Liu Qiangdong went crazy for one year

Author: Yang Mei

来源：商业人物（ID：biz-leaders）

It begins with a few angry rebukes and ends with a reflective apology. In a flash, Liu Qiangdong has been "returning with a bang" for one year.

In the past year, the "big hadron" with a great desire to share has gradually faded out in the field of public opinion. In front of the camera, I no longer see him talking about his struggle experience in Jiangsu Mandarin, and there are no longer long articles such as "The person who messes around is not my brother" on social media. In its place, only some news came out of JD.com.

These messages paint an image of the helm of a company in a state of anxiety. The company's executives made him dissatisfied, at this time last year, he angrily denounced some executives at JD.com's internal meeting as liars, and would only deceive themselves with PPT and fake empty words;

The effect doesn't seem to be great. In terms of performance, JD Group fell into growth stagnation in the third quarter of this year, especially the core revenue segment JD Retail's revenue increased by only 0.1%. At the capital market level, it can also be called bleak, JD.com's Hong Kong stock price is currently 105 Hong Kong dollars per share, down more than half from the beginning of the year, and the market value of the US stock market is currently 43.4 billion US dollars, which is a quarter of Pinduoduo.

Mr. Liu attributes all of this to his own mismanagement. In the middle of this month, he took his mobile phone and passionately replied to an operation colleague on the Jingdong intranet with more than 300 words, apologizing for his management mistakes.

Scolding, resuming power, and apologizing, these three key words roughly summarize his whole year. It also depicts the sense of urgency in his heart.

A year ago, when he was angry and scolding, there was good news and bad news on JD.com. The good news is that the company is fully profitable, and the bad news is that the market capitalization has been surpassed by Pinduoduo. There is Ali's steady growth in the front, Pinduoduo's strong counterattack in the back, and at the same time, there are strong neighbors such as Douyin Kuaishou. At that time, Liu Qiangdong had already sensed the battlefield of stock competition in the e-commerce industry, and he slowly lost his traffic advantage.

Low price has become his most important grasp. At an internal meeting last year, he bluntly said: "Low prices are the only basic weapon." He believes that Jingdong used to rely on advantages such as low prices and services to master enough competitiveness. And now, if you want to survive better, you must "recapture" the advantages you once had.

With this as a clue, you can string together all his big moves this year.

In 2023, JD.com will be vigorously involved in the battle of "the lowest price on the whole network". In March, tens of billions of subsidies were launched;On the eve of 618, Luo Yonghao was invited to settle in Jingdong Live;On the eve of Double 11, a "really cheap live broadcast night" was created. In addition, Jingdong has also launched a series of measures such as the single-piece price function, the double compensation service for expensive purchases, and the lowering of the threshold for self-operated free shipping. It can almost be said that this year's Jingdong has gone from "only for quality life" to the consumption logic of "how fast and good to save".

But it's not easy to bring the price down, especially for JD.com. As we all know, Jingdong has several major characteristics, one is that the core category is home appliances and electronic products, which itself has a high single customer price; second, Jingdong's self-operated perennial accounts for more than eighty percent of Jingdong's retail revenue; third, the supply chain has strong advantages, focusing on logistics efficiency, quality and after-sales.

Behind these characteristics, there is a need for high cost support. If the price is reduced, it will either need to squeeze water out of the supply chain, or sacrifice the profit margin of self-operated goods, or it will need to increase the proportion of third-party merchants (i.e., POP merchants) to cover their own profits and losses.

At the level of opening up the ecology and releasing the vitality of third-party sellers, JD has made a lot of efforts this year. Since January this year, Jingdong has hoped to open up third-party merchants and self-operated, requiring equal traffic rights between the two, and even giving the former a certain traffic tilt. In March, in the 10 billion subsidy activity, JD.com discounted the commission of the participating third-party merchants. The purpose is nothing more than to bring a low-price competitive advantage to JD.com through a third party.

JD.com's internal organizational structure adjustment also revolves around this goal. Since November last year, JD Retail has undergone three major organizational adjustments. One is at the end of November last year, the president of each business group of JD Retail has been replaced;The other is in April this year, the original business group of JD Retail has been changed to a business department, and each business unit is split into specific business units according to subdivided categories, and these business units will realize equal rights between self-operated and third-party merchants, and will be managed by a unified category leader; One is in May this year, the original life service division of JD Retail was cancelled, and a new innovative retail department was established, independent of JD Retail, which aims to "divide by category" before The division was changed to "divided by scenario".

On the surface, this series of moves is for the sake of management streamlining. After the adjustment is completed, the reporting level from the most basic procurement and sales employees of JD Retail to the CEO is only three levels at most. However, behind the more flexible procurement and sales mechanism, I am afraid that there is also the intention of allowing self-operated and third-party merchants to stand on the same starting line, join the "price involution" together, and compete with each other.

In terms of high-level blood exchange, Liu Qiangdong has made frequent moves. First of all, on the eve of 618, Xu Lei, the former CEO of JD.com, retired and was succeeded by Xu Ran, who was born in finance; Wang Xiaosong, senior vice president of JD.com, and Yu Rui, CEO of JD Logistics, also stepped down one after another; before Double 11, Xin Lijun, the former CEO of JD.com, was "appointed separately" and Xu Ran took over his position.

The intensive change of commanders is nothing more than a strong man's broken wrist expression of his determination to change. Even, there is a slight hint of finding a person responsible for JD.com's stagnation in growth. But Xu Ran, who was born as a CFO, stands out, and can actually reveal more clues. The latest financial report shows that after nearly a year of low-price strategy, JD.com, which is mainly based on its self-operated model, has put a certain pressure on revenue and profits due to large price cuts and subsidies. To some extent, Xu Ran should be the person who is most familiar with JD.com's financial situation, and in the process of Liu Qiangdong fighting this low-price battle, she is needed to ensure the final bottom line of financial health.

However, objectively speaking, although Liu Qiangdong's battle is difficult and long, it is not without space. After all, judging from the financial report in the third quarter of this year, JD.com has always been the e-commerce company with the highest revenue, and the profit level has also remained at a certain level. In particular, the advantages of its supply chain are still prominent.

Compared with the stagnation of JD retail's growth, JD's service revenue increased significantly in the third quarter, and the profit of the logistics sector increased significantly, with a year-on-year increase of 89%. In the context of the boom of e-commerce going overseas, the integrated supply chain business provided by JD Logistics has also achieved significant growth. According to the plan, JD Logistics will build a supply chain logistics network covering major countries around the world in the next three years.

Liu Qiangdong's original idea was also to keep squeezing water out of the supply chain to keep JD.com's low prices. But at present, it may be difficult to sustain only by the squeezing of water in the supply chain. If you want to fight the battle of low prices, JD.com's bigger shortcoming is the ecological diversity of the platform - JD.com's POP merchants are only hundreds of thousands, while the number of Taobao and Pinduoduo is in the millions.

This also creates a contradiction in Liu Qiangdong's current mentality: Jingdong's self-operated "high-quality" positioning is also the result of years of hard work and step-by-step construction, how can it really be abandoned?

Everything is as Liu Qiangdong said in his reply letter: it must change, otherwise there is no way out. And it does take time to change.

It's going to be a long and protracted battle. In a short period of time, Liu Qiangdong and Jingdong can only move forward in the direction of "competing for the market at low prices". Can't turn around.

*Title image | Visual China