Original link: https://www.latepost.com/news/dj_detail?id=1716
On June 18, 1998, Liu Qiangdong rented the cheapest stall in Haikai Market, Zhongguancun, as an agent to sell optical and magnetic products such as CDs and recorders. By 2003, he had 12 stores, but not fast enough. A few months later, an e-commerce website with only more than 100 items and a rough page was launched. This was the predecessor of JD E-commerce.
In 2003, e-commerce was absolute high-tech. There are only 30.89 million computers and less than 80 million Internet users in China, and mobile phones can only use 2G networks to transmit text, ring tones and mosaic-like pictures.
Twenty years later, Chinese people will be able to buy 13.8 trillion yuan worth of goods a year just by tapping their screens. E-commerce has also gradually become the most basic commercial infrastructure, and one of the means of commercialization of Internet products with hundreds of millions of users each – Douyin sells goods through live broadcasts, WeChat sells goods through small programs, Meituan and Alipay also sell goods. Added a selling section on the homepage. Each one is playing with hundreds of marketing models.
JD.com has never been the e-commerce company that is best at vying for traffic. It has neither made a cut, nor has any social games that stick to users. It is closer to a classic retail company. In the ten links of creativity, design, research and development, manufacturing, pricing, marketing, trading, warehousing, distribution, and after-sales, JD.com not only intervened in the last five links that originally belonged to retailers, but also through reverse customization. Creativity, design, and R&D links.
This comes from the judgment of the founder Liu Qiangdong on the retail industry. The above ten links are like ten sections of sugar cane. When there are more and more brands in the industry and competition becomes more and more fierce, the profit of each link will decrease and the sugar cane will become shorter. , To get more profits, you can only infiltrate more links. When the growth of online retail slowed down and the contention for traffic came to an end, JD.com’s extra steps in the supply chain gave new possibilities to the e-commerce business.
People’s more prominent perception of Jingdong is door-to-door delivery, and delivery is faster. But its supply chain capabilities accumulated for 20 years are not just delivery: there are now 17,000 Jingdong home appliance stores, covering 25,000 townships and 600,000 administrative villages across the country offline; the split-listed Jingdong Health is not just online. Medicines from 50,000 pharmacies are also cooperating with upstream pharmaceutical industry companies to wholesale medicines for online or offline pharmacies.
20 years after starting the e-commerce business, JD.com has gradually deepened its retail transformation. We will take JD.com’s two industries deeply involved in the upstream and downstream of the industry-instant retail and home appliances as examples to illustrate how this e-commerce company has affected the development of the entire retail industry.
Instant retail: 11 years of investment, blurring the boundaries between supermarkets and e-commerce
Today, when you walk into traditional supermarket chains such as Wal-Mart and Yonghui, many major changes have taken place: Before the epidemic, more than 80% of Wal-Mart’s fruits and vegetables were in bulk for customers to pick and choose, but now, 90% The vegetables and fruits are individually packaged and sold in portions, which is not only for hygiene and safety, but also makes it easier for e-commerce to pick goods; if you walk around the back of the supermarket, you can see that many supermarkets have tens of square meters to In the picking area of thousands of square meters, rows of shelves are displayed here, with thousands of hot-selling products on them, which will soon be sold through e-commerce channels.
Behind this, the supermarket chains have improved their reach. Fifty years ago, if Wal-Mart wanted to become a supermarket that covered everyone in the United States, it would take decades to build more than 4,700 stores, so that 90% of Americans could drive 16 kilometers to get there, and spend a week. twice. Today, with the help of e-commerce delivery, Wal-Mart’s Sam’s Club in China can become an “Internet celebrity brand” reaching the middle class across the country with just over 40 stores, making 25 cities and hundreds of millions of people its potential consumers Or, it is possible to wait for the fresh products they want within an hour. The average population covered by each store is 40 times that of Wal-Mart in the United States, and the sales are more than 10 times that of Wal-Mart in the United States.
The way supermarkets do business has changed, over a period of more than 10 years. In 2012, JD began to try to enter the offline retail industry, and cooperated with Tang Jiu, a chain convenience store in Shanxi. The convenience store serves as the promotion point and pick-up point of JD. JD.com provides online product supplements for the convenience store, but self-pickup is worse than delivery at home convenient. Two years later, JD.com began testing the “photographed home” project and renamed it “Jingdong Daojia” in 2015. Its director is Hou Yi, who has worked in Shanghai’s Kedi convenience store for many years.
In 2015, JD Daojia made it clear that in the future, the frequency of people shopping in supermarkets online may exceed that of ordering takeaways, because the former are more family users, while the latter are more single white-collar workers.
In 2015, Meituan Waimai had only been online for two years, and the takeaway orders were only 2-3 million per day. The real independence of the flash shopping business will have to wait until 2018.
In the early days, the cooperative offline stores often encountered problems such as slow picking, riders who arrived at the store and found that they were out of stock and missing orders. Therefore, Hou Yi believed that fresh products must be controlled by himself. Inventory and product quality, he later went to Ali to establish Hema implements the concept of self-operated Daojia stores, so JD.com and Ali have embarked on two different paths in fresh food Daojia.
Jingdong Daojia, which does not go self-operated but insists on taking the platform path, has strengthened its determination to cooperate with large supermarkets after failing to cooperate with convenience stores. In 2022, 87.4% of JD Daojia’s store revenue will come from hypermarkets, supermarkets, and digital stores.
The advantage of this approach is that once offline products are put online, consumers will compare prices, and chains like Wal-Mart and Yonghui are essentially helping brands to sell products, and they are willing to sell products through a new channel. Products are sold at the same price and sales increase; more importantly, chain stores can guarantee the quality and standardization of products.
Later, Meituan’s flash shopping, which started from convenience stores and husband-and-wife stores, encountered a problem. Due to the large number of individual stores and the small number of orders received every day, and the need to pay commissions to the platform and bear shipping costs, the merchants would choose to pay more. The online price is higher than the offline price, so the chain stores have to be greatly expanded in the later stage of the flash sale.
However, a few years ago, chain stores had ample customer flow and strong product brand effects, so they had no willingness to cooperate with Internet companies. An early executive of JD Daojia said that the cooperation with the supermarket chain was not smooth at first. In order to leverage the other party, he tried various methods. The most direct way is to find a partner through capital.
JD Daojia was just established in 2015, and JD.com invested 4.6 billion yuan in Yonghui, with the purpose of selling Yonghui’s products on JD Daojia; in the second year, Wal-Mart invested in JD.com. In order to solve the problem of stable delivery, JD Daojia merged with Dada in 2016 to form Dada Group, which still retains the JD Daojia brand.
When the person in charge of JD Daojia went to Yonghui Supermarket to pick goods, he found that it took half an hour just to push the shopping cart up and down the stairs to find the goods, and he had to walk 20,000 to 30,000 steps a day, which often resulted in longer delivery times. He realized that in order to access the online platform, chain stores must adjust their store layout.
Therefore, he persuaded Wal-Mart and Yonghui to set up special shelves for JD Daojia in the warehouse area of the supermarket, and put all the products with high online sales on the shelves, which greatly improved the efficiency of picking. Today, almost all supermarket chains will leave a piece of land as the front warehouse of e-commerce when opening a new supermarket, with an area ranging from 30 square meters in the early days to 1,000 square meters now. The supermarket has also added a new job for this purpose – the picker.
In order to persuade more supermarkets to join the online channel, JD Daojia and Wal-Mart have created a benchmark – Wal-Mart Shenzhen Shekou Store. In 2017, JD Daojia set up the first e-commerce front warehouse in Wal-Mart Shenzhen Shekou store. Within one year, it achieved an average of 1,000 online orders per day. The store manager set up a special e-commerce team for this purpose. Warehouse area also expanded to 300 square meters. In 2022, that is, four years later, online orders will exceed 2,000, accounting for more than 30% of single-store sales.
“At this time, e-commerce is a matter of life and death for a store. Without your channel, the store may collapse.” The person in charge of JD Daojia said.
The person in charge of JD Daojia said that before the epidemic, it was somewhat difficult to persuade Wal-Mart stores to expand the front warehouse area. The store manager would rather use the store area to sell clothes. Flats – 1000 flats.
In 2022, Wal-Mart China’s online sales will be about 44.279 billion yuan. The person in charge of JD Daojia said that JD Daojia has contributed several billion yuan, and the rest will come from Wal-Mart’s own e-commerce channels. According to Wal-Mart’s financial report for the first quarter of fiscal year 2024, the net sales of the Chinese market were US$5.3 billion, a year-on-year growth rate of 28.3%, which was far lower than the growth rate of net sales of e-commerce business in the Chinese market, which was 54%.
It only took JD Daojia a week to connect with a supermarket chain with strong research and development capabilities like Wal-Mart, but for smaller supermarket chains with weaker R&D capabilities, JD Daojia decided to develop a system to improve their picking efficiency. set of systems.
In October 2019, JD Daojia released the Haibo system, which is a set of solutions that provide merchants with product management, user operation, event marketing, contract performance optimization, data kanban and other functions. It can be connected to all instant retail platforms on the market. And not just JD Daojia. At present, there are hundreds of paid chain supermarkets, covering more than 11,000 stores.
The Haibo system solves several core pain points for merchants: the cooperation between Haibo Picking Assistant and Dadayou Picking allows crowdsourcing personnel to pick goods quickly, and supermarkets do not need to recruit a large number of full-time pickers, and can also ensure the picking Goods efficiency; In terms of product management, Haibo can not only manage standard products, but also manage non-standard products such as fresh food, so that merchants can improve the efficiency of product storage and inventory; in addition, many supermarkets have complex promotional activities , the person in charge of JD Daojia once saw that there were 500 kinds of promotions in a store, which led to confusion in the settlement. He and his team sorted out the core 10 kinds of promotional activities in Shangchao and put them on Haibo, so that Shangchao can clearly manage promotions and reconciliation .
In 2021, JD.com will launch the “hourly shopping” service and open a city channel on the JD.com app homepage. After consumers search for products on the JD.com app, products that can be delivered within an hour will appear. These products come from the physical store closest to the consumer . At that time, JD Daojia set a big goal: In the future, more than 50% of the orders on the JD App will be delivered within one hour.
This means that JD Daojia still has huge room for growth. At present, 60% of JD Daojia’s traffic comes from JD App, while the penetration rate of JD App users is less than 10%. The person in charge of JD Daojia said that JD Daojia’s long-term goal It is to get 50% of JD App users, that is, nearly 300 million people, corresponding to trillions in sales.
What gave the person in charge confidence was that JD Daojia accounted for more than 20% of the orders in Wal-Mart and Yonghui single stores, and the situation in Fuzhou, Fujian Province today – in Pupu, Yonghui Supermarket, JD Daojia, and Meituan flash sales Under the long-term education of many brands, the current instant retail orders in Fuzhou have exceeded the takeaway orders, which means that as long as the instant retail experience is good enough, it is entirely possible for people who cook at home to exceed those who order takeaways. This is also 8 years The judgment of the former Jingdong Daojia.
Home appliances: reduce transaction costs and open up the sinking market with Wandian chain
Moving to a new home is when many people buy appliances. The local property market is no longer booming, and China’s home appliance sales have also declined for five consecutive years. Even if the epidemic is over, the home appliance industry has not ushered in the expected growth-data from the National Household Appliance Industry Information Center shows that in the first quarter of this year, the sales of the domestic home appliance market reached 146.4 billion yuan, a year-on-year decrease of 4.9%.
At the same time, in the past two years, JD.com’s net revenue of home appliances and digital categories increased by 22.8% and 4.7% respectively. 36.5% of online home appliance sales in 2022 will be completed by JD.com.
Compared with 10 years ago, brands need to pay less commission to the platform. In 2012, in order to enter the supermarket chains such as Gome and Suning, brand owners need to pay about 15% of the sales to offline channels for each appliance they sell. , Jingdong reduced this ratio to half; for small home appliances, offline channels generally charge 30%-40% commission from merchants, while Jingdong reduced it to 20%.
11 years ago, the ecology of the home appliance industry was far from this. In 2012, it was the beginning of fierce competition between offline channels and e-commerce. At that time, offline chain shopping malls represented by Gome and Suning sold 18% of the large appliances such as refrigerators and washing machines on the market, and 73% were sold by local chains and department store supermarkets. , Manufacturers’ stores sold, the entire e-commerce channel only accounted for 8%.
This year, JD.com took the lead in igniting the war. Liu Qiangdong declared that “in the next three years, major appliances will have zero gross profit and will be more than 10% cheaper than Gome and Suning.”
At that time, there were only a few home appliance brands supporting JD.com in this battle. Hisense insiders said that in 2012, Hisense’s online channel sales accounted for a very small proportion, and most of them were offline. A JD home appliance salesman who participated in the price war at that time said that it was very difficult to meet the e-commerce leaders of various brands at that time, because most brands felt that online channels would only disrupt the market with low prices.
Household appliance brands rely heavily on offline dealers, which is due to the background of the times: ten years ago, there was little difference in home appliance products, and consumers often bought whatever was sold in the mall, and the mall guided consumers’ choices; at that time There are also few home appliance brands that can establish a logistics network covering the whole country. Dealers all over the country need to buy back the goods and then return to the local distribution to consumers. These dealers buy goods from the brand and also provide the brand with A large amount of cash flow can be used for category expansion or expansion of production scale.
At the same time, brand owners are also suffering from various high rates in offline channels. Around 2015, after brand owners sold their products to Gome and Suning, it took more than 100 days to get the payment for the goods. There is no doubt that there is a lot of pressure on capital flow. JD.com shortened the billing period to 40 days in 2012 and greatly reduced the channel fee rate.
“Watching the water flow to JD.com.” A salesman of JD.com’s small home appliances at the time said that the reduction in commissions brought the business into a positive cycle, and brand owners got more profits, so they were willing to invest in more products and marketing. When resources are put on the e-commerce platform, more users will come to buy online, which brings more brand owners.
The practice of lowering the commission and giving the profits to the partners comes from the “three cents and five cents theory” that Liu Qiangdong mentioned many times internally: if JD.com has the opportunity to obtain one yuan profit, only seven cents will be taken away, and the other three cents will be left to the partners; Of the 70 cents taken away, 35 cents were reserved for the team, and the remaining 35 cents were used for the company’s continuous development.
The Jingdong logistics system, which has been built since 2007, has also helped brand merchants solve the problem of national distribution. In 2015, when Gome and Suning’s products needed to be stored in warehouses for 60-70 days before they could be sold out, JD.com only needed more than 30 days. This also made JD.com’s comprehensive operating costs only half of Gome’s and Suning’s.
In order to attract more users to accept e-commerce channels, in 2013, JD.com was the first in the industry to launch 30-day price protection. If it is not the lowest price, you will lose money, if there is a quality problem within 30 days, you will be guaranteed a return, and if you have a quality problem within 180 days, you will be guaranteed a replacement Serve.
An early JD.com employee said that the “3030180” service was a bold attempt internally. Once it was fully promoted, it might mean a lot of after-sales expenses. Yan Xiaobing, the head of the home appliance business group at the time, reported to Liu Qiangdong many times, and finally decided After more than half a year of promotion, it was found that the cost was still within the controllable range, and consumers did not return a large number of products because of this. The brand side also realized that JD.com is not just a platform that can only fight price wars.
The real reason why JD can surpass Gome and Suning is that the latter has difficulty in achieving the same price online and offline due to the high cost of offline stores. Naturally, it lost its competitiveness.
However, the growth of online channels began to slow down in 2016, and e-commerce platforms began to go offline one after another, trying to build new sales scenarios outside of traditional supermarkets. Alibaba launched Hema, and JD.com opened its first JD home appliance store this year, offering the same prices and services as online. Since then, JD.com has also opened a larger store with a richer range of home appliances and digital products. JD Mall and Super Experience Store.
By the end of 2022, the number of Jingdong home appliance stores targeting sinking market channels has reached 17,000, covering 25,000 townships and 600,000 administrative villages across the country.
In the next three years, JD Home Appliances plans to deploy 30 JD Malls, 200 flagship stores in cities, and more than 25,000 JD Home Appliances and Home Furnishing stores across the country.
The home appliance industry has entered a period of contraction in the past few years. JD once again played the “low price” brand, encouraging more third-party merchants to settle in, and giving more traffic to low-priced products. A year-on-year increase of 240%.
JD.com is also helping home appliance manufacturers find new business growth points through reverse customization. For example, JD.com found in 2020 by analyzing TV product reviews that heavy gamers need a TV with high performance and picture quality that can be connected to the PS5 game console so that they can play games on the TV.
Therefore, JD.com and Hisense launched the first game TV E75 in 2020. Two years later, the two parties jointly analyzed user needs and launched the new game TV Ace1, which achieved a 103% launch completion rate upon release. After tracking the entire life cycle of Ace1 sales, Hisense and JD.com launched an upgrade cooperation for 2023 game TVs after last year’s “Double 11”. On May 9 this year, Ace2 TV was released on JD.com.
Hisense insiders said that 11 years ago, Hisense’s overall online sales were extremely small, but now the proportion has exceeded 50%. The cognition of JD.com has also changed from an initial channel to an in-depth partner who promotes flexible production in the supply chain and creates explosive products; today, JD.com has become an important influence of Hisense’s “internal innovative business drive, user insight, and even redefining products” carrier.
The basis of transformation: “goods + distribution” supply chain construction
Transforming the retail industry is the long-cherished wish of many Chinese Internet companies. Hema chooses to operate all its products on its own, plus delivery within 5 kilometers; Meituan, which uses “retail + technology” as its strategy, builds its own central warehouse across the country to support the community Group buying business, but to move towards a sinking market, franchisees still need to build grid warehouses together. Choose to do “self-operated goods + full-link self-operated distribution”, only JD.com.
“The deterministic supply chain capability is the best support for JD.com to go through the economic cycle at present.” Xin Lijun, CEO of JD Retail, said that the ability of “goods + distribution” is the core competitiveness of JD.com. It now appears that this is also the basis for JD.com to transform the entire retail industry.
The ability to “goods” not only refers to the ability to purchase relatively low-priced goods, but also includes predicting in advance how much and what goods should be purchased, warehouses in different regions can automatically replenish goods, and give product pricing based on sales volume, etc. Before 2016 These are all relying on manpower. Hu Hao, head of the Y business department of the intelligent supply chain, said that at that time, he felt that this “manpower shoulder” method had reached the extreme. How to further reduce costs, improve efficiency, and experience became the whole supply chain team. Questions to think about.
In 2016, JD.com’s own logistics system has been established for nearly 10 years, and Shanghai Asia No. 1 Warehouse has also been built for two years, which can store 4.3 million items and handle more than 100,000 orders per day. The logistics infrastructure has been set up. This year, JD.com began to set up the Y business department of intelligent supply chain.
The core problem to be solved in the early days of the establishment of the Y Business Department was how to replenish goods intelligently: firstly, through the insight into market segment demand, by allowing the system to independently predict consumer demand for goods, including product types, ordering areas, etc., and then the machine gives After predicting the order, it will automatically place an order with the supplier and tell the supplier which warehouse it should send to Jingdong nationwide.
According to rough internal calculations, even a 1% increase in forecast accuracy can save several times the operating cost. Hu Hao, head of the Y business department of the intelligent supply chain, said that in the past three years, the accuracy of the Y business department’s forecast has improved a lot. For example, the system predicts that in the next two weeks, 100 cases of a beverage will be sold in a certain place. , the final sales volume will be between 70 and 130 boxes. With such prediction accuracy, JD.com can still guarantee a spot rate of more than 95% and a turnover of about 30 days.
After many categories have been able to achieve 100% smart replenishment, the Y business department has set a three-year turnover plan from 2019 to 2022. The goal is to achieve a turnover of about 30 days – even with the world’s leading retail companies In comparison, this is also a leading turnover level. Costco and Wal-Mart have inventory cycles of 30.4 days and 45.5 days respectively, and the number of SKUs they manage is only 5,000 and 50,000. JD.com has managed more than 10 million SKUs in stock, and the turnover has reached 32.4 days.
Hu Hao concluded that in order to achieve such a short turnaround time, it is necessary to be precise in many aspects:
The first aspect is the setting of the supply chain model. Whether a product is delivered through JD Dacang or Wal-Mart stores is the fastest. Behind this, all JD products need to be “LBSized”, that is, when users search for products on JD App , to push closer products to users to improve delivery efficiency.
The second aspect is to build a supply chain network. JD Logistics has built a multi-level infrastructure and warehouse distribution network, including a regional distribution center (RDC, Regional Distribution Center), a front-end logistics center (FDC, Front Distribution Center) and a city local warehouse (TDC, Town Distribution Center).
Relying on the regional logistics center, JD Logistics has built eight core logistics hubs across the country, and built a three-dimensional multi-level supply chain logistics network with more than 1,500 warehouses. Through sales forecasting, the goods are placed in the warehouses closest to consumers to achieve Ship nearby. During the “618” period this year, more than 95% of districts and counties across the country have achieved the delivery time limit of same-day and next-day delivery.
The third aspect is to have an accurate forecast and planning system. JD.com’s current high procurement forecast can not only save JD itself a lot of costs, but also help merchants reduce costs. When JD.com gives merchants a confirmed order quantity, merchants can more stably arrange upstream production, factory manpower, Transport vehicles, etc.
The fourth aspect is that the daily operation actions must be accurate. When the machine gives the predicted purchase order quantity, the purchase personnel should try their best not to purchase in advance or delay the purchase, and the purchase quantity can match the future sales volume, and can It is connected with promotional activities such as “618” and “Brand Day”.
Finally, it is necessary to ensure that the supply chain system is stable enough, that is, the merchant has enough inventory for JD.com, and can guarantee delivery on time and in quantity. In order to ensure the stability of tens of thousands of suppliers, JD.com will also take various unexpected situations into consideration, and moderately expand the purchase volume or purchase in advance.
In order to further reduce the turnover days, JD.com has begun to reduce the number of SKUs in some categories, and has begun to set up warehouses specifically for enterprise-oriented businesses, instead of sharing warehouses with retail businesses, in order to improve warehouse operation efficiency.
The ability to “distribute” and “goods” complement each other. It is precisely because JD.com has spent 16 years organizing more than 390,000 people and investing hundreds of billions of yuan to build a logistics infrastructure. JD.com can efficiently deploy goods internally, and will Supply chain capabilities are open to more companies.
In Xin Lijun’s view, the goal of JD’s supply chain is not to increase its own share, but to help the entire Chinese supply chain realize digitization. “Only when digitization is realized from warehouse to distribution, more companies can join the digital highway.”
He gave an example. On the Haibo system released by JD Daojia, merchants only need to check the products to be put on the shelves, and then they can automatically synchronize product specifications, photos, etc., instead of manually entering them one by one, because JD.com is already China’s One of the largest standardized product databases, as long as a product is sold on JD.com, the product data can be directly synchronized.
China’s e-commerce industry has been developing for more than 20 years. Even though the growth has almost stagnated, the entire e-commerce sales accounted for only 35% of the total social retail consumption.
It will take some time for consumer confidence to recover. A large amount of consumption still occurs offline, and offline efficiency still has a huge room for improvement. This requires technology companies to take the lead. Long-term investment is the most painful and tiring thing, but it may not be the most rewarding thing.
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