Research report: re-understanding Jingdong

3) Build strategic cooperation in vertical fields based on the investment layout of main industries. In addition to its own business construction, JD has also actively invested in vertical leading companies after listing, leveraging partners to extend business tentacles.

For example, invest in Vipshop and Farfech to expand the operation capacity of women's categories such as clothing and luxury goods; Shares of Tuniu and e-car extended tourism, automobile and other travel service products; Merger and acquisition of Dada, investment in offline supermarkets (Yonghui, Bubugao, etc.) to develop O2O business.

4) Improve supporting services such as logistics and finance, and expand innovative businesses beyond e-commerce. After the listing, Jingdong began to build its own warehouses (previously mainly rented warehouses, as of 2019Q3, 23 of Jingdong's 29 urban distribution centers were built after the IPO), to improve the degree of logistics automation, reduce costs and increase efficiency.

In terms of finance, Jingdong has successively launched supply chain financial services for suppliers, launched white ribbon consumption staging, and bound merchants and consumers to use scenarios. In addition to consolidating the main business experience of e-commerce, logistics and finance have begun to provide social services, and have respectively established sub-groups for independent financing and development.

3. The adjustment and sorting is completed, and the quality growth starts again

Intensive adjustment and sorting, reunion of organizational combat effectiveness. After the slowdown in business growth since 2018 and the founder's "Mingzhou incident", Jingdong has been combing and adjusting in multiple aspects such as organization, personnel and business since the end of 2018. With the resignation of some senior executives in April 2019 as a sign, Jingdong's internal combing and adjustment has basically been completed.

1) Organizational structure adjustment: reorganize the business structure and reorganize the main business of the mall. Founder Mr. Liu Qiangdong is the Chairman and CEO of Jingdong Group, and directly manages Jingdong Retail (formerly Jingdong Mall), Jingdong Digital (formerly Jingdong Finance Upgrade), Jingdong Logistics, and Jingdong Health (newly established in May 2019) under Jingdong Group. Integrate the four business sub-groups of Jingdong Pharmacy, Yaojingcai, Jingdong Internet Hospital and other core products of the Group, and the Jingdong Cloud and AI business division (newly independent in December 2019, integrating the structure and responsibilities of the original Jingdong Cloud, artificial intelligence, and IoT three business divisions).

The core retail sub-group broke the original business group system and was reorganized into the large and middle Taiwan business structure. The heads of the front, middle and back office business departments report directly to Mr. Xu Lei, CEO of Jingdong Retail Group, among which: the front office department aims to establish a flexible, innovative and responsive mechanism around C-end and B-end customers.

Integrate and set up 5 business departments including platform operation, purchase, 7 frseh, New channel and Paipai Second-hand; The middle desk department aims to over-precipitate, iterate and componentize the output of common capabilities that can serve different scenarios in the front end and constantly adapt to the front end.

The middle Taiwan business group is adjusted according to the business model and business scenario, and three business groups are set up: 3C electronics and consumer goods retail, fashion home platform and life service, and three support departments: technology and data center, Mall user Experience Design department and Mall Marketing Department.

The backstage department aims to provide guarantee and professional support for the front desk, and set up three departments: CEO Office, Finance Department and Human resources Department of the mall.

2) Business line adjustment: fitness slimming, emphasizing quality growth. The Group's business lines are re-evaluated on the basis of "durability, profitability and sustainability", emphasizing "quality growth", and closing or adjusting and merging businesses that have no hope of turning around for a long time.

Typical examples: the merger of Jingdong fresh and 7 fresh business division, the opening of offline 7 fresh stores has slowed down significantly, the format has been re-planned, and the three formats strategy of seven fresh supermarkets (boutique supermarkets), seven fresh life (community fresh stores, the first store opened in December 2019) and seven Fan (for office white-collar workers, the first store opened in 2019.12) have been established.

Strategically led the investment in Love Recycling, and injected the original Paipai second-hand business into Love Recycling (the transaction is similar to 2016 Jingdong led the investment in Dada with cash + Jingdong Home business package).

Led the strategic investment in Five Star (46%), the offline electrical store business and Five Star strategic cooperation, jointly explore the offline experience store, sinking market and supply chain construction.