NetEase raised pigs before, and JD.com grew vegetables later. Why do Internet companies

Last year, Caijing reporter Song Wei’s article “Conversation with Wang Xing: Too Many People Pay Attention to the Boundary, Not the Core” went viral on the Internet and was reprinted by many media websites. The article also raised a question worth thinking about, namely, “border” and “core”.

Meituan-Dianping CEO Wang Xing mentioned in the conversation: "As long as the core is clear - who do we serve? What services do we provide them? We will continue to try various businesses. ”Obviously, Wang Xing believes that people and service are the core.

In recent years, more and more companies have begun to cross-border. Traditional companies have crossed over into the Internet industry, and Internet companies have crossed over into traditional industries. Internet companies have continued to develop more businesses that are not closely related to their own core. From the perspective of business scope, it is even difficult for us to describe the situation of Internet companies such as Alibaba, Tencent, JD.com, Baidu, and NetEase, because the business scope is too broad. Online, the number of various Apps alone is more than 50, and as many as one or two hundred. Offline, each covers a wide range of businesses.

When companies expand their business boundaries, it is often difficult for people to understand. For example, in 2009, NetEase CEO Ding Lei announced a pig-raising plan. A well-known Internet company actually launched a pig-raising business, and many people were not optimistic about it. However, at the Second World Internet Conference in Wuzhen in 2015, Ding Lei hosted a banquet with "Dingjia Pig" for many Internet tycoons. At the end of 2016, NetEase Weiyang black pork was officially launched, and the first pig was auctioned for 277,000 on "Black Friday".

A few days ago, JD.com announced that it will build a plant factory in Beijing with a total area of more than 10,000 square meters. The factory is the largest Japanese technology hydroponic vegetable factory that can be mass-produced and commercially used. Its output is 3-4 times that of conventional cultivation and 3-4 times higher than that of conventional cultivation. The planting method saves more than 90% of water. The vegetables produced in the plant factory will become a member of JD.com’s own fresh food brand “Jingmi” and will be put on the shelves of JD.com’s fresh food online platform and 7FRESH offline supermarkets in the near future. The initial menu includes six common vegetables: spinach, green stems, salad greens No. 5, red leaf lettuce, cilantro and arugula.

In the past, JD.com raised pigs, and later, JD.com built its own plant factories. These businesses seem to have nothing to do with their respective main businesses. Why do Internet companies fall in love with agriculture, a market that is not "high-end"?

(1) Raising pigs and growing vegetables is only part of it. Use raising pigs and growing vegetables to open up the entire agricultural market. For example, NetEase pig farming is a sub-business under the Weiyang brand. NetEase Weiyang's official website states, "NetEase Weiyang is NetEase's agricultural brand. It focuses on providing high-quality meat production and industry solutions, leading modern agricultural innovation through innovative technology, and providing Chinese consumers with safe, delicious and high-quality food." ”

JD.com’s plant factory is part of the “Jingmi” sub-business. Jingmi has included more than 30 products, covering multiple categories such as fruits and vegetables, seafood and aquatic products, and meat and poultry.

The focus of raising pigs and growing vegetables is to open up a wider agricultural market.

(2) There are retail channels, so you don’t have to worry about selling. The Internet cannot cross borders at will. Everything must be based on sufficient foundation. Otherwise, sales will be a big problem. Both NetEase and JD.com have their own retail channels. As long as the quality of the goods is ensured, there is no need to worry about selling. JD.com’s 7FRESH Supermarket, JD.com, and NetEase’s NetEase Kaola Overseas Shopping are all very good retail channels. It may not be possible to switch to other Internet companies.

(3) Cost is controllable. Unlike Internet companies, which often invest tens of millions of yuan in investment and mergers and acquisitions, the cost of raising pigs and growing vegetables is not so high and is still within control. Even if the business fails in the future, the losses will not be too great. Once successful, pig raising and vegetable growing can be used as templates to expand to more categories, thus forming a larger product alliance.

Generally speaking, it is definitely a good thing for Internet companies to enter the agricultural market. First of all, it can cultivate the habit of users to buy agricultural products online. The domestic e-commerce market environment is very mature, and payment, logistics and distribution are relatively complete. However, the proportion of online agricultural products is still not high. Driven by the Internet, more users will try to buy agricultural products online. Secondly, Internet companies will bring new technologies and different perspectives, activating the vitality of the agricultural market.

[Source: Guo Jing’s Internet Circle]