Original link: https://www.latepost.com/news/dj_detail?id=1646
JD.com’s organizational and personnel adjustments, which began at the end of last year, have finally moved from the logistics, finance, and retail sub-groups to the highest level of the group— Xu Lei, CEO and business leader of JD.com, is about to step down.
“LatePsot” exclusively learned that Xu Lei, 49, will step down as CEO of Jingdong Group next month due to personal reasons. He has just completed his term in this position for one year.
It is understood that Xu Lei will be transferred to the first chairman of the Jingdong Group Advisory Committee, and will continue to participate in important management and project work in Jingdong Group’s strategy, organization, and business. His authority in Jingdong’s internal communication software will also continue to be retained. The members of the advisory committee also include Huang Xuande, the former CFO of Jingdong Group, and Liao Jianwen, the former Chief Strategy Officer of Jingdong Group.
Xu Ran, CFO of Jingdong Group, will succeed Xu Lei as CEO of Jingdong Group. She will continue to report to Liu Qiangdong, Chairman of the Board of Directors of Jingdong Group. Shan Su, the former CFO of JD Logistics, will be promoted to CFO of JD Group, and Wu Hao, the former head of the audit department of JD Group, will be transferred to CFO of JD Logistics.
Liu Qiangdong made a strong comeback at the end of last year and led several rounds of adjustments to organization, strategy, and business goals. He reduced organizational reporting levels and mobilized employees to cope with the unfavorable macro environment and increasingly fierce competition in the industry . Low-price strategy” will be the core direction of JD Retail in the next three years.
Since then, some JD.com employees say, it has felt like the founders are moving forward. In many recent company internal meetings, Liu Qiangdong has always been the one who decides the company’s strategy and criticizes business development issues. He did not put forward some specific opinions like he did at the executive meeting from 2019 to 2020, followed by a sentence, “This is just My suggestion, whether to do it or not, how to do it, is up to you.”
These did not exceed Xu Lei’s expectations, and he was always clear about his position. In an exclusive interview in 2019, Xu Lei told “LatePost” that he felt that Liu Qiangdong had never left, “he just had to adjust his position at every stage.”
The person who led JD.com out of the trough has left
Xu Lei, born in 1974, joined JD.com for the first time at the age of 35. Xu Lei loves cooking, football and music. He wears a black sweater, a metal necklace in the shape of a skull, and wears many colorful bracelets on both hands. In the eyes of his colleagues, he is quite individual. In 2019, he envisions his leisure life after retirement including riding Harley motorcycles, taking cooking classes, playing golf and learning to play the guitar.
Xu Lei is the person who has known Liu Qiangdong for the longest time among the current JD.com executives. Many people in JD.com commented that there is a rare tacit understanding between Xu Lei and Liu Qiangdong. Xu Lei briefly left in 2011, but returned to JD.com two years later. During his tenure, he coincided with the rapid growth of JD.com for more than ten years. He grew up with JD.com.
Zhang Yang’s personality is in contrast to his background in a military compound. At work, he speaks humorously, but at the same time he is also a manager who pays attention to principles and discipline.
At the beginning of his tenure as the rotating CEO of JD.com in July 2018, he began to establish rules, principles, and unify consensus. Xu Lei realized that the business was developing too fast, which led to “everyone has their own understanding of the business, which is not aligned, like a headless chicken.”
In the third quarter of that year, the number of annual active buyers of JD.com declined month-on-month, which is rare among large Chinese Internet companies of its age. Revenue growth slowed to 25% in the quarter, a low in nearly nine quarters at the time.
Two months before taking over as the CEO of the mall, Liu Qiangdong, Xu Lei and other executives held a small-scale strategic meeting. At the meeting, Liu Qiangdong asked Xu Lei, “(Old Xu) can you take over the mall? It’s not forced , I know it’s really hard.” Xu Lei’s first reaction was, “Don’t stop! I’m very busy and stressed right now.”
In the end, Xu Lei agreed to be the rotating CEO of the mall. Xu Lei, who took office by rotation, also implemented the principle that other company executives must rotate regularly. He said that this is not only to make executives familiar with different business positions and improve management capabilities, but also to eliminate some incompetent executives and stimulate vitality.
This is one of the changes he brought to JD.com’s management.
Rotation and replacement do not mean tossing. In the long talk with us in 2019, Xu Lei believed that his biggest advantage is “strong integration ability”. He said that this is not to toss people, but integrated thinking, “just like playing chess, it is about the global optimal solution.”
Another excellent management ability that he considers himself is to manage in a “way that won’t be hated by everyone” and “respect human nature”, provided that the bottom line of “unruly” is not touched.
The business philosophy that Xu Lei established for JD Retail Group—creating value based on trust and centered on customers—is the most important role he plays in the core business.
Under the guidance of this business philosophy, JD Retail has established four principles: from purely pursuing numbers to pursuing quality growth; from purely focusing on goods to customer-centered; from vertically and vertically integrated organizational structures to building blocks The front, middle and back office of transformation; talent incentive orientation from digital creation to value creation.
Since Xu Lei served as the rotating CEO of the mall in 2018, JD Retail has established an organizational model of front, middle, and back office: the front desk department includes operations, product, and business research and development departments that serve C-end and B-end users, and pay more attention to the market and Insights into user behavior; the middle office department includes 3C electronics, fashion home and other business groups. R&D, experience, and marketing are no longer placed in the business group, but become separate departments according to functions to serve the business group; the back office includes the CEO office, personnel , business points, finance, etc.
Two years after Xu Lei took office, JD.com reversed its previous decline: In the second quarter of 2020, JD.com added 30 million active users in a single quarter, with a year-on-year growth rate of 30%, the highest growth rate in 11 quarters.
In 2021, the e-commerce industry began to move towards an inflection point. Ali’s customer management revenue (advertising and commissions) experienced negative growth for the first time in the fourth quarter of 2018, and this part of the revenue growth rate has declined for three consecutive quarters. JD.com and Douyin are still growing against the trend. In 2021, JD.com’s net income will reach 951.6 billion yuan, approaching the trillion mark, a year-on-year increase of 27.6%.
Also in September of this year, Xu Lei became the president of Jingdong Group. In April 2022, Xu Lei was appointed as the CEO of Jingdong Group and the executive director of the board of directors of Jingdong Group.
A person from JD.com commented that the reason why JD.com’s performance grew rapidly in the three years after Xu Lei took office was that the competitive environment was not as fierce as it is today. What’s more important is that Xu Lei “really engaged in retailing in a down-to-earth manner”——internal Criticizing the “KPI-only theory” and “delivery of numbers” culture, determining the front, middle and back offices, and implementing regular job rotations are all aimed at bringing employees back to the essence of retailing.
A new CEO, a changed environment
The new group CEO Xu Ran (Sandy) is 46 years old this year. She joined JD.com in 2018, promoted from vice president of finance to senior vice president, and then began to serve as group CFO in June 2020. “She can work closely with Liu Qiangdong,” said a person from JD.com. In recent years, Xu Ran has been a key figure beside Liu Qiangdong, and she will also attend many important business meetings of the company.
When Xu Leigang took over as the CEO of JD.com in July 2018, he spent more than 4 months analyzing the problems existing at JD.com. At that time, Xu Ran used an external perspective to help analyze the financial situation of JD.com. Then adjust the operation and organizational model, the company’s business risk may be very large. Since then, Xu Lei has started several rounds of organizational and business adjustments.
In the past three years, Xu Ran led the team to complete the mergers and acquisitions of listed companies such as Dada, Debon, and China Logistics Real Estate, as well as the business restructuring of JD Technology; she also promoted the secondary listing of JD Group on the Hong Kong Stock Exchange, JD Health, The spin-off and listing of JD Logistics, as well as the primary market financing of JD Industrial and JD Industrial Development.
Before joining JD.com, Xu Ran was an audit partner of PricewaterhouseCoopers Zhongtian Certified Public Accountants (Special General Partnership). He worked in PricewaterhouseCoopers’ Beijing office and San Francisco office for nearly 20 years, focusing on the TMT industry and U.S. capital markets. She graduated from Peking University with a double bachelor degree in Science and Economics.
Xu Lei’s last three promotions in JD.com all caught up with drastic changes in the environment, including the escalation of Sino-US trade frictions in 2018, the regulation of the Internet industry in 2021, and the sweeping of the whole country in 2022.
Today is the turn of CEO Xu Ran to meet a new round of challenges. JD.com currently has a circulating market value of less than US$50 billion, which is lower than the low point at the end of October last year.
She and Xu Lei participated in several performance conference calls and answered questions from analysts. They understood the rise of Douyin and Pinduoduo, and how each e-commerce platform continued to invest in logistics and brand investment. She will not be surprised how these actions of the opponent make JD.com’s once “good” and “fast” advantages less prominent, and its disadvantages in “many” and “saving” are magnified.
Now JD.com’s sales growth rate has entered another historically low range. Regardless of the abnormal data performance in the second quarter of last year, JD.com’s revenue growth rate has declined for six consecutive quarters since the first quarter of 2021. It was only 7.08% in the fourth quarter of last year, and the sales growth rate of 3C products in the quarter was as low as 0.53%.
Douyin and Pinduoduo grabbed a large amount of market share in the same period—not incremental, but the stock of JD.com and Ali. Last year, the GMV of Douyin e-commerce reached 1.6 trillion yuan. According to the forecast of Guosen Securities, Pinduoduo’s GMV will be 2.8 trillion to 3 trillion yuan in 2022, which will further approach JD.com.
Along with the slowdown of macro and policy fluctuations, there is also the growth of e-commerce and even big consumption. Last year, China’s retail sales of social consumer goods fell by 2.82% after excluding the impact of inflation. Online retail sales of physical goods also slowed to 6.2% from 19.5% in 2019.
In order to find new growth points, JD.com has tried community group buying, food delivery, going overseas, and sinking. However, under the profit-oriented business policy, shrinking or shutting down new businesses has become the norm.
It was not until the end of last year after Liu Qiangdong adjusted personnel and issued a stern internal letter that JD.com made “low prices” its core direction for the next three years, and the status of self-operated and third-party sellers was leveled. The indicator is GMV rather than profit, emphasizing the need to focus on the essence of retailing, “cost, efficiency, and experience.”
Today, JD.com pushes the CFO to the front line to lead the group’s business direction, which is the same as Ali’s choice eight years ago. At that time, Zhang Yong, who was a CFO, became the CEO of Alibaba Group. His goal was to make Ali the world’s first company with platform sales of one trillion US dollars within five years, and build a business ecosystem such as e-commerce, finance, logistics, and data.
The environment that the giants are now facing is quite different from a few years ago. The new fields that the Internet can expand to are already limited. Return to the essence of cost, experience, and efficiency, and re-stimulate organizational vitality.
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