Liu Qiangdong opens up. Here are 20 things he most hopes to be understood about.
Text | Ren Cairu
Editor | Qiao Qian
On the evening of June 17th, Liu Qiangdong appeared and spoke at JD.com's headquarters in Yizhuang, Beijing.
At this small - scale media communication meeting, he started from "recalling the past years" and then extended to what JD.com is doing today, what it intends to do, and what its money - making methods are. During the process, the emotions he showed included pride, disappointment, and expectation.
Since March, JD.com has ventured into the food delivery and hotel - tourism sectors, and there have even been rumors that it is entering the ride - hailing business. JD.com's "all - front attacks" seem a bit crazy. However, according to Liu Qiangdong's statement, JD.com's strategy has become much clearer - following the idea of deepening the supply chain, it has laid out 7 - 8 business formats, plus internationalization, which constitutes the current JD.com.
In this sharing session, "innovation" was the topic that Liu Qiangdong cared about the most. Therefore, he severely criticized JD.com in the past five years, describing it as "five lost years, five years of decline, five years without innovation, growth, or progress."
As of now, what is JD.com's innovation?
Liu Qiangdong's answer is to reshape the supply chain. From the self - operated retail and JD Logistics back then to today's JD Food Delivery and the future hotel - tourism and medical aesthetics businesses, etc., "I've been conducting business around the supply chain all my life."
This is the third year since Liu Qiangdong returned to JD.com. "JD.com has long ceased to belong to any single individual," Liu Qiangdong said. He returned in 2023 at the request of the current CEO, Xu Ran. "Because she really has no experience in retail or e - commerce, and she was very straightforward when she said that she needed me to be involved throughout the process. After she gets the hang of it, I'll step back a bit."
Before truly "stepping back," he is still the sole soul figure of JD.com. From e - commerce retail to food delivery, hotel - tourism, and internationalization, the strong "Liu Qiangdong flavor" in all of JD.com's business styles is hard to ignore.
From Liu Qiangdong's one - go "output" this time, we've extracted 20 key pieces of information to record his thoughts on business and competition. These are also the things that Liu Qiangdong currently hopes the most for people to see and understand about JD.com.
(I) Where is the food delivery business headed?
Now is not the best time to "invite Wang Xing for a drink"
To be honest, Brother Xing and I are good friends. Of course, he might have some opinions about me during this period. The other day, I was asking if I could invite Brother Xing for a drink during the 618 period. One of our mutual friends said, "I suggest you wait. Now is not the best time." I think he makes sense.
A completely different business model from Meituan will emerge in a month
Throughout my life, or rather, the entire JD.com Group has always been conducting business around the supply chain. We are not a so - called diversified company. Although it seems that we have many subsidiaries, in fact, all of them serve the supply chain. Even our food delivery business today is to serve the fresh food supply chain.
The food delivery market is huge. In about a month, JD Food Delivery will soon present a business model completely different from Meituan's. We also hope that this business model can completely solve the food safety problem and enable consumers to buy high - quality, cost - effective, and safe food.
There are over 120,000 full - time food delivery riders, and the main problem is a shortage of HR staff
The food delivery industry has been developing for 15 years. We entered the food delivery business on March 1st. As of June 15th, JD.com already has over 120,000 full - time food delivery riders, and we have 3,000 to 4,000 new hires every day. Currently, the main problem is the shortage of HR staff, which poses a huge challenge to the HR department. It's not that we don't want to recruit more full - time riders; it just takes time.
Currently, 40% of the sales are cross - sales, and the losses are more cost - effective than buying traffic from Douyin and Tencent
When customers come, currently 40% of our sales are cross - sales, and they can buy products on our e - commerce platform. So, the money we lose is still more cost - effective than the money we would spend on buying traffic from Douyin and Tencent.
(II) After five lost years, what to enter and what not to enter
JD.com will officially enter the hotel - tourism industry on June 18th
JD.com is about to enter the hotel - tourism industry, and the relevant news will be officially announced tomorrow. JD.com is confident of achieving success in the hotel - tourism and catering industries because we can provide a brand - new channel for hotels and restaurants and create value for the industry. (Note: Before the publication of this article, "JD.com News" has issued a "Letter to All Hotel Operators," stating that "by participating in the JD.com Hotel PLUS Membership Program, you can enjoy up to three years of 0 commission.")
A new channel division has been established for hotels and restaurants
JD.com's entry into the hotel - tourism and catering fields aims to reduce the costs of these industries by 20% through the supply chain, bringing them down to two - thirds of the original level, and becoming a new channel for hotels and restaurants. To this end, JD.com has established a new channel division for hotel and catering businesses.
There are probably about 6 innovation projects in the next year and a half
Regarding the supply chains of catering, hotels, in the future, we will also have the supply chains of beauty, medical aesthetics, hospitals, and all kinds of businesses like head - massaging and foot - washing shops you see on the street. We will provide supply chain services to them in the form of a new channel. This is in line with the overall function of the JD.com Group, which only focuses on the supply chain. This is our logic. The hospital supply chain has already been established.
In the past year and a half, the group has about 6 innovation projects.
Denial of entering the ride - hailing business
Who said I'm going to enter the ride - hailing business?
Stablecoins are an innovation project with key layout
Stablecoins are an innovation project with key layout for us. We hope to apply for stablecoin licenses in all major sovereign currency countries around the world to achieve currency exchange between global enterprises, reduce the global cross - border payment cost by 90%, and improve the efficiency to within 10 seconds. Currently, it takes about two days for enterprises to use Swift for cross - border payments, with an average of two to four days, and the cost is quite high. After completing B - to - B payments, we can penetrate into C - to - C payments.
Not planning to launch a brand - new business model
It's not easy to create a new business model anymore because we have already laid out seven or eight supply chains and covered all aspects of the supply chain. We are not planning to launch a brand - new business model, but we will deepen, strengthen, and internationalize the existing seven or eight business models centered around the supply chain.
(III) Internationalization is not following Amazon
There are 6 essences in the international business strategy
In a nutshell, my international business strategy is local e - commerce, local infrastructure, local employees (we already have over 2,000 employees in Europe), local procurement, local delivery, and only selling branded products. Of course, our strategy is different from Amazon's. If we did exactly the same thing as it, we would have no competitive advantage at all.
Bringing 1,000 brands overseas in 5 to 10 years, which is different from Amazon
The international business does not follow the cross - border e - commerce model. At the beginning, JD.com signed contracts with 1,000 Chinese brands. We believe that if we can make these 1,000 Chinese brands successful, then JD.com will be successful because Amazon doesn't have these 1,000 brands, and neither do local retailers. If the products we sell are the same as Amazon's, all being local European and American brands, we really won't have any advantage.
It might take us another five years because we have to negotiate with these 1,000 brands one by one, ensure their compliance, obtain local certifications, and do a lot of work. It might take five years to bring all these 1,000 brands overseas.
(IV) JD.com's past and glorious journey
12 years: From 38 people to 900,000 full - time employees and 30,000 managers
In 2003, there were 38 people in the JD.com Group, including me. We could earn about 120,000 to 200,000 yuan a year. That year, we gathered all the employees and said that in the future, for every employee in the company, we would adopt an orphan. As of the end of the first quarter of this year, we had 720,000 employees.
In the second quarter of this year, we launched the food delivery business and recruited a large number of riders. Our riders are gradually transitioning to full - time riders. So, the second quarter should have the largest net increase in the number of employees in a single quarter since I started my business. Compared with the first quarter, we had a net increase of over 150,000 employees in the second quarter. By the end of the second quarter, we had about 900,000 employees.
The salaries of employees above P5 have doubled
I don't want to exploit employees. I will raise the salaries of new employees. For employees above P5, their salaries have basically doubled.
The average pre - tax salary of full - time couriers in Beijing has exceeded 13,000 yuan
Since the day I founded JD Logistics in 2007, from the first courier we hired, we have been paying the full amount of the five social insurances and one housing fund. The average pre - tax salary of our full - time couriers in Beijing has risen to over 13,000 yuan, and we pay the five social insurances and one housing fund based on this 13,000 - yuan base.
There are only 5 levels between me and the most grass - roots employees
To this day, there are only 5 levels between me and the most grass - roots employees. I've set a strict rule that as long as the entire JD.com Group has no more than 2 million employees, I only allow 5 levels. Many companies with a few thousand employees have 6 or 7 levels, but we only have 5 levels to this day. So, the core of Big Boss is to have a flat organization and full authorization. When a company grows large, it's afraid that when doing something, seven or eight departments get involved, which will cause problems in implementation.
The absolute No. 1 enterprise in the home appliance industry: The combined scale of Gome and Suning is less than 1/5 of JD.com's
Today, JD.com is the absolute No. 1 enterprise in the home appliance industry. The combined scale of Gome and Suning is less than 1/5 of ours. However, if you look at the home appliance brand manufacturers in China, their net profit rate exceeds 10%. The overall net profit rate of JD.com in the home appliance industry is about 3 - 4 points, that is, 35 cents. That is to say, the profit of brand manufacturers is twice that of ours. In the past, the profit of Gome and Suning was 3 to 4 times that of brand manufacturers.
The comprehensive cost of JD.com's retail business is 10%, and only 5 companies in the world can achieve this
There are various descriptions of JD.com in the outside world. Many of them are from laymen looking at experts. To understand JD.com's core competitiveness, you should look at our cost. We are the same as Costco and Sam's Club. The comprehensive cost of JD.com's retail business is only 10%, and we also have a logistics business.
What does a 10% cost mean in the retail industry? Only 5 companies in the world can achieve a cost of only 10%: Costco, Sam's Club, Aldi, JD.com, and Amazon. Traditional supermarkets need a 20% cost, and Gome and Suning need 15%. So, how JD.com has come this far is actually supported by our cost - efficiency and customer experience.
The payment period is 59 days, which is half of that of trillion - level retailers
Let me tell you a set of figures. JD.com can survive until now because we have 1,600 warehouses in mainland China alone. The number of products on sale in our logistics centers on our own platform exceeds 10 million. Our inventory turnover days are 30 days. Anyone who has experience in the retail industry knows what this figure means. This is our core competitiveness.
I firmly believe that we can optimize our inventory turnover days to 20 to 25 days. For JD.com, optimizing one day means 10 billion yuan in cash flow in the future. Optimizing five days can generate 50 billion yuan in real cash. Our payment period is 59 days, while the average payment period of trillion - level retailers is 120 days. Because of our high efficiency, we also won't exploit suppliers.
The profit accounts for about 1% of the transaction volume, which makes Liu Qiangdong proud
As of last year, our group's platform transaction volume exceeded 4 trillion yuan, our net revenue was 1.1588 trillion yuan, and our net profit was only over 40 billion yuan. We paid 116.1 billion yuan in salaries and 18 billion yuan in the five social insurances and one housing fund for our employees. From 2007 to now, in 18 years, we have paid over 100 billion yuan in the five social insurances and one housing fund. These could have become my personal legal wealth and the net profit of JD.com.
Profit is necessary, but we have truly not made profit our top pursuit. I dare to say this on any occasion.