JD's operating model and characteristics

1. Focus on user experience

JD's vision is to become the most trustworthy company in the world, and JD has always been zero-tolerance for counterfeit goods. When consumers have a deeper understanding of genuine goods, JD will fully demonstrate its value and opportunities will follow.

When determining whether there is demand at the front end, invest time and energy to communicate with users to capture user needs and user experience. When users have needs, make decisions by considering the interest structure and make good back-end layout.

JD believes that only when all cooperating suppliers make money and only when users who buy things on the platform get things at a fair price can it stand out from many competitors.

2. Focus on self-operated model

JD used to focus on the self-operated model. On the basis of self-operated, it gradually turned to the platform model, focusing mainly on non-standard categories, such as clothing, etc., attracting more brands and gradually integrating these brands with JD's logistics service system.

Main features

①Mode: Procurement and sales mode (merchants are responsible for supply and operation. JD.com purchases and sells to operate, and JD.com is responsible for delivery and distribution)

②Deposit: Same as JD.com POP store fees, depending on the category (just a guarantee to prevent merchants from violating regulations, please refer to the description in the previous settlement system overview)

③Gross profit: Determined on the premise of ensuring the merchant's profit, the gross profit margin is about 20%. Among them, the gross profit margin is: (retail price-supply price)/retail price

④Product pricing: Merchants only need to provide the supply price, which includes the product cost and merchant profit; the selling price is the supply price plus JD.com's gross profit, and the supply price must be reasonable.

⑤Distribution: Merchants need to arrange logistics to deliver the goods to one of the eight warehouses closest to the product location; JD.com is responsible for transshipment, and the cost is borne by the merchant, and a "Transshipment Fee Agreement" will be signed (transshipment means sub-warehouse, which is distributed to all JD.com warehouses, which may not be just the eight warehouses); JD.com will bear the storage fee and the cost of delivery to consumers.

⑥Inventory: For seasonal and shelf-life products, in the months before the season is about to end or expire, the purchasing and sales will arrange for merchants to participate in some activities that can both sell and promote the products, so as to minimize or even eliminate losses.

⑦Settlement of payment: After the merchant provides the invoice to JD.com, JD.com will pay the merchant, and the gross profit will be directly deducted from the payment.

Invoice: Special VAT invoice, 17 points. After the tax reform, it should be adjusted to 13 points.

⑧After-sales service: If the return is due to product quality problems, the merchant shall bear the loss, otherwise JD.com shall bear it.

3. Make logistics, financial logistics, and information flow the basis of operation

Logistics accounts for 70% of user experience. In JD.com's view, logistics is extremely important to user experience. JD.com will continue to implement the channel sinking strategy, increase its popularity in third- and fourth-tier cities, and speed up delivery.

The B2C logistics system did not exist in China before JD.com. There is an urgent need in the commercial society, so JD.com naturally seized the opportunity and began to innovate. JD.com emphasizes large-scale and large-volume procurement from suppliers, then transporting them to warehouses and finally to consumers. Goods are only moved once to minimize logistics costs.

4. Focus on partners and build an industrial chain

JD.com reduces the intermediate processes and can directly give cash to suppliers without the need for intermediate pallet dealers, which is conducive to the adoption of new systems and low-cost strategies.

JD.com passed the cooperation preparation period and negotiated with Tencent to finally reach a cooperation. After JD.com increased its traffic, it brought high growth to itself. At the same time, Tencent, as a shareholder, can not only support it, but also make long-term profits.