Alibaba, beware! Here comes the challenger JD!
JD.Com. Almost unknown in the West, this is the name of the second biggest e-commerce giant behind Alibaba. The next IPO in the US is already said to be a success.
How did a high tech shop become such an e-commerce leader?
Formerly known as 360buy, JD.com IPO in the US may well be a success. According to sources very close to the operation quoted by the Wall Street Journal, the company may have taken a look around and found potential investors. It foresee to raise 1.7 billion USD and be valued at 24.6 billion USD according to what was submitted to the Security and Exchange Commission (SEC)
Its main competitor, Alibaba has been observing this operation very closely since it is about to do the same at the New York Stock Exchange. The two companies don’t have the same way of doing it : Alibaba connects sellers with the masses on its plate form while JD.com is very similar to amazon : it sells directly to its customers goods he owns first hand
The involment of Tencent.
Owning warehouses is mandatory for this strategy, weighting heavily on its results : In 2013 the number two of the Chinese e-commerce had a 11billion dollars turnover and reported a net loss of 8 million dollars. Alibaba has nothing to worry about with its monopolistic 80% market share.
But let’s not underestimate JD.com here. Their top of the line delivery system makes it a worthy competitor to the current e-commerce emperor especially when JD is helped by Tencent. The conglomerate owns 15% of Jingdong shares as of march 2014. According to the report filed at the SEC the e-commerce website has generated 125.5 billion dollars in sales for over 323 million orders in 2013
JD has been founded by Liu Qiangdong in 1998 in Beijing. The entrepreneur only invested 12000 RMB in this project (about 1400 euros). At first it was simply an electronic shop on Zhongguancun, the area dedicated to new technology in Beijing. The company grew and in 2003 it had become a chain of 12 stores according to the Financial Times. In May 2003 an epidemy of bird flu spreads in the country: Liu Qiangdong employees cannot go to work and his customers stay at home fearing to be contaminated by the disease. That is when the entrepreneur had the idea to develop an e-commerce plate form.
A well-established management.
Fashion, cosmetics. Ever since 2003, it has progressively opened its online shop to other sectors. Clients were often complaining against JD.com because their parcels would often arrive very late. In 2007, Liu Qiangdong took the matter into his own hands and decided to deliver the goods bought by his customers himself.
The CEO manage his employees with an iron fist. He enforces a very strong corporate culture upon his newly hired employees. Every morning the director organize a meeting with the 200 company managers and review the mistakes made by the teams the previous day.
Google as a model?
Every year Jingdong recruits a hundred intern students right after graduation: “we require them not to have any past professional experiences so that would not be spoiled » firmly state the CEO to the Financial Times. These employees make their first steps into the working class at JD.com and often stay to continue their career : 80% of the middle management have never worked anywhere else. JD.com manages his teams just as some giant American tech companies such as google do. Indeed they too recruit their intern students and future employees right after graduation or even when they are still in the schools themselves.