The deal between Trip.com and JD Group will see the online travel agent (OTA) sell packages directly to JD’s 400 million strong user-base through a flagship store which is set to launch in early 2021.
According to a press statement from JD, “the goal is to meet all diversified travel-related needs of consumers before, during, and after travel, and create the most reliable platform for users.”
The agreement promises to reorient China’s domestic travel market, here’s what you need to know:
How will Trip.com and JD.com benefit?
Trip.com and JD Group have pledged to integrate traffic and supply chains, a move that will leverage the strength of two giants.
Trip.com is seizing a chance to capitalize on a platform with 25 percent of the e-commerce market — as well as eight million corporate clients and tens of thousands of merchants — through releasing real time travel products. The market reach JD offers into lower tier Chinese cities is of particular importance.
For JD.com, platforming desirable and unique products from China’s leading OTA allows it to compete in the domestic travel market with Alibaba’s Fliggy and Baidu’s Qunar.
In recent years, Trip.com has evidenced its global ambitions through acquiring Skyscanner and MakeMyTrip, partnering with TripAdvisor, and changing its name from Ctrip.com to one less China-focused.
COVID-19 has put this internationalization push on hold. China’s domestic tourism market is stabilizing — Ctrip reports hotel and flight bookings at 70 percent of pre-COVID-19 levels — and a domestic pivot makes sense.
“For JD this is a natural step,” says China Outbound Tourism Research Institute’s CEO Dr. Wolfgang Georg Arlt, “now is a good time as Trip.com doesn’t have as strong a bargaining position as one year ago. It’s a continuation of their shopping spree involving Li & Fung Group, 5 Star Electric, Kuayue Express, CAISSA tour operator”.
How will Chinese consumers be impacted?
China’s digital landscape is well-accustomed to price wars; 2016 saw Uber and Didi battle over the rideshare market and 2018 brought Alibaba’s Ele.me into a price-dropping spectacle with Tencent-backed Meituan for control of the meal delivery market. It’s possible 2021 will be the year of dramatic domestic tourism discounts.
“Consumers will see a more diverse travel product set with a much more competitive price point,” says Michael Lin, Business Director at Mailman X, “Overall, user preferences towards channels won’t be directly impacted, but upcoming travelers on JD.com’s user base should be able to find an increase number of offerings delivered.”