Original link: https://www.latepost.com/news/dj_detail?id=1775
One afternoon at the end of June, Liu Qiangdong, the founder of JD.com, convened various departments such as procurement, sales, products, and marketing in the large conference room of the Beijing headquarters. Thousands of employees listened to a “Dongge Lecture” in the conference room and online. . He told his employees that he summarized JD.com’s growth experience over the past two decades into 20 growth methods the night before.
He hopes that everyone can think as much as he does, because “innovation is not that difficult.”
In the past six months, Liu Qiangdong has led a thorough organizational reform and strategic shift of the company, and “low price” has become the most important strategy for JD Retail in the next three years. He internally criticized JD.com for losing its price advantage today, but he never gave a specific strategy.
“I haven’t understood the specific business for many years, and I can’t give you a particularly specific answer.” Liu Qiangdong said in a speech at the end of last year. But he believes that the retail business remains the same: saving consumers money and providing services that exceed consumers’ expectations.
After “618” this year, more direct facts are in front of the industry: “618” shelf e-commerce grew by only 5.4% year-on-year, which was lower than the 9.8% year-on-year growth of national online retail sales that month. In the forecast, JD.com’s retail revenue growth percentage is only in the low single digits.
Now Liu Qiangdong has carefully dismantled how to grow in terms of commodities, prices, services, marketing, business innovation, organizational culture, etc. He mentioned that in terms of categories that affect the minds of Jingdong users, we must “resolutely fight!”
A JD employee said that what surprised him the most after listening to it was not the specific method, but that as the chairman of the board of JD Group, not the CEO of JD Retail, he could have such a detailed implementation plan.
It is understood that the division of labor of Jingdong’s retail business has also changed: Yan Xiaobing, who returned at the end of June, will be responsible for all innovative retail businesses, including but not limited to front warehouses, fresh food supermarket Qixian, community group buying business Jingxi Pinpin, etc., innovative retail The department is at the same level as Jingdong Retail, and both report to Xu Ran, the new CEO of Jingdong Group.
Two months ago, Xu Lei, the CEO of JD.com, resigned for a one-year term and became the first chairman of the JD.com Advisory Committee. Xu Ran, the former CFO of the group, succeeded Xu Lei and became the CEO of JD.com, reporting to Liu Qiangdong.
Previously, there were disagreements within JD.com about the future development direction. Some people advocated abandoning the sinking market and using e-commerce and intra-city retail to develop users in first- and second-tier cities, but Liu Qiangdong did not agree with this. Now JD.com is moving toward the same strategy and tactics, and its organizational structure is clearer. As the de facto leader, Liu Qiangdong returns to the front line again, leading JD.com, which is undergoing transformation, to find specific solutions for the future.
20 Laws of Growth, Back to Product, Service, Price
At the end of last year, Liu Qiangdong proposed a user experience formula:
Liu Qiangdong believes that for middle and high consumer groups, products and services are more important; for low consumer groups, price is more important. The “>>” in the formula has two greater than signs, which means that he hopes to greatly exceed the customer’s expectations, which requires a result far greater than 1, and the price needs to be low enough.
The tactical guidance given by Liu Qiangdong this time still revolves around the three aspects of product, service, and price, and he gives direct and detailed requirements for each item, requiring every employee to memorize and put forward specific requirements for themselves. Ways to improve your business.
In terms of products, Liu Qiangdong asked for procurement and sales to get more headwear companies to enter JD.com. This is the goal that Liu Qiangdong hoped to achieve in 2014. At that time, the 3C category contributed 60% of JD.com’s sales, and the clothing and fashion category was regarded as the next breakthrough point of JD.com’s performance. In 2016, Liu Qiangdong even proposed to make Clothing has become the largest category on JD.com.
Apparel is the dominant battlefield of Tmall, and the progress of Jingdong Apparel has not been smooth. A leading fast fashion brand has reached an exclusive cooperation with Tmall since 2014, and has never entered JD.com; while another leading clothing brand entered JD.com in 2015, and the partnership ended after only three months up. In the following years, the only e-commerce platform that the brand cooperated with was Tmall, and at the same time vigorously developed its own small program.
With the implementation of the “Anti-Monopoly Law” last year, “choosing one of the two” has become history, and some headwear brands have also begun to sell goods across platforms. Perhaps based on this, Liu Qiangdong saw an opportunity to expand the apparel industry.
According to a salesperson, it is still difficult to achieve this goal in the short term. Although there have been clothing merchants returning in the past two years, they have not reached the level of five years ago.
For branded products, Liu Qiangdong believes that JD.com should be made a channel for preemptive release. New products should be launched on JD.com before the official release, and customer complaints and business inquiries should be cleaned up in a timely manner; he believes that long-tail products are also needed, “there is no long-tail There will be no best-selling,” and this needs to be achieved more through POP (third-party merchants on the JD platform).
In terms of price, Liu Qiangdong made it clear this time whether he wants to fight a price war with competitors, saying that as long as it is a category that affects JD.com’s brand mentality, he must “resolutely fight.” These categories include 3C, home appliances, etc., and he believes that they should be included in the brand’s Power, together govern the price system outside the Jingdong platform.
According to the data monitoring of Jiuqian Zhongtai in mid-June, among JD.com’s tens of billions of subsidies, 3C digital, home appliances and other strong categories do have many SKUs (minimum stock keeping units) that are cheaper than Pinduoduo’s tens of billions of subsidies, 231 of the same SKU Nearly half of the items in the list are cheaper.
Liu Qiangdong believes that the core of the platform’s subsidy spending is the rate of return. It is necessary to consider whether the money can be earned back in one or two years after spending the money, and it should not only attract the wool party.
In terms of services, Liu Qiangdong requested that the normal user experience should not be affected by means such as purchase restrictions because of a small number of “wool party” to snap up low-priced goods. Previously, in order to clear up leftovers and achieve the GMV target, some JD sales personnel would negotiate with dealers in advance to release a batch of low-priced products at a certain node. After purchasing these low-priced products on JD. Selling at JD.com’s self-operated price directly affects the competitiveness of JD.com’s self-operated products.
Liu Qiangdong hopes that buyers and sellers will “let go of the knot of the wool party”. If there are really “scalpers” and “wool parties” who come to buy low-priced goods in bulk, as long as the gross profit rate required by JD.com is acceptable, but at the same time, these goods must be guaranteed What you sell on Pinduoduo cannot be cheaper than JD products, and even if it is cheaper than self-operated products, it cannot be cheaper than POP products.
In order to prevent this method from continuing to be used by purchasers and salespersons to improve their performance, starting in April this year, bulk purchases will no longer be included in the performance of purchasers and salespersons.
In terms of marketing, Liu Qiangdong pointed out that “advertising that costs nothing is the most effective and attractive.” He cited an example from the early days of his business 20 years ago:
In 2005, Liu Qiangdong just closed the store selling optical and magnetic products in Zhongguancun. The JD Multimedia website he built had just been launched for a year, and he was planning to sell notebooks online. It didn’t go well at the beginning. At that time, notebooks were still a luxury item for most people. Customers were worried that express delivery would damage the computer after online shopping. Liu Qiangdong called the fattest employee in the company and asked him to jump up three times in a row, sit on the package containing the notebook, and finally opened it. The notebook was intact. Liu Qiangdong took pictures of the process and posted it on the Internet. Fat abuse laptop”, the number of clicks skyrocketed.
Regarding the live broadcast, Liu Qiangdong pointed out that if there are only self-operated products in the live broadcast room, the profit is limited, and more POP store products can be added to the live broadcast room in the future to increase the gross profit margin.
For a time, live broadcast was not a sales channel in JD.com’s view, but just a marketing method, so it has not received enough attention. Xu Lei, who served as the CEO of JD Retail in 2020, mentioned in a public interview that the main appeal of live broadcast is low price, and its supply chain is not a normal supply chain. Therefore, live broadcast is not retail, but to attract new products, clear inventory, and push new products. , Merchants do reverse customization of products and other marketing behaviors.
JD.com has never made efforts in live broadcasting, and it is also limited by its own product structure. The decision-making cycle of consumers for high-priced and durable 3C products is much longer than that of fast-moving consumer goods. The reason why consumers are willing to enter the live broadcast room to buy such products is that they often think about the purchase object in advance and wait for the low discount price. Order, unless there is a big enough discount, otherwise not impulsive consumption. However, the price of 3C products is relatively transparent, and it is difficult for consumers to have a large room for bargaining.
A person who made friends said that Luo Yonghao started from the 3C and home appliance categories in Douyin in the early days, but soon found that sales could not rise because of low repurchases and a certain cycle of product updates, which led to a lack of product categories in the live broadcast room. It was not until the category was expanded to food, mother and baby, clothing and other categories that sales increased significantly.
In Liu Qiangdong’s view, live broadcasts, short videos, etc. are all outlets. We cannot ignore the outlets, nor can we keep chasing them. Otherwise, it will be difficult to do business for a long time. What’s more important is to be sure of our own direction, which is supply. chain building.
A person close to JD.com concluded that today when Alibaba emphasizes “returning to Taobao, returning to online, and returning to the Internet”, JD.com still has to deploy offline, because Alibaba is a traffic-driven company, and JD.com is a supply-chain-driven company.
Liu Qiangdong proposed that the next step is to drive growth through innovative stores. Taking JD Super Experience Store as an example, compared with a single electrical appliance store model, one-fifth of JD Super Store’s area is devoted to computers, accessories, photography, mobile phones and other categories, while the rest is devoted to home furnishing, sports, mother and baby, etc. , It can expand the user pool even more, and home furnishing and home appliances are also strongly related in the scene.
Compared with traditional electrical appliances stores, JD Chaoti can also achieve consistent online and offline prices and services. Even if customers fail to place an order at the store, they can still place an order on Chaoti’s official applet or JD.com after the store is closed. Can continue to generate sales.
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.
Shortly after this internal training, JD.com announced the establishment of the Innovative Retail Department, led by Yan Xiaobing. The front warehouse project is a new attempt in the innovative retail business. Beijing has already started two self-operated front warehouses, and there are 6 more A front warehouse is under construction.
Unlike Dingdong Maicai, Meituan Maicai and other front-end warehouse projects, JD.com did not specifically re-select products for this purpose, and rented a large number of warehouses near the community. It sold high-volume, fast-turnover products on the main website, and only delivered The speed is faster, from the original same-day and next-day delivery to delivery within two hours.
Once it wants to match the half-hour delivery time of Meituan Maicai and Dingdong Maicai, JD.com will need a large number of warehouses, and the cost will rise sharply, making it difficult to expand its scale in the short term. According to an analysis by a person in the retail industry, JD.com’s attempt to adopt this model is more likely to prevent the erosion of the share of self-operated e-commerce by front-end warehouses. Both serve middle-class families, and these people are used to faster delivery. warehouse business, the consumption left for self-operated business will be reduced.
In the eyes of a person in the retail industry, Meituan is JD.com’s biggest competitor. The two companies are essentially transportation companies. For the different needs of the same group of people, Meituan delivers food, while JD.com delivers daily consumer goods.
Liu Qiangdong also mentioned that we need to use organization, talent, and culture to drive growth, and we need to build a team that is united and able to fight tough battles. At the meeting, a senior executive of JD.com also mentioned the one-off system of other Internet companies and the strict restrictions on the exchange of employees’ stocks and options. Although JD.com will not do this, it must know how its competitors are fighting, otherwise it will not be able to compete with others. .
An employee said that what encouraged him the most was Liu Qiangdong’s emphasis on “no layoffs.” Another employee said that although there are no new practices and ideas, most of them are things that have already been done or have not yet been done, but at least all employees have the opportunity to systematically sort out their business.
The low-price strategy has been implemented for four months and is still in its infancy
Among the many ways of growth, price is undoubtedly the most powerful and direct way. In the past six months, one of JD.com’s major weapons for implementing its low-price strategy has been the “10 billion subsidy”, which has brought a certain increase to JD.com users.
According to QuestMobile data, from March to June this year, the daily activity of JD App increased by 10.4%, 2%, 9%, and 5% year-on-year.
A person from JD.com said that due to the internal emphasis on price comparison and the promotion of tens of billions of subsidies, the average revenue contributed by each user (APRU) has declined to a certain extent, but the internal hope is to attract more users through low-priced products, and ultimately increase overall sales.
There is no concentrated growth of users in the short term. The most direct reason is that JD.com’s 10 billion subsidy has attracted a large number of products that are equal to the lowest price on the entire network, but there are limited products that are cheaper than the lowest price on the entire network.
Liu Qiangdong believes that 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. So damaged.
A JD purchaser summed up the current predicament of tens of billions of subsidies as, “good products cannot be sold, and the products that have been promoted cannot be sold.” The so-called “good products” refer to standard products such as Apple, Dyson, and Moutai, with transparent prices , Most of them are platform and merchant subsidies for drainage. As user habits gradually develop, the subsidies will gradually decrease.
Jiuqian monitored the situation during the week from March 29 to April 4, and found that Apple products accounted for 32% of the tens of billions of subsidized sales; on June 14, the number of Apple product SKUs decreased from 102 in March When it reached 83, the original Apple zone was replaced by a computer zone.
The above-mentioned purchasers also mentioned that for good products that usually sell well on the site, there is not much incentive to push the purchase to tens of billions of subsidies, because if these products are lower than the average transaction price on JD.com in the past three months, the merchants will You have to bear the cost of “buy expensive double compensation”. The purchases that are willing to push tens of billions of subsidies are often inventory products that have been backlogged for a period of time, and they can be sold at a discount to pay back.
Although the user growth is not obvious, Jingdong’s 10 billion subsidy has significantly improved the product richness in the past few months. The number of SKUs on June 14 increased by 98% compared with the previous two weeks, reaching 24,000 indivual. Among them, the proportion of 3C digital, home appliances and other categories in the total subsidy of tens of billions of SKUs has dropped to 11%. At the same time, the proportion of pets, sports outdoors, and clothing has continued to increase.
Since consumers have relatively fixed minds about JD.com, the actual transactions of tens of billions of subsidies are still concentrated in 3C digital categories and self-operated products.
In the tens of billions of subsidy activities, the actual cost of the platform is not much. From the financial report of JD.com in the first quarter of this year, it can be seen that the marketing expenses did not increase but decreased by 8%. The original market expected that JD.com would introduce a large number of POP merchants, which would lead to an increase in gross profit, and at the same time invested a lot of costs in tens of billions of subsidies, resulting in a decline in profits. , In the end, the two phases offset the flat gross profit, while the gross profit margin of Jingdong increased by 0.8% in the first quarter, and the gross profit was 2 billion yuan more than the market expected.
In contrast, Pinduoduo paid a greater price for tens of billions of subsidies and brought greater benefits. After the tens of billions of subsidies started in the second quarter of 2019, almost every 100 yuan of income Pinduoduo earned was subsidized. However, after five quarters, Pinduoduo only needs a subsidy of 70 yuan to earn 100 yuan in revenue, and it also achieved its first quarterly profit.
At present, the turnover of Jingdong’s 10 billion subsidy is also lower than that of Pinduoduo in the market, but Pinduoduo has been investing for more than 4 years, while Jingdong’s 10 billion subsidy has only been launched for 4 months.
What consumers want is cheaper products on the whole network, and the platform needs to guarantee profits. How to solve this core contradiction?
JD.com’s solution is to introduce a large number of POP merchants and let these merchants fully bid. At present, POP products have exceeded 60% of JD.com’s tens of billions of subsidized products.
An insider of JD.com said that in the future, the entire JD.com market plans to achieve more than 60% of POP merchants, because JD.com now does not want to rely on self-operated profit growth, but hopes to rely on self-operated plus POP to make GMV and do business. large market share.
In order to mobilize the enthusiasm of grassroots employees to compete for market share, Jingdong also turned the business group into a business department in April this year. The original business department under the business group was split into many procurement and sales combat units according to categories. These procurement and sales combat units have more Great decision-making power.
The performance appraisal method of procurement and sales personnel has also changed. Previously, how much bonus each business unit received at the end of the year depended on the score of the business group leader, and was not directly linked to the GMV, gross profit and other indicators of the business unit; now after splitting into combat units, As long as the GMV of each combat unit this year is higher than last year, a certain percentage of the excess can be given to the person in charge of the combat unit.
A Jingdong purchaser believes that this will undoubtedly make the front-line managers more motivated, and the possible hidden danger is that everyone pays more attention to short-term performance returns, and pays less attention to long-term investment. Transform some actions.
Such worries may seem superfluous to JD.com today, and maintaining growth and grabbing the market is above all else.
A series of actions show that Liu Qiangdong is leading JD.com back to the fighting state.
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