What's going on with Jingdong in 2023? Liu Qiangdong made a high-profile statement: Brothers will never lie flat!

In 2023, the general environment is turbulent, and the tide of the technology circle is still surging.

Large models open up a new world of AI, Vision Pro leads spatial computing, smart trams surpass oil cars, Pinduoduo "new king" has been established, smart phones are innovating, new hardware is emerging in an endless stream, HarmonyOS system is accelerating growth, AI chips drive everything... In 2023, there are too many major events in the tech industry.

Among them, the "2023 Please Answer" series will systematically sort out the companies, products, technologies and people worth recording in the technology industry in 2023, and the "2024 Observatory" series will look forward to the "spoilers" of the products and technologies worth looking forward to in the technology industry in 2024, continue to output high-quality content, pay tribute to innovation, record the times, and think about the past to inspire the future.

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Following Jack Ma, Liu Qiangdong also spoke out. On December 9, Liu Qiangdong responded to employee comments on JD.com's intranet, talking about JD.com's situation and future outlet. He first bluntly said that "Jingdong must change, otherwise there is no way out", and even blamed himself for "There are so many problems, of course, it is my mismanagement", and his dissatisfaction with the current situation is overflowing.

(Picture from Sanyan Technology) 

JD.com's 2023 is indeed not going well. As of Mr. Liu's speech, JD.com's share price had fallen nearly 50% from the beginning of the year, with a market capitalization of just $41.6 billion, less than a fraction of that of Pinduoduo and Alibaba.

The share price doesn't tell the whole story. Looking at the financial data, under the leadership of the new CEO Xu Ran, JD.com will implement the policy of reducing costs and increasing efficiency in 2023, and its profits and revenue will improve compared with the same period last year. Since returning to the front line at the end of last year, Liu Qiangdong has personally led a number of changes, including the launch of tens of billions of subsidies to restart the price war, the improvement of JD.com's price power in the industry, the opening of self-operated and POP systems, and the promotion of a series of internal personnel changes "arrangement".

Under the impact of the "new king" Pinduoduo, the former head e-commerce kings are changing, but Jingdong is under the leadership of the founder Liu Qiangdong, and the changes are more in-depth. "Unlike some friends who always like to engage in some fancy actions, or play with gimmicks such as AI large models, JD is still very down-to-earth, and has done a lot of real work in terms of price power", an industry insider commented on JD.com's changes in 2023.

It is true that JD.com is also facing "giant troubles", but fortunately, the reform has been progressing in an orderly manner, and whether it can return to the status of the king of e-commerce is an important point to watch in 2024 and the next few years.

(The picture comes from JD.com's official Weibo)

Return: Three arrows at the same time, all for the low price

JD.com's series of changes in 2023 also kicked off in Liu Qiangdong's internal speech.

At the end of December last year, Liu Qiangdong organized the company's management and many front-line employees to make a serious speech. In addition to criticizing PPT culture and criticizing JD Retail for ignoring user demands, it also set the tone for the new year - an insider revealed to the media that in Liu Qiangdong's 3-hour speech, the word low price appeared at least dozens of times.

In Liu Qiangdong's words, the low-price strategy is the most important strategy for JD Retail in the next three years. Xu Lei, then CEO of JD.com, and Xin Lijun, CEO of JD.com, also emphasized the importance of returning to the low-price strategy on different occasions. The return to users and low prices has become the main theme of JD.com's reform throughout 2023.

JD.com is the originator of the e-commerce price war. At that time, it had fought head-on with Gome, Suning, and Dangdang, although the results were not necessarily a big victory, but at least it showed that Jingdong has never lacked confidence and courage. Today, Gome is in a difficult situation, and Suning is silent, and the deep-seated reason is that it is impacted by Jingdong and the e-commerce platform represented by Jingdong. This year, Jingdong proposed to return to low prices, which is Liu Qiangdong's reversal of Jingdong's emphasis on quality e-commerce and deviation from the general trend of consumption downgrading in the past few years. In order to get the yaw ship back on the right track, it is natural to take a few doses of fierce medicine.

The first card that Liu Qiangdong threw out was a simple and crude subsidy of 10 billion.

From the name, preferential strength to various operational details, Jingdong's 10 billion subsidies are tantamount to a "pixel-level" imitation of Pinduoduo: a very conspicuous event entrance is set up at the main station, and the subsidized goods are mainly digital 3C and home appliances, and the subsidy range of several platforms is almost the same. Lei Technology in 618、11.11 During the period, the price power of popular products such as iPhones has been evaluated, although Pinduoduo still has obvious advantages, but Jingdong's service advantages are still significant, you can poke "618 mobile phone price war: Pinduoduo's price power is difficult to shake, Jingdong's service golden signboard is still there", "iPhone 15 freezing price, not in the Double 11 Shopping Festival?"

In the history of Pinduoduo, the trump card activity of 10 billion subsidies has played an important role, and it is also a key measure to help Pinduoduo establish the minds of users and strengthen the low price tag. One of the important reasons why JD.com will strengthen the subsidy of 10 billion yuan in 2023 is precisely to leverage the price-sensitive users of Pinduoduo and Taobao, and its former CEO Xu Lei has said that the 10 billion subsidy has received far more than expected results in attracting new users and improving the activity of old users.

The second card is to win over small and medium-sized businesses and create a live broadcast ecology throughout.

In January this year, Jingdong launched the "Chunxiao Plan" to recruit small and medium-sized businesses with five major selling points, including 0 yuan trial operation, 0 platform usage fee, 0 technical service rate, and reduced margin requirements. In this year's 618 and Double 11 promotions, JD.com also deliberately blurred indicators such as GMV and growth rate, focusing on promoting the support effect for merchants.

If the subsidy of 10 billion yuan is mainly aimed at brand merchants and high-priced goods, providing consumers with cost-effective choices, then attracting small and medium-sized businesses is to increase the supply of low-priced goods and enrich the SKU of the platform. The popularity of Jingdong's live broadcast room during the Double 11 period is thanks to the "three nos" character of "no commission, no routine, no pit fee" and a real low price. Compared with Taotian's "Internet celebrity live broadcast" model, which has been criticized by the industry, JD.com and Pinduoduo do not focus on the live broadcast of Internet celebrities, which not only forms a differentiation, but also is more conducive to the healthy and sustainable development of the platform ecology.

The last trump card is to start the largest organizational reform of JD Retail in the past 5 years, and fully open up the self-operated and POP systems.

At that time, the reason why the change was important was that it broke the original business group system, split it into business units according to subdivided commodity categories, and gave the person in charge of the business unit the autonomy of personnel appointment and dismissal, which was equivalent to overthrowing JD.com's original large middle platform model;

Another support for POP merchants comes from the after-sales level. In March, JD.com announced that it would open the interface of the logistics platform and no longer require third-party merchants to use JD Logistics, and then required third-party merchants to complete the delivery within 48 hours. These measures aim to reduce the operational difficulty of POP merchants, and bring the services of self-operated and POP merchants to the same level, so that merchants can boldly enter and actively expand their business scope.

The opening of POP and self-operated system will inevitably fight with each other, which will test JD's balance ability. One of the drawbacks of JD.com, which was bitterly reported by the employees who posted on the intranet this time, also has the contradiction between POP and self-operation. However, judging from the evolution of platforms such as Amazon, SHEIN, and Alibaba, the integration of POP and self-operation is also the general trend.

In general, most of JD.com's work in 2023 revolves around the word low price. Returning to low prices is a long-term strategy with a three-year cycle, and it is impossible to stop or turn around easily once it is launched. And not only JD Retail, JD Logistics, JD Finance, and JD Technology have also played their respective roles in the low-price strategy, such as the interest-free installment of white strips promoted by JD Finance, which directly improves the user's sense of affordability, and also brings real increments to merchants, which is also a disguised "price power improvement".

Of course, if JD.com wants to support this round of long-term changes, it is inevitable that some adjustments will be made within the group.

Transmutation: Liu Qiangdong "released the military power with a glass of wine", and the top management changed repeatedly

In addition to the changes that users can perceive, such as the launch of tens of billions of subsidies, the support of live broadcast fields, and the lowering of the threshold for free shipping, JD has actually spent a rather turbulent year internally. From JD Retail to JD Logistics, from the organizational structure to the high-level team, a series of adjustments have taken place.

One of the biggest changes is that a number of Jingdong veterans have faded out of the front line one after another, and the new CEO Xu Ran has become Liu Qiangdong's most relied on and trusted policy implementer.

The internal vibration came to a climax because of Xu Lei's departure. In May, JD.com announced the retirement of its chief executive, Xu Lei, without warning, just 13 months after he took office. It is true that Liu Qiangdong's speech at the end of last year, as well as the strategy of overturning the quality e-commerce route and returning to low prices, showed that he was not very satisfied with the results of Xu Lei's work, but no one expected that the parting of ways between the two sides would come so suddenly and so thoroughly.

And Xu Ran, who replaced Xu Lei at the top of JD.com's power pyramid, represents a completely different leadership style.

Xu Ran is from a financial background, and his time to join JD.com is much shorter than Xu Lei's, and he does not have the latter's internal foundation, and his understanding of the front-line business may not be as thorough as Xu Lei's. You must know that Xu Lei joined JD.com in 2009 as the head of the enterprise sales department, and in 2013, after entering the palace for the second time, he successively worked in different departments such as JD Mall, JD Retail, Marketing Department, and Wireless Business Department, witnessing the rise of JD.com.

However, in his own advantageous areas, Xu Ran's business ability is well-known: he is familiar with the capital operation system, can keep profits, is good at cost optimization, and is extremely sensitive to data, which is called "walking excel" internally. For JD.com, which is promoting tens of billions of subsidies on a large scale and increasing marketing investment, Xu Ran, who was born as CFO, is the most suitable candidate for the coach to keep the group's money bag, test the expected effect of the low-price strategy, and ensure that it can safely carry out a "more aggressive attack".

After Xu Lei stepped down, a wider range of personnel changes are still brewing, and a large number of Liu Qiangdong's good brothers have faded out of the front line or left Jingdong directly this year, and the change of power has come vigorously.

In November, Jingdong announced that Xu Ran concurrently served as the CEO of Jingdong Retail, and the new position of former CEO Xin Lijun has not yet been determined;In June this year, Wang Xiaosong, senior vice president of Jingdong and head of Jingdong Retail's own brand business, quietly resigned, and Yu Rui, CEO of Jingdong Logistics, resigned from his position as executive director, CEO and authorized representative for personal health reasons, and was replaced by Hu Wei, the former CEO of Jingdong Industrial Development.

The practice of enterprises shows that if there is no personnel and organizational change, strategic transformation will only be reduced to empty talk. JD.com's drastic internal reforms and frequent changes at the top are still serving its core strategy of returning to low prices. Xu Ran, who is more suitable for the current strategic direction of JD.com, has taken the position, a large number of old ministers have either been cut or left directly, and the organizational structure of JD Retail and JD Logistics has been adjusted in turn, all in order to preserve the overall situation.

Accumulation: It is difficult to hold profits, and new business is waiting for opportunities

Looking back at the end of the year, a series of internal and external changes in JD.com have brought the expected results?

JD.com did deliver several better-looking financial reports, and Xu Ran, who was born as a CFO, lived up to expectations and maintained profits and improved the cost structure for the group.

According to the financial report, JD.com's total revenue in the first three quarters of this year was 2430, 2879 and 247.7 billion yuan respectively, an increase of 1.4%, 7.6% and 1.7% year-on-year respectively, slightly higher than market expectations. The profit side also performed well, JD.com achieved an operating profit of 9.3 billion yuan in the third quarter, much higher than market expectations, JD.com's retail operating profit increased by 7% year-on-year to 11 billion yuan, a new high in the past four quarters, and an operating profit margin of 5.2% set a new historical record.

After the growth of the e-commerce market slowed down, the slowdown in the revenue growth of e-commerce platforms is the general trend, which has long been expected by the outside world. Fortunately, Xu Ran, who has rich experience in financial management, gave full play to his own advantages and earned greater profit margins by strictly controlling expenses. However, considering that the investment in tens of billions of subsidies is still increasing and the threshold for free shipping has been lowered, marketing expenses and performance costs are slowly increasing, and it remains to be seen whether JD can maintain profitability in the future.

In the increasingly competitive and highly involuted e-commerce industry, it is not easy to keep profits. Jingdong's Ruth has to go step by step, to regain the advantage of low prices, change the image of quality e-commerce built in the past few years, it is not something that can be completed overnight, and more patience is needed. In addition to the most important retail business, JD.com is also actively deploying various new businesses in an attempt to alleviate growth pressure and create new growth points.

On the one hand, JD.com has further strengthened its efforts in instant retail.

Taobao Tmall's biggest opponents are not only JD.com, Pinduoduo, but also Meituan. In 2023, instant retail has become Meituan's largest growth point, and it has also shown the potential to "recreate another Meituan food delivery". For the trillion-dollar cake of instant retail, JD.com cannot sit idly by.

In September this year, Jingdong Daojia released the grand plan system and launched the "Double 10 Billion Brand Plan", announcing that it would help 10 brands exceed 1 billion yuan in sales in 2024 and create a benchmark brand with sales of more than 10 billion yuan. JD.com's goal is clear: to expand its business scope and store network with JD Daojia as the core, so as to seize more market share before its competitors.

(Picture from Jingdong Daojia's official Weibo)

From the perspective of GMV and market share, JD.com's strategy has achieved certain results. The iPhone 15 series debuted, JD Daojia and more than 4,600 Apple authorized stores across the country reached a comprehensive cooperation, fearless with Meituan flash sales, Ele.me head-on war, and in November, it announced that it had reached a comprehensive cooperation with Moutai Sauce series, and 4,000 Moutai terminal stores will be completed by the end of the year.

The core competitiveness of instant retail is two, one is the supply of goods, and the other is the ability to fulfill contracts. The former point, JD is not inferior to Meituan, Eleme, but the latter point JD may still need to work hard, after all, Meituan's end distribution team is really too strong, million-level professional riders + powerful intelligent logistics system + deep intra-city logistics operation capabilities, Meituan distribution is currently "unbeatable". It remains to be seen how JD Daojia will complement the logistics fulfillment system in the same city in the future.

On the other hand, JD.com is a new entity enterprise and a technology company, which has not been absent from the cutting-edge technology field, and continues to line up troops in large models, cloud computing and other tracks to establish a bridgehead.

In January this year, JD Technology carried out a new round of organizational structure adjustment, established JD Cloud Business Division, and reintegrated several other departments into three major centers: sales, solutions and delivery, further clarifying the core position of cloud computing. Compared with the three giants of TAB, JD.com's investment in cloud business in the past was not high, and its position in the industry was slightly inferior. However, in the context of the accelerated take-off of the digital economy and the combination of data and reality becoming a trend, JD must also increase investment.

In July this year, JD.com released the "Yanxi" large model, which integrates general data and native data of the digital and intelligent supply chain for joint training, with more obvious B-end attributes. Cao Peng, President of JD Cloud Business Division, said that "Yanxi" is a large model product with "IQ", and from the very beginning, he has been considering how to generate value for the enterprise and how to implement it in the scene.

The popularity of large models and the trend of combining with the B-end cloud computing industry have changed the original development trajectory of the industry, and also given JD an opportunity to approach its competitors - if it can give full play to its advantages in the B-side and make products that are more in line with the needs of enterprises, JD Cloud's business may be able to gain growth space that outperforms other competitors.

Write at the end

Liu Qiangdong said that any company will go through a number of peaks and troughs in order to achieve greatness. Jingdong is still a private enterprise with the highest revenue in China, and it is still a super powerhouse in China's e-commerce, ranking first with Taotian and Pinduoduo, and has obvious advantages in quality e-commerce and self-operated e-commerce, and is still leading in categories such as 3C home appliances.

Looking forward to the future, retail is the basic market of JD.com, and low price is the core strategy of JD.com's retail, and these two principles may not be easily shaken. In the long run, JD.com's business changes will continue. Compared with the all-encompassing business of Alibaba, JD.com is relatively more focused, but compared with Pinduoduo, which only does e-commerce, JD.com's business is diversified. Pinduoduo's new growth point is cross-border e-commerce (TEMU), which has formed a definite advantage in the upward movement of agricultural products, and JD is expected to do more in these dimensions.

Patience is a scarce quality, but it is indispensable for JD.com, which is in a trough. As Liu Qiangdong said, Jingdong will never lie flat, but I just hope that everyone will be more patient, and the internal "brothers should be more patient and insist on fighting." "The war in the e-commerce industry will never end, and I believe that after in-depth changes, a more powerful and even great JD.com will be presented to the world.