The development strategy needs to match the adjustment of the organizational structure, regardless of the size of the enterprise. If the brain has an idea but the limbs cannot support it, the strategy will naturally lose its effective support.
As the new year is approaching, a group of Internet giants are undergoing a new round of organizational restructuring. Ali, Meituan, Didi, and Kuaishou all have new changes, and JD is no exception. This year, Jingdong’s stock price has risen by more than 130%, entering the gate of 100 billion in market value, close to 140 billion US dollars. Under such a premise, investors also hope that JD.com will have new changes, which will bring them more room for imagination in 2021.
Recently, JD Retail has intensively announced the appointment of several vice presidents and the integration of new business units. This is the second more intensive structural adjustment and personnel appointment of JD Retail since mid-December. In addition, JD Digital Technology and JD Logistics also made new adjustments.
What is certain is that JD.com, which once had a similar model to Amazon, is no longer a pure e-commerce company. After being involved in multiple fields, along with the adjustment of the business organization structure, a large number of positive signals at the strategic level have been released. At present, retail, logistics, and the spin-off of JD Health are intertwined. Can the story of high valuation be further staged?
Great adjustment of personnel department structure, JD attacking in multiple directions
JD.com has made changes in retail, finance, logistics, etc., showing a aggressive attitude toward multiple directions.
Specific to the retail direction, JD’s focus is mainly on integrating third-party platform businesses. For example, the original JD retail-platform business center and the user experience design department were integrated into the platform business center, with Lin Chen, the original ecological business person in charge, reporting to Xu Lei.
The original JD-Ecological Business Center- Omni-channel Ecology Department merged into the JD retail cloud system. Yu Yongli, the former head of the Y business department, was appointed as the head and reported to Yan Weipeng, the head of JD’s technology and data center and retail cloud.
Focusing on the platform business, JD.com continued its efforts from the marketing side. Open up the marketing department and the business promotion department, and set up the Jingdong retail-marketing and commercialization center, with Shao Jingping as the person in charge and reporting to Xu Lei. The above are just some of the recent adjustments, and the actual situation is far more than that.
According to Jiemian News, a person close to Xu Lei said that platform business is one of the focuses of JD retail in 2020, which coincides with the recent retail adjustments.
Another thing in common is that more reporting supervisors are directly transferred to JD Retail CEO Xu Lei, which means that the strategic position is significantly improved.
After adjusting the personnel of JD.com retail, JD.com released two more news: one is to integrate cloud and AI business from JD.com listed company to JD Digital, and the other is to change the CEO of JD Logistics.
Some industry analysts said that the transfer of cloud and AI businesses to JD Digital this time may dilute the financial attributes. Combined with the previous CEO change, JD Digital’s repeated actions or adjustments made for listing.
If the changes in the former are understandable, then the departure of the latter’s CEO is obviously intriguing, because the listing of JD Logistics can be said to be on the line. Looking at it this way, what Jingdong will release in logistics in 2021 may be more worth looking forward to.
At present, JD Retail, JD Digital, and JD Logistics are known as the troika driving JD’s performance growth, while JD Digital, JD Logistics, and JD Health are known as the three unicorns incubated by JD Group.
In addition to JD Health, JD Digital has already submitted a prospectus to prepare for listing, and JD Logistics will also split up for independent listing. Liu Qiangdong may welcome 4 listed companies. No one can guess what game Jingdong will play, but there are always some changes in many changes, and they are worth digging deeper.
The core business is bottlenecked, and JD, which is seeking for increment, looks like a "young" Amazon
No matter how complicated organizational structure adjustments are made, there will be a demand that is difficult to escape, hoping to find new increases at the performance level.
In the early stage of development, JD.com was recognized as the benchmark Amazon. At present, Amazon has grown into a global retail giant, while the recent JD.com has "growth troubles."
In the third quarter of this year, Jingdong's revenue growth rate was 29.2%. Although it has risen sharply from the historical low of 20.9% in the first quarter of last year, its self-operated electronic products and household appliances have fallen into a growth bottleneck for several quarters.
JD’s revenue from net services (including advertising, logistics and technical services) was 22.8 billion yuan, an increase of 42.7% year-on-year, which exceeded JD’s total revenue of 29.2% year-on-year growth. However, the high growth mainly comes from the income of logistics services, and the income from the advertising part only increased by 24% year-on-year.
Compared with Alibaba and Pinduoduo, JD has a significant gap in the indicator of active users. Ali ranked first with 760 million active users; while Pinduoduo completed its surpassing of JD, ranking second with 730 million; JD was only 440 million.
Therefore, JD needs a stronger rebound and growth potential. That's why looking for new additions has become one of the reasons for Jingdong to adjust its organizational structure. JD.com, which develops revenue from third-party platforms, advertising and logistics and drives the "troika", still has the shadow of Amazon.
Amazon, which started as an e-commerce company, continues to expand its business scope. In addition to cloud services, commissions and advertising have become a source of high-growth revenue for Amazon.
Amazon's third-party seller service revenue has gradually increased from US$11.962 billion in the second quarter of 2019 to US$20.436 billion in the third quarter of 2020, and the corresponding year-on-year growth rate has expanded from 25% to 53%. Amazon uses mature third-party platforms to explore new growth points from merchants.
As early as in the earnings analysis conference call in April 2018, Amazon's chief financial officer stated that advertising will be a continuous highlight, whether it is from a product perspective or a financial perspective.
At present, when more overseas users are shopping, their first reaction is to search on Amazon instead of Google. Based on such user preferences and attracting more merchants to settle in, Amazon can make a big fuss about the commercialization of the platform.
Looking back at JD.com, the advertising service revenue in the third quarter of this year was almost the same as the growth of the 3C category. For the development of business advertising value, JD’s performance actually has room for continued improvement.
It can be found that JD.com has upgraded its platform ecology department, and its positioning is to continue to serve third-party platforms. On this basis, the newly established marketing and commercialization center indicates that JD will continue to tap the value of platform merchants and explore platform commercialization.
But unlike Amazon, which is relatively mature, the Matthew effect of domestic e-commerce advertising has become more obvious, and JD’s position is not solid.
At present, the market share is concentrated on the three major e-commerce giants of Alibaba, Pinduoduo and JD. Alibaba has achieved 33.45% and 20% advertising revenue growth in Q2 and Q3 this year by taking advantage of live broadcasts. Pinduoduo has achieved corresponding gains. Year-on-year growth rates of 71% and 47.89%.
In addition, when consumers shop on JD.com, they will give priority to products with self-operated logos and ignore those other merchants on the platform. Therefore, compared with mature Amazon, JD.com still has a lot of competition and challenges in increasing its net service revenue.
Being both a seller, what does JD rely on to continue Amazon's retail technology growth story?
From the perspective of JD.com as a whole, JD.com has expanded into many areas from e-commerce, and they may all be expected to be independent in the future. Starting from an online bookstore, Amazon has gradually developed into a mature retail technology giant. Amazon can not only serve as a reference for JD in the platform business, but also its overall development logic.
First of all, in the field of logistics, Amazon and JD are both self-built logistics systems. When Amazon was making central warehouses, JD began to subdivide regional warehouses, central warehouses, and front-end warehouses. As a heavy asset, JD Logistics is one of the main reasons for JD’s early years of losses, and it is also JD’s core competitiveness.
In fact, Amazon has long been involved in the medical and health industry. Through the e-commerce business, Amazon has accumulated a large number of users and traffic resources in the early stage. In 2018, the acquisition of Pillpack took the first step in the medical and health field.
After successfully entering this field, Amazon launched Amazon Pharmacy online pharmacy, taking its second step into the medical and health industry. Introduce their own Prime members into the online pharmacy business, and rely on the self-built logistics system to provide them with drug mailing services.
Domestic Internet companies have entered the medical and health industry from medical e-commerce for several years. At present, JD Health achieved revenues of more than 10 billion last year. Recently, JD Health completed the spin-off and listing, which means that its development may be more mature.
Amazon’s play style is worth learning, but the domestic Internet medical model has not yet taken shape and is still in the early stages of development. Moreover, Alibaba Health and Ping An Good Doctor have both established Internet hospitals and opened up channels for medical institutions. The competitive situation faced by JD should not be underestimated.
Another piece of Amazon's business puzzle is cloud computing , which occupies more market share than Microsoft, Google, and IBM. In the first three quarters of this year, Amazon AWS achieved revenues of 10.2 billion, 10.8 billion and 11.6 billion US dollars. The CEO of AWS said this month that AWS's annualized revenue in the third quarter of this year reached 46 billion US dollars, an increase of 29% year-on-year, which is equivalent to an annual increase of 10 billion US dollars.
JD.com has continued the Amazon model in its business. It is not surprising that it has added cloud computing technology in the past few years. It's just that in its original architecture, cloud, IoT, and AI are in JD Zhilian Cloud, and the smart city business is under JD Digital. Therefore, on To B, JD.com is inferior to Amazon in terms of brand unification, and cannot give full play to the synergy effect.
With the integration of cloud and AI business with Mathematics, the problem of To B brand inconsistency has been improved. Ultimately, the competitiveness of the B-side business will be improved.
Now JD.com is no longer a platform that only sold goods back then, and its business map, which has been in the Internet industry for many years, has become more abundant. Although the ecological gap between Ali and Tencent is not small, it can also be seen that JD has already deployed in logistics, health, finance and other fields. These highly anticipated businesses will also take the burden of increasing JD's market value in the future.
This time before the end of the year, behind Jingdong’s business adjustments and executive changes, it may also be hiding its ambitions and goals in 2021. Can it take a new round of personnel adjustments to a higher level in 2021? Perhaps the performance is The best reason to use facts.
Source of the article: US Stock Research Institute, please indicate the copyright for reprinting.