Stronger by Paying Salaries and I Have 1 Billion Employees

After all, the most valuable items in the pool of products eligible for Sunning’s vouchers were small appliances. If customers already had their needs for those items met, why would they bother buying large appliances and digital products from Sunning just to be able to spend their vouchers on low-value goods like snacks and alcohol?

Credit where it was due, Liu Qiangdong lived up to his reputation as a veteran of business warfare. He had immediately figured out Zhang Jindong’s endgame and sabotaged it.

The day after Jingdong’s ”Desert Storm” event launched, the sales performance of Sunning’s ”Zero-Cost Shopping” event plummeted. The day-over-day drop was a staggering 53.7%. The event’s effectiveness was gutted, with sales nearly cut in half.

Before Zhang Jindong could even react, Liu Qiangdong launched a series of new services, including free appliance cleaning and ”beauty deliveries.” The former is self-explanatory. For the latter, Jingdong selected a group of attractive, well-built female couriers to make door-to-door deliveries in Smart cars.

It was low-brow, but customers in 2012 ate it up, especially since Jingdong’s user base was predominantly male.

Singles’ Day hadn’t even officially started, yet Sunning and Jingdong were already at each other’s throats. An uninformed observer would have thought they were the main event of the big sale.

Zhang Yong, however, was far more patient. He waited until October 18 to launch the Wealth Treasure ”Top-Up for Red Envelopes” event.

For every successful top-up of 300 Hua Yuan, users had a chance to claim a 150 Hua Yuan red envelope. For every 150 Hua Yuan top-up, they had a chance to claim a 50 Hua Yuan one. Each tier could only be used once per person, for a potential maximum of 200 Hua Yuan in no-minimum-spend red envelopes.

These were released in limited quantities on the hour, every hour from 10:00 a.m. to 9:00 p.m. With a total of 200,000 red envelopes available, the daily subsidy for this event alone was 40 million Hua Yuan.

The event ran for seven days, from October 18 to October 24, for a staggering total investment of 280 million.

Although users had to be online at the right time to claim them, a single national ID could be used to register six different Wealth Treasure accounts. That calculated out to a 1,200 Hua Yuan instant discount, and the red envelopes had no minimum spend and were valid across all product categories.

In 2012, Ali Baba’s spending on major promotions was far more extravagant than it would be a decade later, and it came with virtually no strings attached.

This was far more generous than what Jingdong and Sunning were offering!

Coupled with other events like ”50% Off Sitewide,” ”1 Hua Yuan Flash Sales,” and ”Half-Price iPhones,” the attention of the entire internet was instantly drawn to Tmall Mall and Taobao.

Jingdong’s average daily sales, which had just held at the one-billion-yuan level for two days, immediately plummeted back to the 500-600 million range.

Tmall Mall’s daily active users climbed steadily as it effortlessly siphoned off 70% of the market’s traffic.

Pinbei was also affected by the fallout.

On the first day of the presale, Pinbei’s total sales were 1.63 billion.

On the second day, sales were 1.27 billion.

On the third day, sales were 1.04 billion.

On the fourth day, sales were 980 million.

On the fifth day, October 18, sales were down to just 730 million.

To put that in perspective, Pinbei’s typical daily sales before the major promotion had been over 800 million Hua Yuan.

After a moment of thought, Huang Zheng had the operations department initiate their own major promotion plan.

First, customers who placed an order on Pinbei would receive a Yu’e Bao ”interest-boosting bonus.” For example, they could get bonuses of 8.8, 28.8, or 88 Hua Yuan for spending 100, 1,000, or 10,000 Hua Yuan, respectively. It didn’t seem like much, but the trick with Orange Pay was that a user could activate the 88 Hua Yuan bonus simply by depositing 10,000 Hua Yuan into their Yu’e Bao account and leaving it there for one month before withdrawing.

This strategy targeted the user’s wallet directly, locking up their funds. The only way to use that money without violating the rules for activating the interest-boosting bonus was to spend it on Pinbei.

At the same time, they increased the Yu’e Bao trial funds given for placing orders. The amount was raised from 5,000 to 6,000 Hua Yuan in trial funds for every 99 Hua Yuan spent—a 20% increase.