It is not wrong to find new growth momentum for consumer orientation, but putting aside the technical discussion of traffic gameplay, deeper exploration - why should users continue to choose this platform or brand?

Post-epidemic and post-traffic era, the certainty "protective effect" of the supply chain has emerged.

Whale Business (ID: bizwhale) Original Author | Li Qingle

Growth has always been an unavoidable topic for corporate operations. And "Internet traffic dividend is no longer" has become a consensus in the industry. Therefore, "private domain management" has become a hot topic in the past two years.

It is not wrong to look for new growth momentum, but putting aside the technical discussion of traffic gameplay, deeper exploration - why should users continue to choose this platform or brand? This may be closer to the essence of business.

Take the Double 11 that just passed, most merchants and channel platforms are too difficult! Because of many uncertain factors, such as the epidemic, some places cannot ship temporarily, so the refund rate will naturally increase .

For this reason, the whale merchant happened to hear two voices: one was a consumer in a third-tier city. He reported that most of their logistics had been stopped during Double 11, and only JD and SF can still be delivered normally; the other was feedback from the founder of a new tonic food brand. He said that he did not expect that his new Double 11 promotion had the highest growth rate and the most worry-free delivery on the JD platform.

It can be seen that JD.com has already gained the dividends of the "supply chain" and achieved certainty and continuous growth, so it can be as stable as Mount Tai in the post-epidemic era and the post-traffic era. Behind this is that JD.com has continuously invested 100 billion yuan in the "supply chain" over the past 20 years, which has built industry competition barriers. The effect of

can be perceived from the latest released financial reports, and for the deep reason, we have to explore the "bottom logic" built by JD's supply chain.

High-quality growth is the "main theme"

On the evening of November 18, JD.com released its third quarter financial report for 2022, with net income in the quarter of 243.5 billion yuan, and increased by 11.4% year-on-year. If calculated by revenue category, its net service revenue was 46.5 billion yuan, a year-on-year increase of 42.2%, accounting for 19.1% of the net income. If divided by revenue department, JD.com's retail revenue was 211.9 billion yuan, an increase of 7% year-on-year, an increase from 4% in the previous quarter, which is a true portrayal of the entire consumption environment.

Looking at JD Group's profitability has also been greatly improved. The operating profit of in the third quarter of 2022 was RMB 9.9 billion, compared with RMB 4.6 billion in the same period in 2021. Part of this is the improvement of profit margin at the operating level. In the third quarter of 2022, JD.com's comprehensive gross profit margin was 14.9%, compared with 14.2% in the same period last year. In terms of segmentation, JD Group's core retail operating profit margin was 5.2%, an increase from 4.0% in the same period last year.

As we all know, JD.com's high proportion of self-operated business is its major feature, so retail efficiency is an important indicator that cannot be ignored. Even though the epidemic has repeated and logistics restrictions have led to many obstacles to the circulation of goods in many places, JD.com was able to maintain a inventory turnover day of about 31 days at the end of the third quarter of this year. With the scale of more than 10 million self-operated SKUs, it can still achieve efficiency far higher than traditional retail companies such as Gome and Suning .

consumer dimension, as of September 30, 2022, JD.com's active purchase users in the past 12 months was 588.3 million, an increase of 6.5% from 552.2 million in the same period in 2021, while the net increase of from in the second quarter of this year was more than 7.5 million. In addition, indicators such as JD DAU (average daily active users) , user shopping frequency and ARPU (average user contribution revenue) continue to maintain rapid growth. In terms of expenses during the period, JD.com's performance expenditure in the third quarter of 2022 was approximately RMB 14.4 billion, an increase of only 0.5% from RMB 14.3 billion in the same period last year. This part of the expenses are mainly spent on procurement, warehousing, distribution, customer service and payment processing expenses. 's fulfillment rate in the quarter was about 5.9%, a significant decrease from 6.5% in the same period last year. It can reduce the overall fulfillment rate without sacrificing the number of orders in the environment of repeated epidemics, which shows that JD's supply chain is in a continuous improvement of its fulfillment efficiency.

In addition, it is worth noting that JD.com also reduced its marketing expenses in the third quarter of 2022, about 7.6 billion yuan, compared with 7.8 billion yuan in the same period last year; the marketing expense rate also decreased from 3.6% in the same period last year to 3.1% in the third quarter of this year. shows that over the past year, JD.com's active user growth, revenue growth and operating efficiency improvements are not exchanged for spending money on marketing and traffic.

Therefore, 's inventory turnover rate from JD.com is stable in the high-efficiency value range, but the performance efficiency is improving and marketing investment is still decreasing. It can be judged that JD.com's cost reduction and efficiency increase has begun to show results and has entered the era of high-quality growth. This is generally due to JD.com's continuous construction of supply chain capabilities over the years.

summarized in the words of JD Group CEO Xu Lei : "JD continues to focus on improving the operating efficiency of various business sections, helping us to achieve healthy growth in the environment facing challenges in the industry. We are pleased to see millions of small and medium-sized enterprises, especially in rural industries, participate more deeply in JD's high-quality growth. These enterprises rely on JD to obtain efficient supply chain solutions and opportunities for sustainable growth."

dismantled the "bottom logic" of JD's supply chain

On the eve of 618, 2020, JD's strategic positioning has been upgraded from a "retail and retail infrastructure provider" to a "supply chain-based technology and service enterprise". It is because of accumulation that can make a thin comeback.

The well-known American management guru James Collins 30 years ago, through studying 18 benchmark companies, he came to a conclusion in the book " Foundations and Evergreen ": a far-sighted company is "making clocks, not creating time". Specifically, it is to constantly do constructive things and act on the creation of value points every day.

JD founder Liu Qiangdong also has a similar view: "Only by creating value can you get rewards", which is the basis of all business models. In this regard, he once proposed the "Ten Sections of Sugar Cane" theory. divides the value chain of the retail and consumer goods industries into ten links: creativity, design, R&D, manufacturing, pricing, marketing, transaction, warehousing, distribution, and after-sales service. The first 5 belong to brand owners, and the last 5 links belong to retailers.

And each section of "sugar cane" represents a certain profit (survival) space. The overall intensity of competition in the industry determines the length of "sugar cane". From this dimension, we can understand that JD continues to invest heavily in supply chain construction as JD.com wants to create new value points and self-controllability in the entire circulation of retail and consumer goods, and is not affected by the external distribution system.

Therefore, Jingshang believes that the construction of JD supply chain barriers did not start with JD's self-built logistics in 2007, but it is just an important landmark node and strategic core. simplifies the complexity, and we can understand the "underlying logic" of JD's supply chain from three aspects: quality, efficiency, and coordination.

quality, I believe everyone has heard that JD has stopped selling counterfeit goods since its first day of its establishment. The 3C digital and home appliance categories they started have high customer orders and heavy decision-making. The Internet was not developed at that time and the trust system was not perfect, so it has been controlled by offline Gome, Suning and other channels.

JD.com can use a strict supplier procurement and sales system at that time, uses a strict supplier procurement and sales system, directly reaching the brand original factory, downstream is close to user needs, and completes a counterattack online, and extends the standard product supply chain capabilities to non-standard fields. Combining technical capabilities in the dimensions of consumer trend insight, product life cycle, category attributes, etc., , covering all aspects of life, the number of SKUs has exceeded 100 million.

has rich product selection and good quality control of , which has long allowed JD.com to accumulate high net worth users in terms of authentic reputation, thus attracting tens of thousands of new and old brands to settle in, forming a virtuous cycle of .As of the third quarter of 2022, JD Retail has achieved year-on-year growth of more than 20% of the number of third-party merchants for seven consecutive quarters. More and more third-party merchants have chosen to open stores on JD.com, gaining efficient supply chain solutions and opportunities for sustainable growth.

At the same time, JD.com is also constantly penetrating life scenarios closer to consumers and integrating the "last mile" of the supply chain. For example, last year, Holdings , which completed Dada Group's , increased its efforts to retail JD.com in the same city, covering more than 87,000 physical stores; since this year, JD.com MALL, which has created a trendy shopping space, has opened in Kunming, Shijiazhuang and other places.

efficiency brings improvement in service experience and improves user repurchase rate . For example, recently, State Post Bureau issued an announcement on the results of the express service satisfaction survey and time limit and time-limit punctuality test in the third quarter of 2022. JD Express and other public satisfaction is high, and they continue to lead the industry to develop towards high-quality with high-quality services. The survey shows that in the third quarter of 2022, the public satisfaction score of user express services was 82.2 points, and rose by 2.4 points year-on-year compared with . Since the beginning of this year, JD Express has continuously improved the delivery service standards through internal refined management and has continued to increase the delivery safety, so that consumers can collect and send it with confidence.

It is worth noting that JD Logistics In the third quarter of 2022, external customer revenue reached 24.87 billion yuan, a year-on-year increase of 67.8%, and external revenue accounted for 69.5%, an increase of about 12% from 57.6% in the same period last year. Of course, part of this is the consolidation of the acquisition of Debang Logistics in the first half of this year. The layout of large-scale logistics distribution will further strengthen JD.com's supply chain performance efficiency in large-scale appliances, home furnishings, kitchens and bathrooms. In addition, JD Logistics has become the first logistics companies to access the "Single Depend" service of , Douyin e-commerce, providing door-to-door delivery services to Douyin users.

It is precisely because JD.com spared no expense to build its own logistics that it ensured the solidity of JD.com's supply guarantee system due to the repeated outbreak of the epidemic in Shanghai in the first half of this year. During the outbreak of the epidemic in Shanghai in the first half of this year, JD.com's support is a typical case. JD Logistics has never stopped its layout of logistics infrastructure. As of the third quarter of this year, JD Logistics operated more than 1,500 warehouses, including cloud warehouses, and the total area of operating warehouses exceeded 30 million square meters. In the recently announced S&P CSA rating, JD Logistics scores rank among the top among global transportation companies, and ESG results have been recognized by international authoritative institutions.

collaboration, the construction of JD's "integrated supply chain system" has allowed JD to "get out of virtual and real" to accelerate its penetration into the industrial belt and industrial chain . Take the just-lasting Double 11 as an example. JD.com practiced the "three network connection" and deeply integrated the goods network, warehouse network and cloud network, becoming one of the effective paths to combine the real economy with the digital economy . In terms of manufacturing, JD.com has opened up supply chain technology and joined hands with more than 2,000 brands to realize reverse customization cooperation in C2M, realizing "creating explosive products - helping physical enterprises to digitally upgrade - setting a benchmark for reducing costs and increasing efficiency in the industrial belt - promoting industrial quality and quality upgrading". At the same time, it continuously promotes digital and intelligent coordination of the supply chain, helping the manufacturing industry to comprehensively improve its operational level and achieve lean production and quality upgrading. In terms of agriculture, keeping up with the pace of rural revitalization, JD.com has built a positive cycle of "high-quality agricultural products-consumption upgrade-farmers' income increase", integrated "three network connection" supply chain system, and implemented three major measures of traceability, branding, and standardization, promoting enterprise circulation efficiency, feeding farmers to improve breeding standards, and promoting land improvement and production areas optimization. JD.com's 11.11 started well, with agricultural products covering more than 2,000 landmark industrial belts, and more than 120,000 national landmark product SKUs were launched, of which more than 20 landmark industrial belts had transaction volumes increased by more than 100% year-on-year.

technology connects the supply chain with the " flywheel effect "

In May 2020, Liu Qiangdong issued an internal letter to "Who is JD.com", stating that JD.com will "unswervingly transform into a technology-driven supply chain service company."On June 18, 2021, he sent another shareholder letter, saying that in the next ten years, JD will devote himself to building a new generation of infrastructure - JD Digital and Intelligent Social Supply Chain.

In April this year, Xu Lei took over as CEO of JD Group and worked hard to implement JD's "digital and intelligent supply chain" strategic route. is not stingy with JD's investment in technology research and development. In the first three quarters of this year, a total of RMB 12.527 billion in R&D expenses were invested.

Just look at the scale of infrastructure construction, is at At the end of the third quarter of this year, the asset scale of JD supply chain infrastructure reached 126.7 billion yuan, a year-on-year increase of 65%. On the eve of Double 11, the second phase of JD Logistics Asia No. 1 Xi'an Intelligent Industrial Park was officially put into operation, and the first full-process flexible production logistics park in the northwest region was built, and the new warehouse model of Beidou was applied. Since then, 95% of JD self-operated orders in Shaanxi Province can achieve same-day delivery or the next-day delivery.

and 618 during , Yiwu and Wenzhou Two "Asia No. 1" opened simultaneously, Zhejiang formed a "one main and three deputy" logistics network composed of Hangzhou as the main warehouse group, and three secondary warehouse groups in Ningbo , Yiwu and Wenzhou. So far, JD Logistics has 44 large-scale intelligent logistics parks in the country.

JD's supply chain layout can not only take into account the "downward" needs of local consumers' products, but also take into account the "upward" needs of local industrial belt supply chains. The power of technology is behind it, and technology changes are used to deal with different solutions for different scenarios and different needs of the supply chain.

, who once served as the chief strategy officer of JD Group, Liao Jianwen previously explained to the outside world that revolves around the capacity building of "commodity supply chain + logistics supply chain", originates from deep links, deep data, deep technology operations (blockchain, IOT, quantum technology, etc.) , deep intelligence. Therefore, it constitutes the "new flywheel" of JD growth.

uses JD Retail CEO O Xin Lijun’s words to interpret it. As a technology and service enterprise based on supply chain, JD.com continues to build supply chain infrastructure and solutions for “chain and network integration”:

“Cargo Network” refers to JD.com’s full-time, omnichannel, and all-scene commodity trading network, and is the “Three Networks” flowing commodity cells; “Cargo Network” refers to JD.com’s warehousing and distribution network covering the whole country and radiating the world, and is the solid facility trunk of “Three Networks”; “Cloud Network”, as the technical base for building “Cargo Network” and “Cargo Network”, refers to JD.com’s Cloud as the technology The digital and intelligent service network serving brands is the efficient technical nerve of the "Three Netcom".

In the article "Looking at the "Directive War" of Supply Chain from Yiwu", Whale Merchants gave their own understanding: supply chain logistics companies that integrate digital and real, represented by JD Logistics are creating an "open source" ecosystem, which is like Lego building blocks , and on its underlying logistics module, let merchants choose combinations that meet their own situations for long-term operation; it is also like a "sponge", with great depth and flexibility , while inclusive and absorbing more partners, it is also a buffer at the bottom of economic landing and industrial iteration.

Although " science and technology are the primary productivity ", there is a "strange" phenomenon in JD.com, that is, the overall number of JD.com employees has not decreased due to the iteration and upgrading of technology. On the contrary, in the past year, in the wave of layoffs of major Internet manufacturers, JD.com has seen more than 70,000 people in the past three months. As of September 30, 2022, JD.com's employees in the JD.com system The total number is nearly 500,000. Among them, after JD Logistics and Debang were combined, the salary and welfare expenditures for front-line employees reached 11.2 billion yuan in the third quarter of this year.

Supply chain management, warehousing, sorting and other links can be achieved through "black technology". However, when delivering goods or services to customers in the "last mile", people have "temperature" contact, which reflects the "human fireworks" atmosphere that promotes production and life in the development of supply chain technology. This may be another interpretation of technology and humanities.