Liu Qiangdong set off a low-price storm and rebuilt while destroying

Start the boat first, and never stop

Author | Yan Xuegong

封面来源 | 京东黑板报公众号

On the second Saturday of December (December 9), at 10 o'clock in the evening, Liu Qiangdong issued a harsh criticism of JD.com in a tone of "self-blame".

"We say that the customer comes first every day, but we think about ourselves everywhere in our work. We often say that we only do the first thing in battle, but we let go everywhere and never think about how to take the initiative. Many people talk about innovation every day, but they plagiarize and follow others every day. He wrote in response to employee comments on the company's intranet.

At this time, it has been about a year since he criticized executives at a nearly four-hour internal meeting and set off a storm of organizational change on JD.com.

This year, the atmosphere of combat was everywhere, and top-down changes kept happening.

"Low price is the only basic weapon", this is always the only center, but in the process of transmitting orders from the highest center of power to the front line of the battlefield, from the deployment of strategy to the execution, it often goes through entanglement, vacillation and even confrontation.

On the definition and playing method of low price, whether to separate procurement and sales, and the balance between self-operation and POP, there have been many differences and discussions within JD.com. Some people took advantage of the east wind to climb the green cloud ladder, and some people had to leave the scene gloomily. Liu Qiangdong admits that there are many pain points in the company, "we must change, otherwise we have no way out".

The will of this business leader, who is not afraid to label himself as "strong", must be carried out, no matter what the cost.

In-house horse racing rolls are low

In JD.com, the pursuit of low prices and traffic is not a KPI for individual departments, but one of the themes of internal horse racing.

"Low price is the first criterion, but each team can come up with a plan for specific activities, and whoever has a good effect (high GMV) will be the main promoter. Yu Jia (pseudonym), who has worked in Jingdong Retail for more than 5 years, told Snow Leopard Finance that the main tactic of Jingdong is still 10 billion subsidies + free shipping, which is a style of play that has been set since 618. But after Double 11, JD.com is more inclined to internal horse racing in specific activities with low prices.

Taking the "out of the circle" of the procurement and sales team as an example, during the Double 11 period, JD procurement and sales personnel "grabbed" a conference room with no one at the JD headquarters, and started the live broadcast with a table and a setting, and most of the anchors were product managers of the procurement and sales team. With low prices, familiarity with commodities and traffic brought by shouting Li Jiaqi, as of 23:59 on November 11, a total of 380 million people have walked into the live broadcast room of Jingdong procurement and sales.

This achievement made JD.com's eyes shine and increased its investment in procurement and sales live broadcasts.

He Huan (pseudonym) of JD's procurement and sales team told Snow Leopard Finance that at present, JD has dispatched more than 100 customer service personnel to support the live broadcast team, and every day it will invite personnel from various business divisions in the procurement and sales team to take turns to go into battle, and the materials invested in the live broadcast room have also been upgraded.

The low-price strategy is the key word that runs through JD.com throughout 2023. Earlier this year, JD.com put more emphasis on "streamlining and rectifying" promotional gameplay, and also cut a lot of activities. But at present, some activities have been picked up again, such as the flash sale channel relaunched on November 13.

The teams went to great lengths to get a dollar cheaper than other platforms, with the goal of "getting more people to go to JD.com."

JD.com's pursuit of traffic is not only reflected in internal live broadcasts, but also in seeking every opportunity for exposure externally.

A JD insider told Snow Leopard Finance that JD is currently negotiating with a number of local satellite TVs to sponsor the New Year's Eve party, and at the same time "has a deep interest in the Spring Festival Gala of the Year of the Dragon". In 2022, JD.com will be the exclusive interactive partner of the Spring Festival Gala, issuing more than 158 million yuan of coupons that night, attracting more than 32.27 million people to participate, with a total of 69.1 billion interactions.

In addition, a person close to the top management of JD.com revealed that JD.com is about to carry out a major revision of the App, and it is Liu Qiangdong who put forward this requirement and rectification opinions. "The specific details are unknown, AI e-commerce may become the main direction, but it must be for the purpose of attracting more users to visit, and it is expected to be launched early next year. ”

With the adjustment of business, personnel changes have also been the key words of JD.com in the past year. After this year's Double 11, Xin Lijun, the former CEO of JD Retail, who had proposed four must-win battles at the beginning of the year and pointed to the low-price strategy, retreated to the second line.

Xin Lijun's resignation as retail CEO is unexpected and reasonable in the eyes of many JD people contacted by Snow Leopard Finance Agency.

The sword-wielder is ineffective in breaking the wall

"It was inevitable to go, but I didn't expect it to be so fast. An employee who has worked at JD.com for nearly 7 years commented on the retail change.

At the beginning of this year, Xin Lijun proposed four must-win battles and was regarded as the real executor of the low-price strategy. But most of the tactics he proposed failed to make many waves and ended up in vain.

The first of the four major battles is the sinking market, which is also the strategic direction that Liu Qiangdong began to mention as early as 2019. But what exactly is the sinking market, there is no clear consensus within JD.com.

"At least until 618 this year, there was still a dispute within the company about what a sinking market was. Some people say that it is a third-tier to sixth-tier city, while others say that it depends on the specific consumption amount, and it should not be a one-size-fits-all city. A JD retail employee told Snow Leopard Finance Agency.

The construction of an open ecosystem has also encountered a lot of resistance in the process of advancing.

According to the original plan, JD should become more open and allow more POP merchants to participate (Editor's note: POP stands for Platform Open Plan, a model in which JD introduces third-party merchants to sell goods).

Different from platforms such as Taotian, self-operation has always been the absolute main force of JD Retail, contributing more than eighty percent of its revenue all year round. However, the cost of the self-operated commodity supply chain is high, and there is little room for price reduction, so the purpose of introducing more POP merchants is to prosper the ecology and make low prices sustainable. Liu Qiangdong once pointed out at an internal meeting, "The bottom line of self-operated products is not too expensive, but POP merchants should be able to compete with external platforms for low prices." ”

However, the biggest obstacle to promoting the balance between self-operation and POP is that it involves the procurement and sales department with great power and complex interests within JD.com.

Procurement and sales is the team that JD.com relied on, they are composed of buyers and sales, can negotiate with merchants and supply chains in depth, and determine which goods to buy and sell according to user preferences and profits, and have a lot of say. Procurement and sales personnel, on the other hand, rely mainly on commissions, so they will naturally prefer self-operated products with higher GMV and higher profits.

Yang Xiu (pseudonym), an employee of JD Retail, told Snow Leopard Finance, "In order to purchase and sell interests, sometimes some fields will deliberately 'suppress' POP, do not give traffic, and do not do promotions, just to let users only buy self-operated." ”

Xu Lei bluntly said when he was the CEO of JD.com at the beginning of this year, "The separation of procurement and sales must be thoroughly implemented, and the company will be finished if it remains unchanged." ”

Xin Lijun himself is from the procurement and marketing team and is well aware of the intricate entanglements of interests. Since the beginning of this year, JD.com has tried to separate procurement and sales, and has also packaged the GMV of self-operated and POP together for assessment, but it has had little effect. Even if the GMV assessment is opened, the team leader has the autonomy to decide whether to do POP or self-operation, and it is inevitable that the balance will tilt when the procurement and sales still control the absolute right to speak.

Xin Lijun, who wore a red vest to build momentum for Double 11, left the position of retail CEO four days after the end of Double 11. From the proposal of tactics to the handover of the seal, there are only more than 7 months.

The boat cannot be stopped

Xu Ran, who is also the CEO of retail, said on the Q3 earnings call that there will be no major changes in the direction of JD.com's overall retail strategy. This means that the low-price strategy will be carried out to the end.

At present, the new team's style of play is beginning to show signs - to bypass those problems that cannot be solved in the short term, and to maintain performance growth first.

Regarding the separation of procurement and marketing, the voice within the company became quieter and quieter, until it disappeared. During the Double 11 period, JD.com started live broadcasts under the banner of the procurement and sales team, and the separation of procurement and sales finally turned back to the integration of procurement and marketing. For the gameplay of the procurement and sales team, Jingdong also decentralizes it, as long as it can run out of performance.

"The black box is the black box, there is always something to run out, at least it is better than slowing down the performance. He Huan told Snow Leopard Finance Agency. Yang Xiu said that Jingdong is currently spending money on incentives for the procurement and sales team and increasing commissions, in order to increase performance.

According to the financial report data, JD.com's Q3 retail revenue increased by less than 0.1%. Yang Xiu revealed to the Snow Leopard Finance Club that in 618 this year, Jingdong Supermarket's market share slipped to fifth, and was surpassed by the self-operated supermarket sector of Maopinjikuai. "This piece of competition is the most fierce, all of them are personal care and cleaning food, etc., which are easy to convert, have a low threshold, and are not highly loyal, and Jingdong, which is weak in traffic, is easy to seize share. ”

Due to the challenges of filling the shortcomings of ecological richness, JD.com will achieve low prices and performance growth expectations, and put more emphasis on its self-operated longboard. Xu Ran said in the Q3 financial report that the supply chain advantage is one of the main reasons why the profit level has reached a record high. Xin Lijun also said at the Double 11 media communication conference that JD.com's low price is constantly squeezing water out of the supply chain.

JD.com is also working internally to improve the quality of its own operations.

An insider revealed to Snow Leopard Finance that Liu Qiangdong is ordering the rectification of "fake self-management". According to him, Jingdong's self-operation depends on the three links of Jingdong's distribution, warehousing and invoice, and all three are self-operated to be "true self-operated". "If you don't raise the standard, many boundaries will be blurred, and the most common is how to calculate direct shipment from the factory?"

FCS self-operation, which is closest to true self-operation (essentially POP merchants are operating, but can use JD logistics and warehousing, and also hang self-operated standards to the outside world), is also within the scope of this rectification.

FCS self-operated can enter JD warehouses and issue JD invoices, but it is essentially a merchant operation, so it is also attributed to POP, and it is necessary to pay additional logistics and storage fees to JD. This time, JD.com wants to improve the standard of FCS self-operation, and has requirements for the scale, quality, and GMV of merchants, and proposes to be differentiated from true self-management, and cannot sell exactly the same products.

When JD.com's pursuit of low prices shifted from outward (POP) to inward (self-operated), the outside world could not help but be worried.

An analyst who has been tracking the e-commerce field for a long time said that compared with Taotian and Pinduoduo, the diversity of JD's POP ecosystem is still a shortcoming, and it may be difficult to maintain low prices only by squeezing water from the supply chain, not to mention, JD's fulfillment costs are already higher than other platforms.

Yang Xiu also has a similar question: how much water can be squeezed out of the supply chain?

"The bosses are very anxious, but no one seems to have the courage or ability to break the game, and it is really difficult for the big ship to turn around. But all JD people know that no matter how the executives change, the will from Liu Qiangdong will definitely be implemented.

The captain determined the course and the most important thing was to get the ship up and not let it stop.