tuniu opened the deep binding. < / P > < p > based on strategic investment, tuniu has been granted a 5-year commission free exclusive franchise of Jingdong travel “holiday” channel, that is to say, all products of “holiday” channel come from tuniu in the past five years. At the same time, tuniu is also the preferred partner of Jingdong air ticket and hotel business. < p > < p > five years later, in June this year, Jingdong transferred all its shares of tuniu to Kaiser group at a price of 460 million yuan (about US $66.63 million). At that time, due to the epidemic, the market value of tuniu was reduced by 97%. < / P > < p > after unting with tuniu, the cooperation between Jingdong and Ctrip brings new imagination to Jingdong’s wine and travel business. Jingdong and Ctrip have similar customer groups, namely, urban business groups with high consumption power. After Ctrip’s supply links into JD, customers can buy in one-stop mode, with better experience. After the news of Liang Jianzhang’s secret meeting with xiaoyaozi came out, there was more speculation in the industry. After all, compared with Jingdong, Ali’s flow pool is more diversified, which can complement Ctrip. In addition, Ali has more desire for Ctrip, and the cooperation with Ctrip will help Ali to increase its competition with meituan. < p > < p > for e-commerce platforms such as Alibaba and Jingdong, Ctrip is a unique and huge “business” in China’s Internet commerce. It not only has a complete supply chain and huge inventory, but also can make up for their short board in the aspect of wine travel. It is a desirable partner. In this way, we can make a bold assumption. The cooperation between Ctrip and Jingdong is more like adding chips to the negotiation with ALI. Similar events have occurred in the history of Internet business. Wang Huiwen of meituan once disclosed to the media that meituan had “helped raise the price” at the time of Ali’s acquisition.