With the official launch of JD 618, the conflict between the platform and merchants has once again intensified.
On May 31st, a friend circle post by Shen Haobo, founder, director, and CEO of Grinding Iron Group, attracted attention. Shen Haobo said, "Despite the fact that Mo Tie has completely stopped shipping to JD.com and repeatedly expressed opposition to JD's behavior of disrupting market order through low prices and disorderly pricing, JD.com still ignores our demands and continues to force our products to participate in their low price promotions. This is repeatedly rubbing against our face on the ground."
Shen Haobo stated that Grinding Iron will take three measures: "Firstly, we will take legal measures to protect our rights at all costs. Secondly, we will continue to stop shipping to JD.com and not send any books. If there is an additional deadline, it will be indefinite. Thirdly, we will continue to demand that JD.com remove all of our products and return them to us."
Regarding the statement made by Mo Tie, a JD sales employee responded that the goal of the JD Book 618 campaign is only to enable more consumers to buy cheap and good books. JD.com has never had to stand on the opposite side of publishing houses and the industry. Both sides should be partners of the same camp, hoping to work together with everyone to bring good books and good prices to consumers, rather than letting the high cost of live streaming harm the industry and writers who create with dedication. JD.com has legal independent pricing rights for self operated books and is willing to offer more profits to benefit consumers.
An industry insider told First Financial that there are two models for publishing houses to operate on JD.com: one is the official flagship store of the publishing house, and the other is JD's self operated flagship store. The dispute between the publishing house and JD this time mainly lies in JD's self operated channels, and the decision-making power for the official flagship store to participate in activities lies with the publishing house. In terms of self operated channels, publishing houses mainly cooperate with e-commerce platforms through consignment. If the platform cannot sell it, they will return it to the publishing house. There is also a platform underwriting model, where both parties agree on payment discounts and payment methods. Selling at a loss on the platform is the platform's responsibility. From the reaction of Grinding Iron, the cooperation mode between Grinding Iron and JD.com should be a consignment model.
In JD's self operated model, JD has a certain degree of autonomy in pricing goods, unless both parties have signed a price limit agreement in advance. If the publishing house does not have a full product price limit or only a single product price limit, the platform will sell at a price lower than the supply price, and the subsequent settlement will be based on the supply price, leaving the publishing house helpless.
However, it is unknown whether the settlement can be based on the supply price. The industry insiders mentioned above stated that collecting payments after the platform promotion may increase sales and lead to further negotiations with the publishing house. If suppliers are required to pay according to the conditions of the major promotion, the publishing house will be very passive. In addition, the platform's low price promotion may cause other platforms to follow the price. After launching a low price promotion on one platform, other platforms will also follow suit. When all platforms sell at low prices, it is difficult to settle the original supply price with the publishing house, which is equivalent to "the more you sell, the more you lose.". The industry insider stated that in terms of market share, JD's online book sales have declined after the rise of other platforms, and low prices may not necessarily solve the current predicament of platform sales decline. In addition, the rampant piracy of books has also had a significant impact on the publishing industry and platforms. At present, the industry is concerned about the further deterioration of the entire ecosystem.
In Shen Haobo's circle of friends, he also emphasized the issue of not following the price, "especially to e-commerce partners such as Dangdang Boku Wenxuan Zhejiang who have always had good relationships with Grinding Iron. I earnestly request everyone to not follow the price, not follow the price, not follow the price, and accompany us through this round."
On May 21st, two joint statement letters issued by 46 publishing units in Shanghai, represented by 10 publishing houses in Beijing and the Shanghai Publishing House Management Association, attracted attention. The notification letter mentions that in response to the 618 promotion plan proposed by Jiangsu Yuanzhou E-commerce Co., Ltd., which includes a 20% to 30% discount on the price of all types of books, participating in a cumulative 8-day promotion from May 19th to June 20th, the publishing house will not participate or bear any rebate costs incurred during the promotion period.
Regarding the conflict between JD.com and the publishing house, You Yunting, a senior partner at Shanghai Dabang Law Firm, told First Financial that if JD.com uses its advantageous position to force the publishing house to participate in promotions, China's anti-monopoly law does have provisions to restrict this. From the actual situation, JD.com seems more like a strong channel, but it has not reached the level of abusing its market dominance. Publishing houses can also sue for breach of contract based on the contract between both parties and the Civil Code, or protect their rights according to Article 35 of the E-commerce Law: E-commerce platform operators shall not use service agreements, transaction rules, and technology to impose unreasonable restrictions or conditions on the transactions, transaction prices, and transactions with other operators on the platform, or charge unreasonable fees to platform operators.
In addition, in this case, multiple publishing houses in Beijing and Shanghai teamed up to boycott JD's promotion, which is suspected of horizontal monopoly, and can also apply for exemption in accordance with the law. You Yunting believes that if publishing houses and industry associations want to prove that their collusive behavior meets the exemption criteria of the Anti Monopoly Law, they should first explain the rationality of their actions. It is possible to disclose in detail the cost structure of books, such as copyright costs, namely royalties, printing paper costs, editorial management costs, marketing costs, etc. These data can help explain why publishers need to resist low-priced sales, because if sold at 20-30% off prices, publishers will face huge losses, and the industry ecosystem will also be severely damaged.