CNBC AI News – June 18th – In a rare and candid public address, JD.com Founder and Chairman Liu Qiangdong shed light on the e-commerce giant’s strategic rationale for venturing into the food delivery and travel sectors.
Liu, in his remarks, positioned JD.com firmly within the realm of supply chain management, highlighting a business philosophy that shuns broad diversification. “Throughout my career, and indeed for the entire JD.com Group, we have remained focused on supply chain development. We are not a so-called diversified company. While we oversee numerous business units, all of them are ultimately geared towards supporting our supply chain, including the food delivery service we are currently operating,” he explained.
Specifically, Liu clarified that the core objective of the food delivery initiative is to construct and enhance the fresh produce supply chain. “While the public may perceive this as a direct competition with Meituan [led by Wang Xing], the underlying objective is to leverage our supply chain capabilities, which exist behind the scenes of consumer-facing services.” He even stated that the front-end business for food delivery could operate perpetually at a loss, with the emphasis instead on generating profitability through the underlying supply chain.
Furthermore, Liu reflected on recent performance, acknowledging some setbacks. “Historically, JD.com has launched a new business model every three years; however, in the last five years, we’ve introduced nothing significantly new.” He characterized this period as a period of stagnation and decline, “a five-year period with a lack of innovation, growth, and progress. It has been, without a doubt, the least distinguished and least value-added period in my entrepreneurial history.” Looking ahead, he announced the anticipated launch of a new innovation project each year, with six in the pipeline, including a stablecoin initiative.
Reinforcing JD.com’s commitment to a fair distribution of value, Liu reiterated the “35% profit” principle, which calls for retailers (JD.com) to take only a third (approximately 35%) of the profit margin, allowing the remaining two-thirds to be allocated to brand partners, thus enabling their sustainable growth.
Liu emphasized the company’s fundamental strengths, providing critical data points to underscore JD.com’s resilience: “We operate a network of over 1,600 logistics facilities across mainland China, managing over 10 million self-operated product SKUs, with an inventory turnover rate of just 30 to 50 days.” He continued, “For anyone with experience in retail, those numbers speak volumes. These are our primary competitive advantages. JD.com’s success has been built on cost efficiency, operational effectiveness, and customer experience.”
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