A second kill that has been brewing for 16 years

June 18, 1998, an ordinary Thursday.

With 12000 yuan saved from two years of work, Liu Qiangdong rented a 4 square meter booth in Zhongguancun Haikai Market and started the business of "Jingdong Multimedia" with a second-hand computer and a second-hand tricycle.

It was a year of ups and downs. Liu Qiangdong's parents' boat running business was difficult to sustain because of an accident. With the reform of state-owned enterprises and the vigorous development of private economy, the IT industry with Zhongguancun as the core has become a trendsetter of the times in the vast China.

At that time, Liu Qiangdong was full of ambition to help his family pay their debts and make a breakthrough in Zhongguancun. But he probably would not have thought that, many years later, because of him and his Jingdong, 618 will become no ordinary day.

On June 18, 2019, 21 years later, the annual JD 618 Global Mid Year Shopping Festival will arrive as scheduled:

From 0:00, June 1, 2019 to 24:00, June 18, 2019, the cumulative amount of orders placed reached 2015 billion yuan, covering 750 million global consumers; The number of orders handled by JD Logistics' smart warehouse increased by 99% year on year, and the proportion of orders for integrated warehouse and distribution services reached on the same day and the next day exceeded 91%; At the same time, consumer goods, shopping, fresh food, health services and other businesses have also achieved remarkable growth.

This 16 year old anniversary of JD stores witnessed the rise of JD and the "JD model". In the past 16 years, JD has experienced diversified business expansion from optical and magnetic products, to 3C products, and then to all categories. The impression of its insistence on not selling fake goods and fast logistics delivery has penetrated into the minds of consumers. Behind this is some hard work that is difficult for outsiders - upgrading of technical architecture, personnel changes in enterprises, warehousing and logistics revolution, and so on. These hard work finally brought JD's proud "user experience".

In his early years, it was not 618 of the National Shopping Festival. Liu Qiangdong would personally direct the promotional activities at the front line and even deliver goods in person. Xu Lei, who is now the rotating CEO of JD Retail Group, was in charge of marketing at that time, and when there was a need for enterprise sales, he also temporarily took the lead. Everything is in a hurry.

Today, in the face of an astronomical 618 traffic, JD has become as orderly as it is daily. There is no need to add servers temporarily, and there is no chaos in all business lines.

It is no exaggeration to say that every major decision and business change in JD's history will be reflected in the 618 birthday and festival. It is not just a promotion day for JD, but the best window for JD to present the company's appearance. It can be said that if you understand 618, you can also understand Jingdong.

2004-2009: 618 BC

According to Cao Peng, Vice President of Jingdong Digital Technology and General Manager of Jingdong Digital Technology Center, who knew Liu Qiangdong in 2002 and joined Jingdong in 2007, he probably bought fake goods in Zhongguancun from 2002 to 2003, and the only one who insisted on selling only genuine goods was Liu Qiangdong's counter.

"At that time, I found a forum called CDbest, in which Lao Liu organized some activities and did some group buying, such as sending some small packaged discs, and everyone would test them."

This may be the earliest promotion activity of JD, and also the prototype of 618.

In fact, it is a last resort. In 2003, with the SARS epidemic, offline customers declined sharply. The Yamaha recorder and other products mainly sold by JD were unsalable and short of stock. In 21 days, the company lost more than 8 million yuan. The company was on the verge of bankruptcy.

At that time, the staff of JD Multimedia began to work like a dead horse doctor, trying to post a promotion CD on the CDbest forum. The reputation of persisting in selling authentic products for the past five years has played a role. The CDbest moderator was once a customer of JD, and his message "JD is the only company he knows that does not sell fake CDs" brought JD the earliest online orders. Later, Liu Qiangdong decided to strike while the iron was hot and sell the recorder at a loss to earn only disc profits. He not only cleared the inventory, but also won repeat customers such as Cao Peng for himself.

There is no order system for selling goods on the forum, so employees of JD Multimedia were the first to take notes of the customer list, find the goods from the warehouse after receiving the customer's remittance, and then send them out through the postal system. This has obvious drawbacks, and there will be complaints from customers due to package loss from time to time.

If the customer is near Zhongguancun, the company driver or even Liu Qiangdong will drive the car to deliver the goods directly to the door.

It can be said that since then, Liu Qiangdong and many JD employees have realized that logistics has a huge impact on user experience. This also directly affected later, JD decided to build its own warehouse integrated logistics system, as well as the key decision to pay first-line couriers above the market average. At the most tense time of 618 express delivery over the years, JD has not experienced frequent warehouse explosion by other express companies, which is also the root cause.

By January 2004, JD Multimedia had launched its own website because it hoped to master its own customer sources and CDbest's commission requirements were getting higher and higher. It was the customers of JD at that time who made the website. Cao Peng, who formally joined JD a few years later, took a private job and made a crude www.jdbaser.com. There were more than 100 single products on the page, and each product page had only two or three product pictures, without touching descriptions or brand introductions.

To make matters worse, because JD had only one full-time technician at the earliest, website security was a problem. A hacker once left a message on the JD Multimedia website: "JD NMS is a big fool". After one deletion, the hacker killed another bullet and left a message: "Jingdong NMS is still a fool." Fortunately, the hacker was just playing and did not maliciously damage the database.

It was not until 2008 that Li University joined JD and became the vice president in charge of the R&D department, that JD finally ushered in the first upgrade of its technical architecture. In line with the decision made at that time to expand the full range of products, it designed a category hierarchy structure and the backstage capacity of 100000 orders - you know, JD sold 5000 orders a day. At that time, a dozen programmers who were closed in the development of villas in the suburbs of Beijing thought that 100000 yuan was a great number. They could not predict the wave of mobile Internet and e-commerce, and what kind of giant 618 would become.

Unlike the obvious "festival making" trace of the "Double 11", 618 is more like a sweet coincidence for Jingdong. This is Jingdong's birthday. Before 2010, it was also a relatively simple Jingdong store celebration. Cao Peng recalled that in the early years of 618, the preparations were very casual, like a second killing activity called "Dark Moon and Wind High", which was proposed by Liu Qiangdong in the morning and launched at night. Although the warehouse and technology are still very busy, they are still relaxed mentally.

But it happened that this was the day set for Jingdong: In the early days when we were mainly engaged in 3C products, 618 was a popular season for 3C products because it was just in time for the summer vacation. Later, 618 also happened to be the best time to sweep goods in the middle of the year and promote sales at the end of the year.

In 2009, with the completion of two rounds of financing, JD also began to reorganize its personnel structure and regularize its personnel successively. There is also no shortage of backbones dug from foreign enterprises such as Wal Mart and Amazon. Xu Lei, who was recommended by Xu Xin, founder of Today Capital, and once worked for Lenovo and Haoye Advertising, also came to JD at this time to become the third vice president in charge of marketing.

It can be said that Jingdong, which is not big at this time, has basically completed the construction of e-commerce model——

It focuses on self operated B2C and gradually opens up, expands to the whole category based on 3C category, and builds its own warehousing logistics. This way of opening up the upstream and downstream of the industrial chain, which was somewhat "all embracing", was questioned at that time, and even JD's shareholders had many objections. But at that time, Liu Qiangdong, relying on his majority voting rights, strongly insisted on it, making JD a different kind of B2C e-commerce at that time.

While the undercurrent is surging, 618 and Jingdong are waiting for the opportunity to prove themselves, as well as their own glory and dreams.

2010-2015: Glory and Dream

618 in this period began to grow savagely, which was also the period when most users began to understand and use JD. During this period, the order volume of 618 every year has almost been growing extremely steeply, from tens of thousands to hundreds of thousands, to millions, to tens of millions. In five or six years, 618 witnessed that JD has become the "top stream" of e-commerce in China.

This growth is due to JD's own efforts and many background factors of the times.

At that time, the "Double 11" had formed the habit of consumers to sweep the goods at the end of the year, and the atmosphere of business promotion during this period was also brought up. But a year is so long, we can't just point to the end of the year. The buyer wants to have benefits throughout the year, and the seller also wants to have the opportunity to clear the inventory in the middle of the year. They all looked at 618.

What is more well-known is that these five or six years are also the period when China's mobile Internet has entered a rapid development. The number of Internet users in China has climbed from more than 300 million to 700 million. From traffic to online shopping demand, it is a big explosion.

Therefore, the capital market became more active. In the period from 2007 to 2012, JD received nearly 10 billion yuan of investment. Therefore, although Liu Qiangdong admitted that JD did not earn money in this period as a whole, with the support of capital, JD can burn money and support business expansion and price war.

Before that, not only the "Double 11" of Taobao and Tmall had caused considerable pressure on JD, but also in different categories and models, JD had to face challenges from competitors such as Newegg, Dangdang and Amazon. This kind of competitive pressure also makes JD urgently need to launch 618 as its "fist" to hit its competitors heavily.

In February 2010, Liu Qiangdong said that we would not set foot in the online book market in five years. In May of that year, Shi Tao, who once worked at Amazon, joined JD and became the vice president in charge of book business. Although the book category plate is not large and the profit space is not much, Dangdang has gained momentum because of the wide audience of books. JD, which has decided to work on categories other than 3C, decided to start with books.

In just four months, Shi Tao and Gao Yan, also from Amazon, set up the stage of Jingdong Books and went online as scheduled in November of that year. After going online, JD showed its true nature as a "price butcher". By 618 the next year, it had been conducting large-scale price reduction activities on a variety of books, especially children's books (because it is the hometown of Dangdang), which had greatly reduced the threshold for new users to use JD while curbing Dangdang and Amazon. For a long time thereafter, The proportion of new users who purchase books for the first time is 30% - 40% or higher.

In addition to demonstrating JD's vigorous implementation of category expansion, this event also indicates that the personnel structure reform started in 2009 has been basically completed, more "local cannons" have been replaced by "foreign guns", and gradually demonstrates the status of a mature enterprise. Liu Qiangdong no longer needs to care about every link in every detail. By 618 in 2013, Liu Qiangdong was relieved to give up his life to his brothers and go to the United States to study without intervention. Xu Lei also returned this year to take charge of marketing. If JD was full of grass before 2010, then after that, it has become a large enterprise with complete organizational system.

And 618 has also become mature with Jingdong. It has become the best stage for Jingdong to show its muscles every year, and the 618 we know now. From then on, the "Jingdong Model", which originated from the local offline and also integrated overseas thoughts, has become the leader of China's B2C e-commerce, and has remained so far.

618 also became the only shopping festival that could actually compete with the Double Eleven Festival in the rush of e-commerce festivals that year.

During this period, JD's advantages in user experience were concentrated. In addition to the mid year time and the full range of products giving users more choices, the simple and difficult impression of "no fake" and "fast delivery" began to take root in users' hearts. Today, many users want to be on the safe side, or want to get it tomorrow, they will prefer JD to buy it.

In addition, the POP platform was launched, allowing JD to gradually open up and become peaceful in addition to its strong development of self support. 618 was also the first to involve external businesses. The earliest membership system was also launched in this period, and JD began to try to provide users with differentiated and selective services of different types.

On the other hand, with Xu Lei's return, JD has also shown its creative side. With the help of social media, JD is the first company to use jokes on Weibo to play viral marketing. It not only attracted huge traffic, but also played a huge role in building JD's reputation and image among young people at that time.

With the expansion of categories, such as the books mentioned above, Instead, it forced the warehouse picking system, which used to serve 3C products, to be upgraded greatly, and opened a new warehouse. Soon, JD's SKUs rose from tens of thousands to millions. Later, 618 ushered in the peak, and the strength of this system also emerged. JD's warehousing and logistics supply chain has always been regarded as the conscience of the operating community.

But not every system is so lucky. In terms of technical architecture, the upgrade that I felt was sufficient in 2008 was still out of order. Shang Xin, senior director of research and development of JD retail technology and data center, recalled that during the period from 2011 to 2012, it was dark for JD technicians, especially at promotional nodes such as 618, because the system coupling was too high and the traffic was large, the entire system was easy to collapse: "Even three or four times the server was useless."

In the most desperate time, the technical director could only stay in the office and give orders only to "add machines". Shang Xin and his colleagues felt that they would be fired, so they had to work hard to repair it.

A classic joke about Liu Qiangdong also happened at this time. After the system crashed, Liu Qiangdong asked Li University in charge of the front end of IT and Jiang Haidong, the vice president in charge of the back end of IT, to come to the office. There were two cups of tea and two knives on the desk for them to choose. At that time, Li University was just on a business trip and escaped a disaster. Later, he "pleaded guilty".

At that time, JD's technical weakness reduced its proud user experience, and the work of various departments would also be affected, which also made JD's technical personnel feel miserable. After 2012, JD immediately upgraded its architecture and re planned its platform based strategy. Soon, technology will be gradually supplemented.

2016 present: All the past is prologue

In the past two years, the background of the era faced by JD and 618 has changed again.

As the growth of the entire Internet slows down, all e-commerce platforms have changed from the era of barbaric growth to a stage of refined operation. In this stage, how to transform advanced productivity such as big data, cloud computing and artificial intelligence into good and diversified services and provide better user experience has become the core proposition of JD.

On the other hand, after the 618 Shopping Festival has become the "annual classic" in the minds of consumers, the traffic volume is still rising year by year, but it has lost its previous enthusiasm in public opinion. Therefore, JD has also begun to think about where users' new pain points are at the front end and how to retain users.

In 2014, Tencent announced that it had invested 215 million dollars in JD, acquiring 15% of the shares before IPO.

In the following years, JD played an increasingly important role in the ecology of WeChat. This also means that the scene of people shopping on JD is changing, The traditional e-commerce model of "people looking for goods" is gradually disappearing. How to get closer to the social scene and achieve "goods looking for people" has become a common lesson for JD and the entire Chinese e-commerce industry.

Xu Lei, who has personally made 618 bigger and stronger, is now the rotating CEO. He released Embrace Change and Win the Future on the occasion of 618 this year, reviewed the process of upgrading JD Mall to JD Retail Group, as well as the current mission and challenges of JD, and reorganized the business, organizational structure and cultural construction.

He quoted 618's proud achievements so far: this year 618 has become the largest 618 invested by JD and its partners - tens of millions of people have joined forces, millions of offline stores have participated, and marketing activities have covered 750 million consumers. More than 220000 businesses have won the trust of more than 300 million individuals and family users with hundreds of millions of high-quality goods and services in JD's ecology. During the whole 618 period, JD directly led 220000 online businesses, millions of offline stores, and more than 5 million logistics distribution and crowdsourcing service personnel across the country to participate in it.

But it also emphasizes that "all the past is the prologue".

In the past, for JD, user experience was a service problem, logistics and warehousing was a supply chain problem, and technical architecture was a backstage support problem. They had some similarities, but relatively speaking, three groups of people worked independently to fill their own holes, but could not form a joint force.

This "chimney" state is also reflected in each business line. Shang Xin said in an interview that many of JD's businesses were vertical in the past. He made his own business logic and transaction process. In this way, the vertical business is very painful, and different business lines cannot form a joint force.

This is why Xu Lei's open letter, which means "integration" between the lines, wrote:

In terms of business strategy, we will comply with the changes in industry development trend, consumption demand and self positioning, implement a comprehensive opening strategy, and work together with partners to create omni channel business in different scenarios such as social networking, offline and community, enterprise applications, so as to build a win-win retail ecosystem.

In terms of organizational structure, we have changed from vertical integration to building block front, middle and back offices. While focusing on building large and medium-sized platforms including supply chain, technology, marketing, customer service, and basic platform business, the organization is also accelerating its flattening to make its operation more efficient.

In terms of cultural construction, under the leadership of President Liu and through many in-depth discussions, JD's values have been officially upgraded to "customer first, integrity, cooperation, gratitude, hard work and responsibility". With unified logic and belief, we have a unified pace and goal.

In translation, the front-end business should be open, and flexible development should be carried out for complex scenarios. This requires a building block, which can be freely customized technical middle platform as a guarantee to liberate the front and rear ends. At the same time, in spirit, we should adhere to the values of JD, so that everyone can be united.

After more than ten years of "Jingdong Mode" like a wild horse, Jingdong needs to slow down, change from flash warfare to positional warfare, reorganize the scattered and advancing combat effectiveness, reorganize into precise, stable and powerful chariots, and advance in an orderly manner. The labels on JD in the past: B2C, self support, value chain integration... Now it has entered the blood of JD, and rarely mentioned. That's an old story.

We can see that JD has started some things in its vision——

For example, the shopping group is integrating self operated and POP businesses, and using the huge social network of WeChat to provide diversified services. Behind this, businesses such as shopping malls no longer need to develop their own processes like the previous vertical businesses. Instead, they can call the technical middle office function launched this year to achieve in-depth customization of the shopping process. At the back end, all systems such as warehousing and distribution system, finance system and HR system have also been considered comprehensively and become building blocks, which are combined orderly and grow into a larger JD.

From manufacturing to modern agriculture, JD is deeply integrating into the industrial ecosystem with supply chain, logistics, technology and finance, helping supply side reform, and helping traditional enterprises explore more effective transformation and upgrading. Moving from the retail sector to the "four-dimensional space" represented by the manufacturing industry also reflects the distinctive path of Jingdong's strategic upgrading.

After 21 years and 16 years in 618, Jingdong's technology is no longer the weakest link, and its wings are gradually full. Liu Qiangdong once said in 2017:

"The e-commerce model debate has ended... In the future, JD will only have three things: technology! Technology! Technology!"

Now, it is said and done.

Epilogue

Today, the "festival making" craze of businesses, which used to be so popular on social media, has disappeared.

The shopping festival has only two peaks at the end of the year: Double 11 and 618. They also gradually changed from a new thing to a traditional festival similar to Black Friday. In the past two days, the exclusiveness has become less and less. Just like Alibaba will also do 618 and JD will also do Double 11, the business "choose one from the other" has been so tense that now it seems to be just a joke.

However, 618 is different to JD and Alibaba in the end. If "Double 11" is just a card of Ali, then 618 is JD itself. It is not only the birthday of JD, but also the starting point of JD's glory. It has brought JD the greatest attention and traffic, which has directly forced JD to make continuous progress from category, supply chain to technology, and has also witnessed the replacement of several generations of JD people.

The emergence of 618 has also directly changed the territory of China's e-commerce. With the expansion of this festival and the rise of JD, they have defeated Newegg in the 3C category, ambushed Dangdang and Amazon in the course of category expansion, and now open platform, finance, and offline business are also competing with Ali. Without 618, the shopping habits of hundreds of millions of people would be different.

At the same time, 618 has also selected the strongest team for JD. Whether they are executives, customer service, or couriers, only after experiencing the test of 618 can they be regarded as real JD people, and can they have the cohesive force and unified values from top to bottom. This is the precious and unshakable value brought by 618.