In the past, when many people failed, they said that policy changes, market changes, consumer demand changes, technological developments, etc. have led to failures. They are all nonsense, and in the end, people can’t do it.

All failures are ultimately human failures

In the past ten years, basically among the entire Chinese Internet companies, the most controversial company and the most controversial entrepreneurs should be none other than Jingdong and me. Since 2007, I received the first round of financing (1000 million US dollars). ) At the beginning, by the end of the year we decided to build our own logistics, and then there were various questions in the market. For so many years, what has always remained hot in the market is the discussion of our various behaviors. In the next one and a half hours, I hope to share with all alumni what I think, what exactly is our team doing at JD, what kind of thinking, what kind of thinking, what kind of one we are based on This strategy has allowed us to do so many things in the past ten years. When we lost the worst, we lost more than one billion yuan a year at the most. At that time, many people asked me, can you sleep? Are you not afraid? In fact, it's not that I am not afraid. Sometimes I think about what to do if the company goes bankrupt.

I can sum it up in one sentence. Over the past ten years, we have not been moved by the outside world, or even by our investors and shareholders, to change us. As long as we think that what we do is valuable, profit must not be a problem. I I don’t believe that there is a business model in this world that creates a lot of value for your partners, and creates a lot of value for your users. As a result, you go bankrupt and fail. If so, it must be our execution. Or The problem with our management team is not the problem with the business model.

When many people failed in the past, they said that changes in policies, changes in the market, changes in consumer demand, technological development, etc. have led to failures. They are all nonsense.In the end, it's all people.To give two examples, IBM found that PCs do not make money. The real thing should come from system software and services. In those days, selling PCs was still profitable. When IBM was selling PCs, it had already found out, so it transformed to software and services. , Laid IBM another 20 years of brilliant success. The negative example is Kodak. When Kodak’s traditional cameras, Kodak’s boss said that in this world, I only found one thing that has higher profits than our Kodak, which is drugs. I was very proud when I said this, very proud.

When every company is on its way to success, especially when it reaches its peak, there is a downhill road behind it. and so,The most terrifying thing about a company's founders and managers is at the top.Kodak was the first to invent a digital camera, (but) he himself resisted and did not actively develop it. As a result, the company went bankrupt. Did the technology change? In fact, the Kodak team had a problem, and its strategic choice was contrary to consumer interests.

This is also the value that I have repeatedly emphasized, any choice you make,Never go against the interests of consumersWhen a company’s choice of interests conflicts with the choice of consumers’ interests, it is doomed to fail.

I think that no matter what kind of country or social environment, a company fails only because your team is not good enough. There are no other factors. All other factors are excuses. It is based on this that what we at Jingdong should pay most attention to is the most time-consuming and the most important thing to do regardless of the cost, that is, the team. You need to spend a lot of time.

Cracking the traditional logistics model: reducing the flow of goods

There is a basic concept, that is, cash flow. A profitable company may go bankrupt, and a company that loses money but has positive cash flow may not go bankrupt. JD.com builds a logistics system. In order to provide customers with the best experience at the front end, we also have great demands on the back end, hoping to reduce the entire logistics cost.

When we built our own logistics, we saw a huge opportunity in China, which was based on the following three reasons

the first, China has no UPS, no Fedex, so give us a chance.

second, China’s logistics costs are extremely high;

third,It is service. In the past few years in China, express delivery has developed very rapidly, but the service quality is relatively low. Franchisees and group companies actually violate the interests of the two. Franchisees hope to receive more orders because the express company settles the courier. , Sending is obligatory, and receiving is making money. Therefore, China Express has developed into a franchise model, which is a huge service hidden danger to express.

Based on these three points, JD’s logistics model has gone a step further. JD is not an express company, and we absolutely do not recognize that we are an express company. Whether it’s three links or one delivery or SF Express, they are pursuing how to make the goods flow quickly, so the network is very complicated; while JD’s logistics model is very simple, that is, from warehousing to consumers’ homes, between points and points. There is no dime relationship. Moreover, we are integrated with warehouse and distribution. More and more warehouses are built. The goods are getting closer and closer to consumers. The distance of goods moving is getting shorter and shorter, faster and faster, and the cost is lower and lower. Positive circulation, the larger the scale, the more obvious the logistics.

The core of JD’s logistics design is to reduce the flow of goods. We hope to produce from the factory, even before production, we will tell you that JD has 36 warehouses in 86 cities, and tell you how much to send to each warehouse. The goods were transferred from the factory to more than 80 warehouses. The second move was from the warehouse to the consumer's home. There were no agents or distributors, and there was no cumbersome procedure for moving from this warehouse to that warehouse. Because we have less handling times, the cost is very low, and because it reaches the end consumers directly, the operation efficiency is also high.

According to our public financial report, our inventory turnover days were 32 days last year. Compared with friends, their inventory turnover days were 70-90 days. Don’t forget, the difficulty of management is different. They only managed 70 SKUs during 90-1 days, while the number of SKUs managed by us exceeded 200 million. Their average billing period is more than 140 days, which means you can get the money in more than 140 days, and the funds can only be transferred twice a year. Last year, our account period was only 39 days, which means that the turnover of cash can reach a dozen times a year, and the efficiency of the entire industry has risen.

Let’s look at our overall operating expense ratio, 10.3%. If we exclude the low-end items such as daily necessities, it may reach 15-20%. There is also the cost brought by technology. If these are aside, all electronic products will be used throughout the year. The overall operating cost rate of the company is only about 8%. What is this concept? There are two major appliances in China, and the expense ratio is 16-17%. We only have 8%, which means we are 50% lower than it. How can we achieve low prices? If profits are exchanged for low prices, this business model must be unsustainable.

I just want to tell everyone,You will have doubts about why a company has losses. Sometimes although you are afraid of failure and fear, you can still persist. In the end, you will find that your low price comes from your cost control, and your cash flow comes from you. Higher efficiency, and front-end user experience, including products, prices, and services

What we are pursuing is to reduce the flow of goods, which is a core appeal of the design and logistics of Jingdong Mall.

99% of China's e-commerce sector should be closed

Next, let’s talk about this sugarcane theory, which is a sugarcane with ten knots. Why JD.com has done more heavy work and is unwilling to adopt the lightest mode to do it? In fact, it is also based on this ten-section sugar cane. This theory is only suitable for the retail and consumer goods industries. It was originally a small sugarcane. Because there are too many competitors, the industry competition is extremely fierce, so the sugarcane is getting shorter. Once the industry keeps getting out of the game, the industry tends to be rational, the e-commerce industry will eventually get its reasonable profits, and sugar cane will be in a normal state.

The law of market competition leads to the profit of each brand and each industry. In the short term, today is longer and tomorrow is shorter. In the long term, the profit of this industry and brand profit are relatively fixed and at a reasonable level. This is the advantage of market competition. As long as there is competition, it is impossible for you to make huge profits. If there is only one JD.com, JD.com is not far from death.

The important thing is that when the length of sugarcane is relatively fixed, the division of labor in the industry has ten elements. Why does JD.com make the heavier and heavier? Because we insist that in this industry, the more you do, the more sections you eat. One day when the industry becomes more rational, you will have the ability and qualifications to obtain the best interests of the industry. In the future, I believe that all the consumer goods industries in this world will mainly consist of two, which are the agents and distributors. I'm sorry, after all, you don’t exist. I don’t know when to die. Death is inevitable.

Today, everyone is doing e-commerce for the sake of e-commerce. Every company has established an e-commerce department. In fact, it is useless. 99% of the e-commerce department in China should be closed. All traditional enterprises do not need to do e-commerce at all. Department, now the entire Chinese home appliance manufacturers have an e-commerce department to cooperate with JD.com, open their own flagship stores and then authorize them. Traditional departments such as chain stores are very hard and tired. Suddenly a guy from 87 said that I was an e-commerce expert with an annual salary of more than 200 million. He got a PPT and told the boss that we only told the boss one thing, we would lose money. , The boss is scared, if we do not do e-commerce, we will die later. No problem, brother, it's right to lose money, don't you think Liu Qiangdong is losing money? That's why every enterprise is setting up an e-commerce department, so e-commerce merchants became popular overnight.

All traditional companies and brands must remember what they do, You are a brand, you have to do a good job in the brand, production, manufacturing, research and development, sometimes do not look at whether it is online or offline. Does Apple focus on online or offline? As long as the iPhone is made, someone will buy it. As long as the brand is good, online and offline are treated uniformly, and the same price is set, an e-commerce department should not be used to connect with Jingdong Mall.

When the entire industry is based on rationality, these ten sugarcane segments will be more clear. Whether it is traditional brands or online brands, e-commerce, or traditional retail, I believe that they cannot escape the natural laws of commerce. How did this law come about? It is the result of market competition.As long as you do valuable things, you will definitely get a good market value

question Time:

Question: 76% of JD’s current sales are from self-operated, and the rest are from brand merchants on the platform. In the future, will JD continue to emphasize self-operated or open platforms in strategy? How are these two business models integrated in JD?

Liu Qiangdong: These two are very important to JD.com and are indispensable. All standardized products must be self-operated in the end. For example, internally, including our platform and Lenovo’s notebooks, JD.com purchases 1 units at every turn. The number of sellers on the platform purchases very few, and the purchase cost is impossible to follow. Jingdong competition. However, there are some non-standard clothing, shoes and hats that cannot be done by ourselves. We have no advantage in operating efficiency. Because the brand is highly dispersed and the number of SKUs is massive, the cost of self-operating will only be higher. Standardized products must rely on our platform sellers to sell on our platform. After ten years, JD’s self-operation will be stronger, but for non-standardized products, our JD will not enter, and we have to rely on our cooperative sellers to sell.

Question: In May of this year, JD.com was successfully listed on NASDAQ. In this process, what do you think is the biggest challenge JD.com has encountered? What advice do you have for other Chinese companies looking forward to listing?

Liu Qiangdong: Going public is not a challenge for me. During the entire listing process, I only did 1% of the things I did for the listing, and 99% of the things were done by my current CFO and other colleagues. The only thing I did was I needed to sign and I signed it. Finally, I did a roadshow. Before the roadshow, I was still discussing whether I could not go, but I skipped Singapore, skipped Europe, skipped Dubai. When I went to the United States, I didn’t say how awesome and proud I am.I think any investor will look at your performance after all, and nothing else is worthwhile.So go public, don’t pay too much attention to short-term market value changes. It is meaningless. Long-term market value must be related to the value you create. The world is very fair. As long as you do valuable things, you can get it. Very good market value.

Question: Compared with other Internet giants, JD.com is the retail part of e-commerce. What do you think of JD’s future strategic layout? Will it enter other areas?

Liu Qiangdong: For so many years, I am very simple and extremely focused. I do finance purely because of need. Especially in China, there are countless small and medium-sized enterprises that need loans. It is a huge business opportunity for JD.com. It seems that using JD’s is better than bank loans. The interest rate is about two points higher, but the overall cost is much lower than that of the bank. There is no need for mortgage. You can get the loan in 3 minutes. Now you can apply for a loan on JD.com in 3 minutes, and the money will be on your account. You can pay one day for one day and three days for three. Day interest. All of our financial products revolve around innovation, not to compete with banks. Our money comes from banks. We hope to use this model to do some things that banks are temporarily inconvenient to do. Jingdong has such capabilities. We use our advantages. Cooperating with banks to solve the problem of a large number of small and medium-sized enterprises loans, can turn goods into loans, even upstream, you can use raw materials and take our loans.

Question: JD.com put forward five strategic ideas some time ago. The contents include starting to lay out fresh food, or using big data, cloud computing, and even entering some mobile terminals. How do you think about their future connections? ?

Liu Qiangdong: Our O2O project revolves around our logistics, just to refine it. We have expanded categories in the past ten years, and category management has been relatively loose, but in the future, each will have detailed management. E-commerce has been doing so for so many years. Whether it’s JD or Alibaba, there is one category that everyone hasn’t done well. That is oil, salt, sauce and vinegar, supermarkets, convenience stores, and 3000 SKUs. It’s cheaper. A bottle of water costs a few dollars, but it’s the problem of buying the most. Delivery plus logistics costs, and profit is not much. We used Jingdong’s logistics to make a project to divide Beijing into grids. Every one of us with a diameter of one kilometer has 2.7 delivery personnel on JD.com, and at least one convenience store, all of which have consumers. So after we pass the grid, when consumers buy vinegar and oil, or buy bottles of water At the time, we will find the nearest water to your home. It may be at Wal-Mart. It may be 1-7. We will issue instructions to the delivery staff in real time and ask the delivery staff to go there and get a bottle of water to you. , This is the O11O project. This solves what JD and Ali did not do well, and meets the needs of consumers for high-frequency shopping.The core of Xiaomi's success is to improve the efficiency of the supply chain

ask: Professors of CEIBS are blooming. For example, our Professor Li Shanyou often uses Xiaomi’s example to tell us that many companies in China lack Internet thinking. He thinks he should learn how to remove KPIs like Xiaomi’s method of destroying the three perspectives, but on the other hand Professor Xu Xiaonian said that there is actually no such way of thinking as Internet thinking. Have you ever heard of steam engine thinking? Does the locomotive think? He said that Internet thinking has never appeared abroad. Is there a very popular Internet thinking model? If so, how do we understand it?

Liu Qiangdong: I still maintain a high degree of agreement with our professors at CEIBS. Before our professors did not say anything, I also said at the internal morning meeting that everyone must not talk about what is called Internet thinking, because it may be crazy, the core of Xiaomi’s success It still improves the efficiency of the supply chain and reduces costs. Traditionally, mobile phone sellers have to go through channels, because brand owners do not directly contact users, but adopt a layer-by-layer wholesale method. Second, the efficiency of making mobile phones in the past was very low. It took 15 days from the time the mobile phone was released to the completion of the channel. Now it can be done on the same day. For example, in logistics, we hope that in 5-7 years, 60% of the goods in Jingdong Mall will go directly from the factory gate. Delivered to consumers’ homes. We have now cooperated with mobile phone brands. For example, when a mobile phone brand has not yet been produced, we pre-sold 2 units in 30 minutes. We used to send them to JD’s warehouse before delivery. Station, the delivery staff will deliver it to the customer’s home. Here, our machine will be delivered directly to the delivery station, and the delivery staff will go directly to the customer’s home. We have been in hundreds of cities, and even rural users receive the goods within 24 hours. . This is something that the traditional retail industry cannot do. Xiaomi still reduces costs and improves efficiency.

Question: In the context of the almost monopoly of BAT and JD.com, where are the entrepreneurial opportunities for the Internet born in the 80s and 90s?

Liu Qiangdong: As long as there is a market in this world, there will be no monopoly. Don't worry about BAT. It cannot be monopolized. There is still a chance to start a business. where? It’s very simple. You must know who your users are and how you will create value in the future. If you have a partner in the industry, who your partner is, and how you create value for your partner, you must have the opportunity to create value. .