Richard Liu, the founder and former CEO of Chinese e-commerce giant JD.com, emphasized that low prices are the core competitiveness of the retail industry in an October 23 reply to Farris Xie, firm Vice President and President of its Home Appliances Division. Liu also condemned many JD.com executives anonymously, saying that “with the success of our 3C and home appliance business, many ‘brothers’ began to be arrogant and complacent,” according to an email reported by Chinese media outlet Tech Insight on November 9.
Although it is a business report email from Farris Fan, Richard Liu tagged all internal management posts of JD.com, reading, “Low prices are not only the core competitiveness of e-commerce, but also the foundation of all the eternal competitiveness of all retailers in the world. If we sum up the three core elements of customer experience in our retail business: price, quality and service, low price is ‘1,’ and quality and service are two ‘0s’. If we lose the advantage of low prices, then all other so-called competitive advantages will return to zero.”
Liu continued, “At present, our retail business management culture is gradually losing. With the success of our 3C & home appliance business, many brothers begin to be arrogant and complacent, thinking that they have mastered the pricing power and no longer pay attention to our low-price advantage. If we continue like this, the company will become the second Suning.com [which is on the brink of closure and rumored to be taken over] sooner or later!”
He also wrote in the email, “Your retail division should hold several training sessions on retail culture and business philosophy every year, and never forget that ‘low prices are the most important weapon for our success in the past and the only basic weapon in the future.'”
What followed was the adjustment of platform position and sales rules by JD.com. When the email was released, there were only 20 days before China’s annual Singles’ Day shopping festival, and various business departments of JD.com were making intensive preparations for the promotional period. In recent years, with the rise of livestream shopping channels, led by Austin Li and characterized by low prices, JD.com‘s price advantage has disappeared rapidly.
According to analysis by Tech Insight, in the past year to year and a half, JD.com has aimed at middle class and high-end users, while positioning itself as “featuring better service and higher prices.” However, lower consumption amid the pandemic has kept the low prices as the top weapon in the retail industry.
JD.com hopes to re-establish its image of “the lowest prices in the whole network” in China. It has been aimed at leading livestream shopping hosts such as Austin Li and Luo Yonghao. For example, for the three vivo smartphones on the live shopping channel of Luo Yonghao, JD.com will offer a 5% discount price. The top management of JD.com Retail Division requires employees to communicate with merchants and brands in advance about the pricing of goods in Austin Li’s live shopping channel, and requires them to give JD.com the same price policy.