JD.com and Tmall compete for the pet track, why is the "cute pet economy" so delicious?
Recently, JD Pet, which is positioned as a one-stop pet consumption and service platform, disclosed for the first time that it will integrate JD’s full platform resources in the next year to create more than 50 new brands in the first echelon. Coincidentally, in April this year, Tmall also stated that in the new fiscal year plan, the pet category will be upgraded to a first-level industry. Tmall will use the resources and investment in building beauty products that year to focus on the pet track, and build the pet industry into the second Tmall beauty products in the next three years.
The two e-commerce giants have expressed their efforts to increase their layout in pet business at similar time points, which undoubtedly adds more fuel and fire to the already popular pet track. He Yixuan, senior analyst of iResearch's e-commerce industry, believes that the entry of giants will inevitably lead to pet consumption, pet content, pet brands, etc. more frequently entering the public's vision, driving more people to participate in pet raising, and thus driving the development of the pet market.
The two e-commerce giants
The promotion of pet brand upgrades
At the event on May 19 around the upgrade of JD pet's strategy, Liu Lu, general manager of the pet business of JD Retail Group, introduced that JD Pet is a one-stop pet consumption and service platform, including retail, service, omnichannel and medical and health sectors, and has achieved coverage of the entire industrial chain, consumption scenarios, and pet life cycle.
A reporter from Securities Daily learned that JD has been in the pet industry for ten years, but this time, JD Pet disclosed for the first time that it will integrate JD’s full platform resources in the next year to create more than 50 new brands in the first echelon.
It is worth mentioning that in April this year, Tmall Pet also announced at the Tmall Golden Makeup Awards to increase investment in pet business. It is understood that Tmall Pet upgrades the pet category to a first-level industry in the new fiscal year plan, and will build the pet industry into the second Tmall beauty industry in the next three years; in addition, incubating new brands will also be the key goal of Tmall Pets.
It can be seen that JD.com and Tmall have common points in their strategies to enter the new "pet" track. In addition to enhancing the internal importance of the pet business, they all expressed their attitude towards supporting new brands. Talking about the reasons behind this, He Yixuan, senior analyst of iResearch's e-commerce industry, told the Securities Daily reporter that e-commerce platforms need to find some breakthroughs and provide centralized and large-scale support to gain an advantage in the competition among platforms when the online rate of various consumer goods is gradually saturated.
Dangdong App financial commentator Wang Chikun told Securities Daily that at this stage, with the normalization of anti-monopoly, the strategy of leading companies to use their monopoly advantages to suppress competitors must be changed. "Lead companies have advantages in terms of traffic, capital, resources, etc., and can inject their traffic, capital, and resources into innovative enterprises to help innovative enterprises find structural opportunities in industry segments around industrial transformation and quality improvement and consumption upgrading, increase R&D efforts and innovative investment, open up new market growth in segments, and obtain new industry development dividends." More than 80 pet companies have received financing within the year
The White Paper on China's Pet Consumption Trends in 2021 show that last year, the market size of my country's pet industry was close to 300 billion yuan, and the industry will continue to maintain steady growth in the next three years, with a compound growth rate expected to reach 14.2%, and the market size will reach 445.6 billion yuan by 2023. In terms of quantity, the total number of cats, dogs and pets exceeded 100 million in 2018.
He Yixuan said that the joining of e-commerce giants is mainly based on the rapid growth of the pet market. Whether it is young or middle-aged or elderly people, the proportion of pets is getting higher and higher.
The Securities Daily reporter also found that the frequency of financing in the pet industry has also increased year by year in recent years. Statistics of pet operators show that in 2020, there were 63 financing incidents in the pet industry at home and abroad, of which 39 were domestically, with a total financing amount exceeding 6.1 billion yuan. Tianyan Check data shows that in 2021, more than 80 pet-related companies (company name or business scope including "pets") in my country have received financing, with the financing amount reaching tens of billions of yuan.
More and more pet companies will choose to go to the capital market. In February this year, Tianyuan Pet, which operates pet supplies and food, applied for listing on the GEM, successfully passed the review. On May 18, Yiyi Co., Ltd., the "first stock of pet sanitary products" listed on the main board of the Shenzhen Stock Exchange, with an issue price of 44.6 yuan per share, up 43.99% on the first day, and then hit the daily limit for five consecutive days. As of the close of May 25, Yiyi Co., Ltd.'s share price closed at 103.42 yuan per share, with a cumulative increase of 131.88%, and a market value of 9.721 billion yuan.
The old pet companies that have been listed in the A-share market for many years have also performed exceptionally, highlighting the investment value of pet concept stocks. According to data from Tonghuashun, as of the close of May 25, Zhongpei Co., Ltd. and Petty Co., Ltd., which have been listed for more than three years, closed at 40.55 yuan/share and 35.68 yuan/share respectively, with an increase of 162.29% and 59.71% respectively compared with the issue price.
Comprehensive e-commerce vs vertical e-commerce
In addition to competition, there are also cooperation
Compared with pet vertical e-commerce, Tmall and JD.com have natural traffic advantages when entering the pet track. According to the prospectus of Boqi Pet, in the pet e-commerce field, based on the total GMV (website transaction amount) in 2019, Taobao platform ranks first in the industry with a market share of 60%, JD.com ranks second with a market share of 3.7%, and third place Boqi Pet has a market share of 1.9%.
Will the high-profile intervention of Tmall and JD.com further squeeze the living space of vertical e-commerce? The attitude of colleagues is not pessimistic about this. The relevant person in charge of Boqi Pet told the Securities Daily reporter, "We have always been good partners with JD.com and Tmall. They attach great importance to the pet industry. We are willing to see. There is currently no strict and comprehensive pet product supervision standards in China, especially the chaos in the pet food industry still exists. The industry irregularities have caused a certain degree of trust crisis to the audience. More and more companies and platforms are involved, which is a good thing for the long-term development of the industry.. ”
Speaking of competition, Fang Kai, chief strategy officer of Boqi Pet, had previously told the Securities Daily reporter that the pet market is very large, and companies that can survive in this industry and develop into a certain scale are excellent. Excellent companies are not only competitive, but also win-win cooperation model.
"Most people still purchase pet products through offline stores and large platforms such as Taobao, Tmall, JD.com, and Pinduoduo. With the entry of e-commerce, pet products and brands on the platform can be sorted out more systematically to provide consumers with a more complete and convenient shopping experience, but will not have much impact on the market structure. "He Yixuan commented.
