JD.com
Careers at JD.com
Mission
JD.com is in the business of selling popular household items and electronic devices to Chinese consumers through its online retail platform. It tries to help consumers shop conveniently and save money on purchases of items that they use regularly. The company also operates a separate online marketplace that is dedicated to serving third-party vendors.
Business segments
JD.com operates in two main business segments:
- Online Retail: In this segment JD.com sells items directly to consumers.
- Online Marketplace: This segment of business is dedicated to the service of third-party vendors.
History
JD.com was founded by Chinese Internet entrepreneur Liu Qiangdong (Richard Liu) and the company has been around since 1998, though it has changed names several times over the years. At one point the company was known as Jingdong Century Trading Co., Ltd and it mostly dealt in selling magneto-optical.
Back in 2004, when JD.com was still known as Jingdong Century, it launched an online retail site called jdlaser.com. The launch of jdlaser.com saw the company expand into offering more diversified consumer products.
But about three years down the line, the company deemed it fit to rename its jdlaser.com retail site to 360buy.com. The transformation also came with a much wider range of consumer items being offered on the site.
Jingdong operated its online retail site as 360buy.com until 2013 when the company decided to rename itself to JD.com. The company has maintained its corporate headquarters in Beijing and now its operations cover more than 50 Chinese cities.
To expand online shopping space for Chinese consumers, JD.com has continued to add sections to its online retail site that allow consumers to buy international brands.
JD.com currently boasts more than 170 million users and the number is growing as the company expands to cover a wider variety of consumer products and also expands into more countries.
Industry awards and recognitions have also helped to fuel the growth of JD.com. At a time when online shopping had not taken strong roots among Chinese consumers, by the China E-Commerce Association gave JD.com a reputational boost by naming it the Most Trustworthy Company in 2008. JD.com has continued to build on that reputation.
The company has also bagged several awards over the years, including being named the Best Chinese Employer in 2011 by Fortune magazine. In the same year, China’s Ministry of Commerce named the company among the model e-commerce countries in the country. Prior to that, JD.com was featured featured in the list of Top 10 Growing and Innovative Chinese companies in the e-commerce space.
One of the interesting things about the history of JD.com is that the founder Qiangdong didn’t have a vision for e-commerce early on. His interest as a young man was to go into politics.
In 2013, Qiangdong’s net worth was cited to be $1.06 billion, which rose sharply to $6.1 billion in 2014 following JD.com’s IPO.
Business model of JD.com
Customer segment
JD.com serves two main customer segments:
- Direct consumers: The company renders an array of consumer products across more than 10 product categories directly through its online retail platform. Some of the consumer products categories offered are computers, home appliances and furniture and households goods. JD.com also created a joint venture marketplace called Yihaodian that is aimed at affluent consumers seeking high-quality imported goods.
- Merchants: JD.com serves third-party vendors by providing them a platform to engage consumers. The company also renders advertising and logistics services such as payments support to these vendors.
Value proposition
JD.com has grown to become China’s leading online retailer through its ability to simplify shopping experience for everyday consumer. Shoppers on JD.com can access a wide variety of consumer products as the company has continued to expand its offering, including through partnerships with international brands.
The company has also simplified checkout for its shoppers by offering them a variety of payment methods, including cash on delivery. The variety of payment options enable shoppers to close transactions quickly and this also encourages shoppers to buy more from JD.com.
JD.com also renders credit support to its shoppers. For instance, the company has teamed up with ZestFinance to give its customers access to microcredit. With that, it is encouraging the consumers to continue spending on its retail platform.
Channels
JD.com uses direct sales teams to recruit merchants to use its Online Marketplace. The company also uses traditional media and internet advertising to increase awareness about both its Online Retail platform and Online Marketplace for third-party vendors.
JD.com representatives also present at trade shows and industry conferences to pitch to customers, especially those who can use its platform to advertise and sell their products to Chinese consumers.
Customer relationship
JD.com employs web and mobile technology that simplifies discovery of products on its retail site and the marketplace. Among other things, the technology renders personalized product recommendations and a user-friendly interface.
Key activities
JD.com sells electronics, home appliances and general merchandise products such as books through its main online portal. These items sold through its main retail site are acquired from manufacturers and distributors and then offered at competitive consumer prices on the platform.
On the marketplace used by independent merchants and distributors, JD.com renders advertising and logistic services such as shipping and payments support.
Partners
Tencent is a major partner of JD.com as the two companies are working in concert to build a stronger force against their common rival Alibaba Group Holding. In 2014 Tencent announced that it was making a $214.7 million cash investment in JD.com to acquire a 15% stake in the company. Tencent also said that it was ceding operation of its e-commerce businesses Paipai and QQ Wangguo to JD.com. The transfers also included the minority stake in Yixun.
Wal-Mart China, eBay and finance services provider ZestFinance are some of the other JD.com partners.
- The collaboration between JD.com and ZestFinance is to render microloan services to Chinese consumers who have limited access to traditional credit options.
- eBay is one of the international partners using JD.com’s international marketplace called JD Worldwide.
- com and Wal-Mart reached a deal to jointly operate an online marketplace called Yihaodian that caters to affluent consumers.
Key resources
JD.com operates a network of 210 warehouses across China with total floor space of more than 4-million-quarter meters. The warehouse facilities are helping JD.com to hold more stock and diversify its retail offering. Additionally, they provide a great way for the company to improve order delivery speed.
Because of the large warehouse capacity, JD.com can serve many third-party vendors on its marketplace, thus increasing its opportunities to generate more revenue from the marketplace.
The company has about 108,985 full-time employees whose input in areas ranging from customer acquisition to inventory management keep the JD.com engine roaring.
Cost structure
Maintaining the massive payroll of more than 100,000 employees and a network of more than 210 warehouses are a huge financial burden on the shoulders of JD.com.
You see the burden when you realize that JD.com reported a 54% increase in cost of revenue to $24.2 billion in 2015, with leading cost drivers being direct sales activities and traffic acquisition to its marketplace platform. In the same year, the company said fulfillment expense, marketing expenses and technology expenses rose 73%, 93% and 88%, respectively.
Revenue streams
JD.com’s main source of revenue is the Online Retail business. The company also generates revenue through the advertising and logistic services it renders to third-party vendors on its marketplace. JD.com had about 100,000 third-party merchant accounts on its marketplace at the end of the first quarter of 2016.
JD.com generated net revenue of $28 billion in 2015, an increase of 58% over the previous year. In that year, company’s Marketplace business registered the highest percentage revenue increase at 110% compared to 55% of Online Retail business.
