Original link: https://www.latepost.com/news/dj_detail?id=1706
In April 1983, in Midwest City, Oklahoma, USA, a special supermarket opened for business. Unlike ordinary supermarkets, it adopted the “integrated storage and sales” model. The warehouse is the supermarket, and the supermarket is the warehouse. The upper layer of the shelf is the storage area, which is used to store the goods packed in full boxes; the lower layer is the exhibition area for consumers to purchase products. Here, you can only buy one or two of the most popular items in each category, and keep everything simple in decoration to control costs as much as possible.
The supermarket, Sam’s Club, pioneer of warehouse clubs, offers the same or better quality at lower prices. This model quickly attracted a large number of middle-class Americans. After Sam entered China, he also maintained a high growth rate.
In the first quarter of this year, Sam’s self-operated Member’s Mark products also achieved a growth rate of nearly 50% in China, which is currently Wal-Mart’s fastest growing business.
Behind this is the eternal demand of consumers: hope to buy high-quality and low-cost commodities. From the end of last year to this year, all e-commerce platforms in China have been emphasizing price competitiveness and low prices. Low prices are not the only goal in themselves, but savings and benefits.
Saving and reconciling seems contradictory: the general view is that cheaper prices must mean lower production costs, and fewer and inferior materials. In fact, in the entire chain of product design, production, transportation, and distribution, in addition to direct production and material costs, logistics, advertising, sales channel sharing, and after-sales service are also not a small source of expenses.
Sam’s Club achieved both good and low cost through the Wal-Mart system’s scale premium capability to the supply chain, building its own brand to reduce intermediate channels, and combining retail innovation with location selection and storage and sales.
Now, there are more means available, and the key variable is technology: from the brand side to the production company to the e-commerce channel, all the main players in online retail are applying new technologies to “squeeze water” in the chain from production to transaction “parts”, to achieve efficiency, and finally get the result of “saving”. More economical products will in turn stimulate the willingness to consume, so that merchants who can make money are willing to continue to invest in low prices.
A cycle emerges from this: using technology to improve the efficiency of the supply chain operation, stimulate demand, and then drive the upgrading of the industrial chain.
Under this trend, JD.com, which started out as a self-operated e-commerce company and started to build its own logistics very early, and deepened its supply chain services, has a unique accumulation of practice. After 2020, JD.com combined its supply chain capabilities accumulated over the years with cloud computing capabilities to provide external supply chain technical services based on JD Cloud, hoping to lower the threshold for manufacturers and brands to use new technologies to improve efficiency. This is also helping JD.com to realize the competitiveness of “more, faster, better and more economical”, re-solidify the price advantage of commodities, and serve more users. As Liu Qiangdong said at the Jingdong business management training meeting at the end of 2022: “There are still some families in China who have not eaten high-quality kiwifruit. If these families can buy a catty of kiwifruit for a few yuan, it is very meaningful.” thing.”
Starting from e-commerce, grow supply chain technical capabilities
Subsidies are the most direct way for consumers to perceive low prices. In the past several rounds of Internet subsidy wars, various e-commerce channels have invested tens of billions of funds to compete for users, which has further raised consumers’ expectations for low prices. expected.
At the beginning of 2023, JD.com also launched a subsidy plan of 10 billion yuan, saying that it will achieve “everyday low prices” in the next year. But absolute low prices are not what JD.com was good at in the past, nor can it accurately summarize JD.com’s new competitive strategy.
In an internal meeting at the end of last year, Liu Qiangdong said: If you blindly pursue low prices, short-term competition may be effective, but it will be harmful to the entire industry in the long run, which will eventually lead to a decline in brand profits, loss of innovation funds, or even bankruptcy. will be damaged. So he hopes that JD.com will not judge whether the product is good or not on behalf of users, but will do everything possible to reduce the price and improve the service by improving the efficiency of the supply chain.
What JD.com is actually pursuing is a more difficult balance: more, faster, better and more economical, and have both at the same time. This requires more indirect subsidy means, and improving efficiency with technology is one of the most important options. The series of technical capabilities built around the supply chain is one of the important accumulations of Jingdong since its establishment 20 years ago.
Jingdong began to gradually accumulate supply chain technical capabilities very early, which was initially derived from the natural choice of realizing the differentiation strategy.
Around 2008, JD.com realized that it should not only stay in the retail channel, but should make the business longer, wider, and thicker, and provide more guaranteed services. The first step is to build its own logistics and service system, which was not considered at first. Most people are bullish because the investment required is huge. But after more than 10 years of investment, it has also brought a unique consumer mindset to JD.com: when buying products on JD.com, the quality is guaranteed and the delivery is the most timely.
Today, JD Logistics has established more than 1,500 warehouses across the country, with a total management area of over 31 million square meters of storage network, tens of thousands of self-operated distribution stations and outlets, and more than 290,000 self-owned distribution personnel. JD Logistics’ service coverage In almost all regions and populations in China, in the first 16 hours of the opening of this year’s JD.com 618 Shopping Festival, 92% of the districts and counties across the country received JD.com couriers’ door-to-door delivery of goods, which requires huge logistics technology support. JD.com is also opening up the technical capabilities of operating this huge system. For example, JD.com’s digital warehouse can provide consulting services for other companies to transform their storage. Help corporate customers monitor in-out and out-of-warehouse operations and warehousing conditions in real time, and put warehousing transactions on the cloud. JD Cloud has also opened up customs and port data to make the warehousing and transportation links smoother.
This idea of using technology to improve efficiency also occurs in other links involved in JD’s own development, such as product sourcing, marketing, customer service, and supply chain finance. For example, JD.com has been developing intelligent customer service capabilities using AI technology since 2012, and it now supports more than 10 million customer services per day.
An executive from JD.com concluded that in addition to the e-commerce platform, JD.com is also a “supply chain organizer”. One end is connected to the consumer Internet, covering more than 580 million consumers; the other end is connected to the industrial Internet, and it operates tens of millions of SKU products. , connecting hundreds of thousands of brand owners and manufacturing companies, as well as multiple industrial belts across the country, and can match the needs of all links from production to consumption.
“The core capability we have established is the digital capability around this supply chain, including going deep into industrial belts and enterprises, organizing the supply of goods on Jingdong; organizing the marketing process online and offline; establishing such a logistics infrastructure throughout the country, warehousing Network, so that goods can flow efficiently.” The executive said.
The first stage of JD.com’s development is to use information technology to transform all aspects of retail, which JD.com sums up as “technical retail”. By reducing some intermediate channels and improving the efficiency of goods movement, goods have become cheaper. JD.com provides authentic product guarantee and fast delivery service at a relatively low overall price.
However, after the rapid growth period of online replacement of offline has passed, it is becoming more and more difficult to have both good and cheap. Only relying on the optimization of the e-commerce platform itself in the final commodity transaction link, the room for improvement is limited. Including JD.com, a group of Internet companies that have grown with online dividends have begun to think about continuous cost performance and where their longer-term growth comes from.
Cost reduction from cloud to cloud technology
In 2017, JD.com has a new plan for longer-term value. In July of that year, JD.com proposed to shift from “technology retail” to “retail technology” and become a retail-based technology service enterprise.
JD Cloud integrates JD.com’s long-standing technical capabilities and provides external services. Half a year after announcing this transformation vision, in February 2018, JD.com independently split JD Cloud Services into a subsidiary of JD Cloud.
At the same time as the split, JD.com has found a clearer goal for cloud services. Zhang Zhijun, head of general solutions of JD Cloud, told LatePost that when JD Cloud first started to commercialize externally in 2016, it mainly provided basic IT services such as computing and storage. The general direction of “digital supply chain capability” and refine the corresponding methodology into “digital intelligence supply chain”.
JD Cloud wants to use the experience and methods accumulated by JD in the supply chain in the past to promote digital transformation, connect the upstream and downstream of the entire supply chain, help manufacturers and brands find new growth opportunities, and improve industrial efficiency.
“The opportunity that JD Cloud could seize at that time was the deep integration of cloud and business. The advantage of JD Cloud is to come from the industry and go to the industry.” Zhang Zhijun said.
Under the direction of “digital intelligence supply chain”, JD Cloud began to give priority to contacting and serving customers who have intersections with JD’s core capabilities, the most typical of which are brand owners who sell and market on e-commerce platforms.
Yanxi model can automatically generate marketing copy according to customer needs
Through AI technology, JD Cloud provides generative content services for customers with marketing needs, and provides a variety of content forms for different products, including graphics, short videos, live broadcasts and digital people, etc., to reduce content production costs; JD.com is also Based on JD consumer data, help customers achieve more precise marketing.
Guyu Toys, a brand that produces baby toys, introduced more than 230,000 unique visits to its sales website within three months after adopting the customized marketing service provided by JD Cloud. JD Cloud also provided a complete set of content marketing strategies for the smart watch brand Huami, with monthly sales of 4.8 million.
After the rise of live broadcast sales, JD Cloud launched the Yanxi virtual anchor product, which can automatically generate live speech and convert it into voice, automatically complete product selection, do lottery draws during live broadcast, etc., 7*24h non-stop live broadcast, Merchants no longer need to form a complex live broadcast team, which greatly reduces the cost of live broadcast. After Lenovo adopts Yanxi’s virtual anchor, its daily turnover can reach up to 2.3 times that of a real anchor, and the cost is less than one-tenth of the original.
During the 618 period, JD.com also launched virtual anchor discounts. According to the information on the “JD Service Market” platform that sells JD’s technical service products, the annual fee for the standard version of Yanxi virtual anchor is 19,800 yuan, and the activity price during JD 618 can be as low as 950 yuan/month, which is equivalent to a 40% discount. These saved marketing expenses will eventually be fed back into the commodity price.
JD Yunyanxi’s virtual anchor can not only be used on the JD platform, but also supports the eight mainstream live broadcast platforms to achieve unified management of live broadcasts on various online channels. Alibaba, Douyin and other large Internet companies with strong technical capabilities and e-commerce businesses have also launched similar services.
JD Cloud itself is still providing more cost-effective basic cloud services, which is not only achieved by lowering the prices of computing, storage and network services, but also based on the support for multi-cloud hybrid solutions.
For example, the cloud ship, a hybrid multi-cloud operating system independently developed by JD Cloud, has improved the computing efficiency of processors by 100% in the past three years, supported JD’s trillion-level transactions, and saved hundreds of millions of dollars in costs every year.
“Jinggang” smart network card independently developed by JD Cloud.
Enterprises’ demand for hybrid multi-cloud comes from the comprehensive consideration of improving flexibility, reliability and reducing costs. Hybrid multi-cloud allows enterprises to choose different cloud providers according to different business needs, and flexibly adjust resource usage according to price changes; it can also improve security: when one cloud platform fails, the services of other cloud platforms can continue to be used.
JD Cloud’s multi-cloud strategy comes from internal business exploration. In the 2022 Spring Festival Gala, JD.com, which won the red envelope title, suffered 69.1 billion interactions within a few hours. JD Cloud did not add servers, but moved and dispatched existing computing resources through a hybrid multi-cloud system, while supporting red envelope interactions and shopping transactions The two major scenarios bear the traffic peak.
Dada, an instant retail and logistics company, is also using this multi-cloud architecture, which helps Dada sustain a peak processing capacity of 10 million orders per day, save tens of millions of IT costs every year, and ultimately help reduce the time for consumers to purchase goods. s price.
JD Cloud is also using this multi-cloud experience to serve large customers with complex needs. SPIC is the largest photovoltaic power generation company in the world. It manages huge power resources, and its business is slow to go online. The multi-cloud architecture of JD Cloud provides SPIC with a unified IT base capability, and builds multi-cloud services and PaaS on this basis platform. Now in the SPIC Beijing command center, it is possible to dispatch and manage the production capacity, energy consumption and energy delivery of 531 power stations across the country, reducing the cost of later management and operation and maintenance.
Facing small and medium-sized enterprises, JD Cloud provides standardized cloud services to reduce usage thresholds and costs. Zhang Zhijun told LatePost that currently about 40%-50% of the services provided by JD Cloud are standardized services, which is greater than the industry average of 20%-30%. Small and medium-sized customers do not need to pay for additional customized services, companies can save more money, and the final product price has more room for decline.
After connecting the dots into a line, it not only improves the efficiency
In 2021, JD.com will integrate JD Cloud and the group’s internal AI capabilities as well as JD Digital to form JD Technology Group. One of the backgrounds of the integration is that as more customers have been served and more needs have been met, JD Cloud and the entire JD Technology sector have more specific service ideas: not only to provide single-point technical capabilities, but more importantly, to connect points Form a chain, integrating accumulated data capabilities, market insight capabilities, logistics capabilities, etc. into a more complete supply chain technical service. The value it can bring is not only to manage existing processes and improve efficiency and reduce costs, but also to help companies design new products, find new market opportunities, shape new business processes, and even get rid of business difficulties.
The core accumulation of being able to do this comes from the fact that e-commerce is a two-sided platform, connecting consumers while connecting brands and production and supply companies. Therefore, e-commerce companies such as JD.com not only have real consumption data, but also have gradually penetrated into the supply chain and multiple industrial belts of China’s huge manufacturing industry over the years of operation.
JD.com had tried C2M (Customer to Manufacturer) as early as 2014, that is, to determine product design and manufacturing plans based on consumer demand. During the cooperation with HP at that time, JD.com’s user data showed that in addition to CPUs and graphics cards, consumers also needed the hard drive speed of gaming notebooks. Based on this discovery, HP adjusted its product plan and provided solid-state chipsets 3 months earlier than its competitors. Hard drive gaming notebook.
From 2021, JD Cloud will further start to cooperate with some industrial clusters to collect, collect and sell from enterprises in the clusters to improve efficiency. For example, in Changzhou, Jiangsu, the “super virtual factory” built by JD Cloud and its partners has been connected to more than 70,000 devices in more than 1,000 factories, and has coordinated the digestion of surplus production capacity worth more than 1.5 billion yuan.
Zhang Zhijun shared a case during the impact of the epidemic. In the past, Changzhou Greebo New Energy Garden Machinery Co., Ltd. mainly engaged in the overseas business of weeding machines. During the epidemic, the export was not smooth, and it was in urgent need of transformation. The “super virtual factory” provides Greebo with a full chain of services: through big data analysis, domestic consumers have demand for scrubbers; matching the spare capacity of surrounding factories to provide spare parts to help Greebe produce scrubbers; with the product, JD Cloud’s marketing technical services also help products to be promoted on the shelves of JD.com and other channels. In the end, it only took 4 months for Greebo scrubbers to go into mass production and sales.
The birth process of Greebo washing machine is not just to move the original business online and to the cloud, but to match demand and supply through upstream and downstream collaboration, so as to discover new opportunities for new categories and enter new markets.
In addition to the Changzhou Super Factory, JD Cloud’s industrial collaboration platform also connects the plumbing valve industry in Yuhuan, Zhejiang, home textiles in Nantong, Jiangsu, prefabricated vegetables in Laizhou, Shandong, socks in Liaoyuan, Jilin, furniture in Nankang, Jiangxi, food in Fuqing, Fujian, etc. More than 20 industrial belts in more than ten provinces. For these industrial clusters, JD Cloud provides multiple services such as industrial operation monitoring, data analysis management, intelligent procurement, marketing and sales.
During the 6.18 period this year, the JD App launched the “City Love to Buy” channel to provide special sales channels for products from these origins and help local industries build their own regional brands.
A JD.com executive once said in an interview with the media that the development trend of China’s manufacturing industry is now to build a unified market, so that goods produced anywhere can circulate throughout the country without restrictions. The role of JD.com is to simplify and automate this process: “Many towns have proposed plans for one product for one county and one product for one village. How do these products enter thousands of households? The digital and intelligent supply chain will play a role.”
Factories produce products of better quality at lower costs, logistics links deliver more timely delivery, e-commerce channels cut prices, and products are sold to the right consumers. Their original intention is to sell more products and earn more money, but the efforts of each participant in this process have improved the efficiency of their respective links and created a more resilient supply chain. Cheaper, consumption may be more active. This in turn creates more investment and industry opportunities. It is in this mutual pull of demand and supply that business becomes prosperous little by little, and the industry fulfills the expectation of high-quality development little by little.
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