In the eyes of some Jingdong people, the importance and severity of Liu Qiangdong’s speech is no less than that of 2019.
The founder’s rare participation in the meeting, a serious criticism, and the introduction of vigorous measures——in JD.com, these signals all indicate one thing, and the founder Liu Qiangdong once once more returned to the front desk.
“LatePost” exclusively learned that last weekend, on November 20, at the Jingdong business management training meeting, Liu Qiangdong, chairman of the board of directors of Jingdong Group in Hong Kong, made a video connection during the meeting, saying that the executives deviated from the company’s business strategy The core – that is, cost, efficiency, experience.
Liu Qiangdong also criticized the executives of the retail business, saying that when he was listening to the strategy meeting, “the executives talked too much regarding fancy stories, but they talked too little regarding cost, efficiency, and experience. If they didn’t have enough grasp of such a core strategy, then It will be difficult to lead the team in the long run.”
According to a person from JD.com, various departments have been resuming Double Eleven recently, and the criticism at this meeting may be related to the fact that the growth rate of Double Eleven did not meet expectations. “LatePost” learned that before this year’s Double Eleven, JD.com’s original GMV (transaction volume) target was to increase by 20% year-on-year, but the actual distance is far away. Neither Tmall nor Pinduoduo disclosed specific GMV data.
Liu Qiangdong’s speech lasted for more than three hours. Jingdong’s business management training meeting is held every six months. About 500 people, including group directors and above mid-level executives, and Guan Peisheng, participated in the meeting.
In the eyes of some Jingdong people, the importance and severity of Liu Qiangdong’s speech is no less than that of 2019.
At that time, JD.com was at a low point in stock price, growth was sluggish, and morale was low. Problems also emerged at that time. The hundreds of thousands of people in the company had no consensus on where the business should go, no uniform standards for doing things, and unclear cultural values.
At the internal management meeting at the beginning of 2019, Liu Qiangdong denounced the executives for being “overstaffed and forming cliques”. A Guan Peisheng recalled that Liu Qiangdong, who had always spoken out of script, rarely brought a piece of paper, “It shows that he has already thought regarding what to do.” Whoever you criticize, you have to think regarding how serious it is.”
In the same month, JD.com announced that it would eliminate 10% of senior executives above the vice president level before the end of the year, began to promote the “core executive rotation” plan, and fully supported Xu Lei, then CEO of the retail group, in charge of specific businesses. When JD.com got back on track, Liu Qiangdong gradually faded out of JD.com’s specific affairs and delegated power more and more.
The above scenario is strikingly similar to 2016. In 2013, Liu Qiangdong left JD.com to study in the United States. He tried to decentralize power for the first time, but he returned strongly in 2016 and criticized the company for its declining organizational efficiency and combat effectiveness. A year later, JD.com achieved its first quarterly profit following listing in 2017.
From 2016, 2019 to now, JD.com has gone through the process of power collection and decentralization many times, which happens to happen every three years. Every time, Liu Qiangdong will set off a new reform in the group, and at the same time, he will emphasize that the team should return to the unchanging business philosophy of “cost, efficiency, and experience”.
According to JD.com’s 2021 annual report, Liu Qiangdong owns 13.8% of JD.com’s shares and 76.1% of the voting rights. No matter where he is, he still pays close attention to the company’s business development. He will check the weekly work reports of executives above the vice president level, participate in the group morning meeting every Monday, and regularly have dinner and talk with Guan Peisheng. Live to share.
“LatePost” exclusively learned part of Liu Qiangdong’s internal speech, and extracted the key content, which was described by many JD.com participants.
a serious criticism
-
Liu Qiangdong said that the problems he saw in some executives include: incompetence, mismatch between values and the group, low organizational efficiency, and slow business advancement.
-
Criticize the retail business executives by name, saying that the executives have deviated from the core of the business strategy, namely cost, efficiency, and experience, and further refined the experience into three aspects: product, price, and service. He said, “Any work not related to this is void!”
-
Liu Qiangdong said that when he was listening to the strategy meeting, he heard too many fancy stories from the executives, but too little regarding cost, efficiency, and experience. If he did not grasp the core strategy enough, it would be difficult to lead the team to go far go down.
-
Liu Qiangdong also mentioned that when he was a customer service worker for Jingdong Mall in his early years, he just lay down on the floor in the office. He set the alarm clock to ring once every two hours. Every time the alarm clock rings, it will vibrate on the wooden floor and make a sound. He got up and responded to customer messages. He told the executives that it is not enough to see inspiration only from this story, and what should be seen is to always put user experience first.
-
Liu Qiangdong said, “I hate being a mediocre company. If we are a mediocre company, I would rather shut it down.”
JD’s current core business is retail, logistics and technology. Other businesses include health, Jingxi, international, smart industry development (providing solutions such as warehouses and logistics parks), industrial products (industrial procurement platform), and Allianz Insurance.
JD Retail is still contributing core revenue to JD. In the third quarter of this year, it achieved 211.9 billion yuan in revenue, accounting for 87% of total revenue, with a growth rate of regarding 6.9%. Although this growth rate is higher than the national social retail market, it is lower than the national online retail market. The growth rate of physical goods.
JD.com’s general merchandise (mainly supermarket categories such as food, grain, oil and daily necessities) revenue this quarter was 77.7 billion yuan, lower than the expected 84.6 billion yuan, and the year-on-year growth rate dropped to 3%, which was lower than the 8% in the second quarter. It can be seen that JD.com’s growth in supermarket categories has been impacted by other companies’ community group buying and intra-city retail models.
Live e-commerce has also brought a certain impact. According to Xingtu data, of the 1.1 trillion yuan sales of Double Eleven this year, the total sales of Douyin, Kuaishou, and Taobao live broadcast accounted for 16%, but the total sales increased by 146% year-on-year, while the three platforms of Tmall, JD.com, and Pinduoduo The growth rate of total sales was 2.9%, and the growth rate of JD.com and Pinduoduo was higher than that of Tmall.
JD.com’s second largest business is logistics. In the third quarter of this year, its revenue was 35.771 billion yuan, accounting for 14.7% of its total revenue in the quarter, a year-on-year increase of 38.9%, achieving two consecutive quarters of profitability. However, from September to the present, 17% of customer addresses across the country cannot be delivered due to the impact of the epidemic, and the order cancellation rate of this year’s Double Eleven promotion is also higher than in previous years. Xu Lei, CEO of Jingdong Group, said that this year Jingdong encountered the biggest challenge in logistics in three years since the epidemic. This year, the performance of various logistics companies is facing tremendous pressure. During the closure of Shanghai, many express companies have experienced interruptions.
In the third quarter of this year, JD.com’s operating profit reached 8.7 billion yuan, which was a faster growth than the 2.6 billion yuan in the same period last year, but the driving force came more from “cost reduction” than the growth of the business itself. The main costs of performance expenses, marketing expenses, and general and administrative expenses have almost zero growth or even declined. Gross profit margin reached 14.87% in the third quarter, an increase of 0.65% year-on-year, mainly due to the company’s reduction of user subsidies.
While reducing operating costs and user subsidies, seeking to make profits for the company, Liu Qiangdong also emphasized that the retail business should return to user experience and low-price mentality. This undoubtedly puts forward higher requirements for the management team. They need to balance profitability and low prices Find balance.
Emphasize that low price is the weapon
-
Liu Qiangdong believes that JD.com has given some consumers the impression that it is becoming more and more expensive. JD.com should serve multi-level consumers, considering both rich and ordinary people. There are still some families in China who have never eaten high-quality kiwi fruit. If these families can buy a catty of kiwi fruit for a few yuan, it will be very meaningful.
-
Liu Qiangdong warned managers that they should not ignore the demands of many grassroots consumers just because their lives are better now, and they still pursue the ultimate cost-effectiveness of products in consumption. As a retailer, what we have to do is not to judge whether the product is good or not on behalf of the user, but to do everything possible to reduce the price and improve the service through improving the efficiency of the supply chain.
-
Before Double Eleven this year, Liu Qiangdong replied to the employee weekly report, saying that JD.com’s retail business management culture is gradually losing:
-
With the success of the 3C home appliance business, many brothers have become arrogant and self-satisfied, and no longer pay attention to our low price advantage. If this continues, sooner or later, we will become the second Suning!
-
If the customer experience of the retail business is divided into three elements – price, quality and service, low price is “1”, quality and service are two “0”, losing the advantage of low price, all other so-called competitive advantages will return to zero .
-
Retail should hold several retail culture and business philosophy training sessions every year, and we must not forget that “low price is the most important weapon for our past success, and it will be the only basic weapon in the future” following becoming the first.
-
At the sharing meeting for Guan Peisheng at the end of last year, Liu Qiangdong mentioned that although some companies fight around, they will eventually return to their areas of expertise.
Before Double Eleven this year, JD.com’s retail sectors adjusted their promotional strategies, and some liquor sales even fell below the purchase price, which directly led to Luzhou Laojiao’s request to suspend cooperation with JD.com, and Wuliangye’s request to deduct 3.65 million yuan in JD.com’s market support fees.
A person from JD.com said that compared with channels such as Pinduoduo and Douyin, it is really difficult for JD.com to achieve competitive low prices at present.
In order to launch new products and market promotion on Douyin, many brands will give Douyin a higher commission rate. For example, for the same product and the same price, the brand will give a 30% commission to the Douyin live broadcast room, but Only 15% commission will be given to JD.com; some small dealers will also transfer tax-avoided products and cross-regional offline products to Pinduoduo, Douyin and other channels for sale, so the same products will be cheaper than JD.com.
As a large distributor of the brand, JD.com directly purchases goods from the official general agent of the brand and signs an annual contract with fixed prices and profit margins, leaving little room for price adjustments.
JD.com also overhauled its purchasing and marketing mechanism. Previously, Jingdong’s purchasing and sales functions were all in charge of one person. Since the beginning of this year, Jingdong’s 3C and supermarket departments have begun to pilot the separation policy of “purchasing and sales control”.
“Acquisition” refers to the purchase by professional buyers according to the precise needs of users; “Sales” refers to sales staff who are responsible for the allocation of front-end traffic and marketing resources, and use the front-end traffic resources as bargaining chips to fight for more favorable prices with the brand side; “Control” refers to It is necessary to improve the efficiency of warehousing and allocation performance, and do more refined inventory management and product turnover management.
Resolute Rewards and Punishments
-
At the end of this year, JD.com will eliminate 10% of executives above the vice president level.
-
Reiterate JD’s “3 cents 5 theory”: if JD earns 1 yuan, it will distribute 3 cents to its partners, 7 cents will be reserved for JD, of which 3 cents and 5 will be reserved for employees, and 3 cents and 5 will be invested in future development. The purpose of this is to make partners profitable, employees motivated, and the industry chain in a healthy and benign development environment.
Liu Qiangdong announced at the mid-level executive meeting on November 20 that by the end of this year, 10% of executives above the vice president level will be eliminated at the end of the year. An employee who participated in the meeting said that he felt very nervous throughout the whole process. After hearing regarding the elimination plan, he saw “some people’s faces became ugly.” What he didn’t expect was that he would face a salary cut on the third day following the meeting.
On November 22, Liu Qiangdong sent a letter to all employees, saying that starting from January 1, 2023, the salary of more than 2,000 managers above the group’s deputy director level will be reduced by 10% – 20%, and the higher the position, the more the reduction.
It is understood that JD.com’s general management sequence from Liu Qiangdong down is: Chairman Liu Qiangdong-Group President and CEO Xu Lei-Senior Group No. 1-Senior Vice President-Vice President-Senior Director-Director-Deputy Director. The director’s annual salary ranges from 800,000 to 1.5 million yuan, and the director’s annual salary is regarding 1 million to 2 million yuan, which basically includes equity incentives.
At the same time, he announced the improvement of basic security for employees, the addition of 10 billion yuan in interest-free mortgages, and his personal donation of 100 million yuan to greatly expand the scale of the “Employee Children’s Relief Fund”. After JD.com completed the acquisition of Debon in July this year, JD.com will gradually convert Debon’s outsourced employees into full-time employees and pay all five insurances and one housing fund.
The takeaway project is put on hold before it goes online
In the past year, JD.com has refocused on its retail business and stopped several new businesses that were not doing well.
At the end of 2020, JD.com joined the community group buying battle, and JD.com established the Jingxi Pinpin business group, preparing to fight the battle for the sinking market. In the first half of this year, Jingxi Pinpin’s C-end business in most provinces has been shut down. At present, Jingxi has been relocated back to Jingdong Retail Group; in October this year, Jingdong International shut down its European business and abolished Thailand, Indonesia and other Southeast Asian regions. Part of the business, which was once hoped to “recreate a JD.com”, but had to shrink due to short-term profitability.
JD Group’s new business mainly includes JD Smart Industry Development, Jingxi, JD International, and technological innovation. It lost 2 billion yuan in the third quarter of last year. After a series of adjustments, the net profit of the new business in the third quarter of this year reached 280 million yuan.
In June this year, we reportedJD.com to pilot food delivery business. According to a person from JD.com, JD.com has contacted some catering businesses in Zhengzhou and Changsha, completed the technical support for the launch, and prepared to connect Dada to the distribution back-end system.
However, JD.com’s food delivery business has been progressing slowly and has not yet launched. According to “LatePost”, considering the instability of the epidemic affecting distribution and huge investment, JD.com’s food delivery project has been put on hold.
The “Jingdong Tongchenggou” mini-program that provides food and beverages, scenic spot tickets, shopping malls and fresh food, etc. has suspended its service in October this year. Under the circumstances, “Jingdong Tongchengtui” has fewer types of store coupons, and ordinary consumers can’t use them directly. They can only share the store coupons with friends to earn commissions of a few cents to a few cents. Before sharing, they need to enter Invitation code, it can be seen that the project is still in the experimental stage.
Food delivery is already a mature market with full competition. Meituan has an absolute advantage in this field. If JD.com wants to enter the game, it will inevitably start a new war of burning money. But the overall tone of JD.com this year is to reduce costs and losses.
At last week’s third-quarter report conference call, Jingdong Group CEO Xu Lei’s speech confirmed this point. He said that one of the driving forces for Jingdong’s profit growth this year is various “cost reduction” measures. Starting next year, Jingdong will focus more on On “efficiency enhancement”, Xu Lei said, “the whole organization still has too much efficiency to improve.”
In the past ten years, Liu Qiangdong has released and collected some power. On the surface, every time he delegates power to a certain stage, market competition intensifies, stock prices plummet, and revenue growth rate declines. Then Liu Qiangdong returns to the front line of business, which often brings It is the rise in stock prices, the rise in growth rates and the return of morale.
Whether it is 2016 or 2019, the focus of Liu Qiangdong’s “return” is to return JD.com to the main channel with retail as the core, and to adjust and optimize its business and organization. This time is no exception.
As the founder, Liu Qiangdong hopes that the company can establish a system of self-operation and development, because he believes that the company cannot always rely on the rule of man. But at least for now, he is still firmly in control of this company, and this company cannot do without him. JD.com employees also believe that no matter how the external environment changes and how JD.com changes, Liu Qiangdong will not change.
The author of this article: Chen Jing, source:LatePostoriginal title: “Later exclusive｜Three-hour internal speech, who and what did Liu Qiangdong criticize”
Risk Warning and Disclaimer
Market risk, the investment need to be cautious. This article does not constitute personal investment advice, nor does it take into account the particular investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, opinions or conclusions expressed herein are applicable to their particular situation. Invest accordingly at your own risk.
