To understand the new changes in JD’s strategy, one might as well start from the vast remote cities of China.
JD is changing, and 618 is the best window to observe this change.
Most users’ impression of JD.com is that it is an e-commerce company that advocates “how fast and saves money”, with high product quality and fast logistics. If you move further, this impression may become that it is not only suitable for buying 3c digital and home appliances, but also convenient for daily necessities and fresh food. There is no doubt that the epidemic last year has greatly deepened this impression.
But these are not enough to summarize today’s Jingdong. Faced with the complex e-commerce competition environment and retail industry environment, this company has undergone tremendous changes in both the core and the extension.
At the 618 kick-off meeting not long ago, JD.com released seven major trends on “market and consumer demand”. Among them, they mentioned the three major trends: From the perspective of channels, supply chains, and sinking strategies, it fully embodies JD’s brand new thinking, positioning and practice at the strategic level.
Among these seven major trends, “omnichannel” is the top priority. Xu Lei, CEO of JD Retail Group, said in a conference call on May 19: “The ideal of JD Retail in the future is to sell goods all over the world and sell goods all over the world.” This means that more needs to be explored. It is natural that omni-channel support is indispensable for sales and opening up all links of the industrial chain.
First-tier and second-tier cities are the basic business of JD.com. Users in Beijing, Shanghai, Guangzhou and Shenzhen are already familiar with JD’s brand and services. To understand the new changes in JD.com, one might as well start from the remote area of China-Xinjiang Yili, which is just such an excellent sample.
JD’s supply chain barriers: from the past to the future
Xinjiang Yili is known as “the world’s three major lavender producing areas” together with Provence, France and Hokkaido, Japan. Fu Xinjun, 55, has been planting lavender in Yili since the 1990s. Since 2013, his family’s 24 acres of lavender has been incorporated into the scenic spot by the local Ipar Khan Spice Company.
In 2015, with the launch of Iparkhan’s online cooperation with JD.com, it sold tourism products that were originally limited to local sales to all parts of the country. Iparkhan’s sales achieved an annual growth rate of 20%. , By 2020, the overall sales will reach about 90 million. The water is big and the fish is big. Fu Xinjun’s 24 acres of land has also grown to 60 acres today. The annual income has increased from 30,000 yuan a year to the current 90,000 yuan a year. This has improved the Fu family’s living standards. A big chunk.
It is far more than Iparkhan that has achieved such rapid growth. Sanjiang Muyang is a company engaged in the development and sales of mutton in Yili. Before 2018, Sanjiang Muyang was mainly sold through offline stores, and the customer cluster was in Xinjiang. After cooperating with JD.com in January 2018, Sanjiang sold mutton all over the country, and its sales have grown at a rate of 120% to 150% per year for three years. The herdsmen who cooperated with them have also increased their annual income from 60,000 yuan to more than 200,000 yuan. Sanjiang’s goal for JD 618 this year is 600,000 sales.
Opening a store on JD is just the first step for Yili merchants. Their cooperation with JD.com is gradually deepening.
In January of this year, Iparkhan’s products settled in JD’s four warehouses in Shanghai, Beijing, Xi’an and Guangdong, and selected JD to deliver them. This has changed the place of shipment from Yili, Xinjiang to the nearest four warehouses, and the delivery time has been shortened from the original 5-7 days to the current 1-2 days. As 618 is approaching, Iparkhan is preparing for the battle, and its sales target has doubled from last year during the epidemic.
For merchants in remote areas like Iparkhan, entering JD’s Okura in advance, and delivering goods to the nearest after the customer places an order, is undoubtedly the most direct manifestation of the efficiency improvement of the supply chain—— This is also a typical case of Jingdong’s “digital and intelligent social supply chain” in the upward path of agricultural products.
As early as the beginning of 2020, Liu Qiangdong, Chairman of the Board of Directors and CEO of JD.com, repositioned JD.com in a letter to employees in the Spring Festival: changing the strategic positioning of “retail and retail infrastructure” to “based on supply chain” Technology and service companies”. In the next six months, after continuous discussions among internal high-level officials, the “supply chain” was further clarified as the “digital-intelligent social supply chain.”
In November 2020, JD.com officially proposed the infrastructure for the next ten years-JD Digital Intelligent Supply Chain, which uses digital intelligent technology to connect and optimize all aspects of social production, circulation, and service, and reduce social costs. Improve social efficiency.
There is no doubt that “JD Digital Intelligent Supply Chain” is the most important strategic positioning of JD.com in the future. Liao Jianwen, chief strategy officer of Jingdong Group, has dismantled its core in five dimensions, which is also called the “five in one” internally:
The first is to make it wider. Using China’s supply chain capabilities and global supply chains to serve Chinese consumers, and China’s supply chains to serve global consumers-this coincides with the prosperous status of China’s cross-border e-commerce industry since the epidemic 合;
The second is to deepen. Before JD.com focused on retail and retail supply chains, it will add services in the future. JD Health’s medical service is the representative of JD’s deep supply chain.
The third is to make it thicker. Extend from serving general consumers to serving enterprises, that is, from To C to To B. For example, JD’s B2B corporate procurement business has grown rapidly. In the future, JD will not only provide commodity procurement, but also provide SaaS services to enterprises.
The fourth is to make it longer. There is a very important “ten-section sugarcane theory” in JD’s business philosophy, that is, the value chain of the retail and consumer goods industry is divided into creativity, design, research and development, manufacturing, pricing, marketing, trading, warehousing, distribution, after-sales, etc. Ten links, of which the first 5 sessions belong to the brand owners, and the last 5 sessions belong to the retailers. In the past, JD.com focused on the last five quarters, and will extend it to the next five quarters in the future to more effectively improve the efficiency of the industrial chain.
The fifth is to be falsified. Realize “intelligence” based on the physical supply chain, such as simulation design, intelligent production, dynamic superposition, ecological capture and other technical applications, combining virtual and real.
On the one hand, the “five in one” is a summary of JD’s long-term and deep development in the commodity supply chain-“widening” involves going overseas and cross-border business; the best example of “going deep” is JD’s healthy incubation and When listed, the company’s current market value has exceeded 48 billion U.S. dollars. Its business involves both pharmaceutical retail and online medical services. An important measure to “make it thicker” is the incubation and independent financing of Jingdong Industrial Products Company; On the other hand, “growth” and “virtual” are more generalizations of JD.com’s future plans for supply chain capabilities, which are not limited to the product level and the physical level, but extend to the upstream of the industry and the technical field.
It can be said that after the rapid period of traffic and user growth has passed, C2M and technology empowered supply chains have become a new battlefield for the retail industry and e-commerce giants to compete together. Compared with its platform-based competitors, JD.com’s natural advantage lies in its deep understanding and solid operation of the commodity supply chain for more than a decade.
Under the grand strategy, JD.com has also released many specific products, such as the C2M intelligent manufacturing platform that meets the growing needs of brand manufacturers; the pan-retail technology service platform “Retail Cloud” that serves enterprise users, and the digital supply chain platform “Jinghui “, the intelligent customer service and marketing platform “Yanxi”, and the city-domain governance modernization platform “Lunling”, etc. These products will land in many scenarios such as retail, logistics, finance, education, and government affairs.
In addition, the JD Discovery Research Institute was also established in November 2020. The institute will focus on super deep learning, trusted artificial intelligence, quantum machine learning and other fields to conduct research, and explore cutting-edge technologies from the basic theoretical level.
“All channels”, starting from the transformation of offline
Zhang Yong, 40, runs a JD Computer Digital City in Yining City, Yili Autonomous Prefecture, Xinjiang. In 2002, his entrepreneurial journey began in a mobile phone repair shop-he found that when locals encountered small problems such as black screens, broken screens, and poor battery life, the first thing he thought of was not replacing the phone, but a second repair.
With his mobile phone repair shop, Zhang Yong earned the “first pot of gold” in his life. He also upgraded the shop to an OPPO flagship store and began to dabble in Xiaomi authorized stores. In 2019, during a conversation with customers, he heard that JD Computer Digital Store can provide customers with broken mobile phone screensaver services, and it can also achieve “the same price online and offline”, so he became interested. In January 2020, he decided to transform the OPPO flagship store into a “Jingdong Computer Digital Store” and devoted himself to it.
JD Computer Digital Store is an important format for the sinking market under JD’s “omni-channel” strategy. During Double Eleven in 2018, JD’s Computer Digital Business Department formally proposed the “Opening Plan of One Hundred Cities and One Hundred Stores”, that is, around the computer city of third- to sixth-tier cities, through cooperation with local merchants to provide the latter with The source of goods, logistics services and brand endorsement, the goal is to open 100 stores in 100 cities.
Zhang Yong’s store perfectly fits the location and business model of JD Computer Digital Store. The computer digital city where this store of more than 100 square meters is located is the earliest and largest computer digital comprehensive wholesale city in Ili, and it has undertaken nearly 70% of the business in the eight counties and two cities of Ili Prefecture.
Compared with other types of digital stores, Zhang Yong’s confidence comes from the fact that his store can provide a wider variety of electronic products, from mobile phones to printers, and even small home appliances, and the second is the same price as JD.com. , The third is the high-quality delivery service provided by JD Logistics for users who place orders.
As of now, the number of JD Computer Digital Stores across the country has reached 845. It is an online exploration of JD.com, backed by its most traditional advantage category. It can be said that JD Computer Digital Store, together with JD Home, JD Home Appliance Store, JD New Channel, Qixian Supermarket and other offline formats for various categories, constitute an important component of JD’s “omni-channel” strategy.
In 2016, the concept of “unbounded retail” in the e-commerce circle was born. In the following years, the boundary between the old and the new in the retail industry has gradually blurred, and the integration of channels has become the biggest trend. So, how should we understand the meaning of “omni-channel” to JD and the retail industry?
Xu Lei, CEO of JD Retail Group, explained JD’s understanding of omni-channels at the 2020 annual financial report: “The omni-channel business is an effective supplement to the main consumption model on JD’s platform. This is not only JD’s key development strategy, but also All retailers must face and participate in innovative topics. We believe that the penetration rate of omni-channel and instant consumption models in different industries will continue to increase in the future, and the industry space is very huge.”
2020 is the year when JD.com’s “omni-channel” strategy is implemented. Its symbol event is the establishment of the Dashang Super’s omni-channel business group in April 2020. This is the first time JD.com has used “omni-channel” for Business line naming. Feng Yi, the person in charge of the business group, said in an interview that the mission of the omni-channel business group of Dashang Supermarket, which she understands, is becoming a “full-scale retail group” through the exploration in the high-frequency categories of supermarkets and fast-moving consumer goods. Pioneer of the “channel” strategy.
Before this, Xu Lei once said that the core elements of omni-channel are the capabilities of supply chain management, digital operation and integrated marketing. Unified, so as to achieve further optimization of cost, efficiency and user experience.
At present, JD’s omni-channel business has covered various offline formats and categories such as specialty stores, supermarkets, convenience stores, automobiles, flowers, fresh food, medicine, etc., and millions of stores have been incorporated into this huge system . Among them, the digital capability of stores is the focus of JD’s omni-channel.
Zhang Yong has deeply felt the convenience of his business brought by store digitization. Even if offline was affected during the epidemic, Zhang Yong relied on the open system provided by JD to move offline business to online and maintained good sales performance.
Thanks to the support of complete infrastructure from supply chain, logistics, marketing tools, digital tools, etc., Zhang Yong’s Jingdong Computer Digital City turnover has increased by a full three times compared with his previous mobile phone store operation; last year, 618 and During Double 11, the daily turnover exceeded 500,000.
This year, 618 will be around the corner, and Zhang Yong will get busy early. He contacted the purchasers of some local companies to check their needs for printers, printing paper, computers and other products. At the same time, he promoted JD 618’s discount policies and activities to attract users to an old customer base of more than 400 people. single. His 618 sales target this year is double that of last year. In front of the target, Zhang Yong appears confident.
“Start with the end, change and unchanged”
Looking back at the node of JD’s 18th anniversary, a question worth thinking about is, what has made JD.com today?
The answer is the supply chain.
In 2007, JD started to build its own logistics, and in the supply chainThe beginning of heavy investment. Even in the face of great internal and investor controversy and resistance, the founder Liu Qiangdong still rejected the crowd and insisted on promoting self-built logistics. Externally, the controversy that JD.com has faced for quite a long time is whether self-built logistics is a viable path.
At that time, JD.com was still a company with only 2,000 employees, with a valuation of 250 million U.S. dollars; today, JD.com has more than 370,000 employees and a market value of more than 110 billion U.S. dollars. Efficient and high-quality logistics services are the most deeply rooted brand of JD.com.
“We tend to overestimate the changes in two years and underestimate the changes in 10 years.” Liao Jianwen said at the JDD conference in November last year, “When e-commerce platforms were all concerned about traffic and transactions in 2007 , JD.com has been deeply cultivating industrial efficiency and supply chain efficiency.” In other words, in the 10 links of the “10-section sugarcane theory”, JD.com has consolidated more supply chain links than other e-commerce platforms, and continued to optimize the cost of the industry. , Efficiency and experience, which has also built a real barrier to competition for JD.com.
Standing in 2021, everyone from Internet giants to startups realizes that the period of rapid growth of the consumer Internet has passed, and the future is the era of the industrial Internet. In a sense, JD.com has been working on the industrial Internet, and JD.com’s new positioning seems to be facing the future, but it is actually a return to its original intentions.