An inspiring tale of a humble entrepreneur who created one of the world’s most cutting-edge companies.
Liu was distinguished from many sellers in Zhongguancun by providing invoices for every purchase he made, ensuring that taxes were properly paid while giving customers confidence in their purchases.
JD was known for its efficient executive team and talented offline teams, who together thrived at reducing transaction costs and improving efficiency.
How did JD.com begin?
Richard Liu spent his youth living in a village outside Suqian in Jiangsu province without running water or electricity, dreaming of one day becoming village leader to provide basic necessities to his community. With JD, Richard wanted to establish a technology-centered company which could bring new opportunities into rural China.
JD Multimedia launched their wedding photography and video conversion systems business at Zhongguancun’s Haikai Market in 1998, catering to those unfamiliar with IT hardware and software – many were unfamiliar with both hardware and software; as such Liu also provided technical training services, spending 15 days teaching one client how to use a mouse, computer and CD burner.
Liu was eventually able to generate a steady income and began renting space in Zhongguancun District nearby. Following China’s SARS epidemic in 2002, many businesses closed down but Liu recognized an opportunity and took his business online, renting an office and offering magneto-optical products for sale online.
JD’s success stems from its emphasis on both quality and low prices, boasting 60% market share during magneto-optical product boom years and being able to bring down costs by purchasing in bulk and using its own warehouses for storage purposes.
By 2004, Liu had begun expanding his company and shifting away from physical retail towards e-commerce, facing numerous difficulties along the way. JD was faced with many hurdles during this transition period – one being how to strike a balance between short-term profitability and long-run growth.
Liu understood that JD needed to expand and upgrade its logistics network in order to reach every corner of the country. Prior to JD’s arrival, people living in remote areas had to travel long distances in order to purchase electronics and other goods; JD has overcome this obstacle by creating an integrated nationwide logistics system featuring warehouse space and last mile distribution.
JD’s rapid expansion can be attributed to three primary elements: strategy, execution and corporate culture. Liu’s strategic decisions — such as moving to an e-commerce platform, expanding to full category catalog and developing an integrated distribution and warehousing system — set JD up for long-term success.
How did JD.com grow?
Liu (Liu Qiangdong) began selling multimedia and computer products at his own stall in Zhongguancun in 1998, differing from his competitors by insisting on issuing invoices showing only authorized products were being sold – initially this cost him business, but ultimately gave customers confidence that his company wasn’t engaged in illegal activities like tax evasion or selling counterfeit items; Liu soon discovered this approach was successful in growing his customer base.
Liu made use of warehouses to meet growing demands and partnered with manufacturers to ship directly to customers – bypassing traditional retailers while cutting costs in the process. Furthermore, he leveraged data analytics tools to better understand consumer purchasing patterns and deliver personalized services.
Liu’s efforts produced an irresistibly positive cycle: lower transaction costs, greater customer growth and improved operational efficiencies. As JD expanded further, more cutting-edge technological solutions such as fully automated factories could be introduced – further decreasing unit costs and increasing profitability.
By 2022, JD had become a leading retailer with revenues totaling $37 billion and market capitalization exceeding $44 billion. It had become the fourth-largest e-commerce platform worldwide and one of China’s most valuable publicly-traded firms.
JD was built around its remarkable supply chain efficiency. Although hard for outsiders to comprehend, its success relied heavily on digitalized management and control running behind-the-scenes; this included sales forecasting systems as well as automatic replenishment systems in buying/merchandising departments and logistics/inventory management platforms.
JD utilized cutting-edge technology to offer more competitive prices and faster delivery services, which helped it capture an extensive share of China’s retail market and become its leading retailer by revenue.
As JD expanded, new staff was required to meet its expanding size and complexity. These individuals required engineering and supply-chain management expertise as well as being adept at working alongside offline teams as well as laborers on the ground. Integrating engineers who had spent their lives within the virtual realm into an offline team working closely together was no simple task – although an engineer immersed in internet culture proved crucial for its growth.
How did JD.com become a leader in e-commerce?
Though JD has made significant investments in retail stores, its online platform remains its driving force. Equipped with an expansive back-end infrastructure and nationwide distribution and last mile delivery network as well as its own fully integrated customer service organization, it now provides same-day or next-day delivery for over 1 billion people globally.
Liu’s business model revolves around providing quality products and an exceptional customer experience to set his site apart from competitors. From day one, his goal was to ensure customers enjoyed shopping through JD from browsing, checkout and delivery – his vision for quality fuelled the development of JD’s e-commerce platform, providing industry-leading user experiences that continue to drive digital innovation and solidify JD’s competitive edge.
JD’s early decision to gain control of its supply chain was instrumental in building its platform. By developing relationships directly with manufacturers and purchasing from them directly, it allowed it to reduce middlemen costs while producing private-label products associated with quality that appealed to Chinese consumers and thus generate additional sources of revenue.
JD’s direct-to-consumer model not only allows it to control product mix and quality, but it also uses consumer data to develop tailored products – enabling JD to set itself apart from its rivals and increase market share across various product categories such as home appliances, cosmetics and food.
JD’s commitment to placing customers first was the cornerstone of its success and still drives its culture today. This dedication can be seen reflected in its company culture that promotes competition while adhering to just and fair principles – something essential for continued growth against rivalry from other businesses.
Liu was raised in poverty, his family unable to afford basic amenities like running water or electricity. While visiting a nearby city – for the first time ever seeing skyscrapers! – Liu found inspiration to dream about becoming the leader of his own village.
How did JD.com become a leader in China?
Richard Liu launched JD Multimedia after failing in both restaurant business and selling herbal supplements. To distinguish himself from competitors, he offered products at near cost with no negotiations allowed; quickly amassing a customer base he began expanding his business.
In 1998, he opened a small store in Zhongguancun and quickly sold all types of electronic goods to over 100 million customers. But even though his selection included only premium quality goods, he struggled to break even as there was no set purchasing channel, financial backing or team supporting his operation — it was all him on his own.
At first, JD Multimedia used physical stores as its source of sales; then when SARS hit in early 2003 and closed down Beijing markets and streets of shoppers, its sales changed radically online using crude bulletin boards to post product listings – eventually turning into one of the world’s biggest and most successful ecommerce operations with net revenues totalling $37 billion.
As China’s wealth rose and e-commerce boomed, JD positioned itself to meet rising consumer expectations with premium delivery and service. Furthermore, its products expanded from its initial 3C platform into an all-encompassing one stop shop experience. By 2007, it had also started building its national logistics system to minimize goods lost during shipment as well as control last mile delivery from warehouse to home.
At present, JD runs a network of 3,210 fulfillment centers and pickup stations, covering two-thirds of China’s population. JD owns and controls the backend technology that powers each operation, including systems for suppliers, customer relationships, supply chain management, warehouse management, inventory control, transaction processing, delivery management as well as transaction processing systems. They hold 156 Chinese computer software copyrights as well as 30 patents (with hundreds more pending).
JD was the first Chinese company to list on NASDAQ in 2014 and still remains loss-making but boasts over $40 billion market capitalization – one of only few global competitors that can match or even outshout Amazon’s supply chain efficiency, logistics technology, and vast infrastructure.
