'No way out': JD.com founder Richard Liu warns staff not to 'lie flat' as China's e-commerce incumbents fall behind PDD

JD.com founder and chairman Richard Liu Qiangdong has urged his staff to take more proactive actions to fend off competition and fix management problems or else there would be "no way out" for the e-commerce giant.

The Chinese billionaire entrepreneur made those comments in a a thread on JD.com's internal discussion board, where an employee listed out major challenges faced by the company, including inadequate support for third-party vendors and insufficient supply of low-price products on the platform.

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"So many issues have emerged, certainly because I mismanaged," Liu wrote. "I blame myself for it." He added that he would not "lie fat", although it would take time to make changes at a company that was "large, unwieldy and inefficient".

A JD.com advertisement in Beijing promoting the Singles Day shopping festival. Photo: Reuters alt=A JD.com advertisement in Beijing promoting the Singles Day shopping festival. Photo: Reuters>

Liu's remarks were first reported by Chinese media LatePost. A person familiar with the matter confirmed the veracity of the content to the Post.

Some analysts believe that JD.com is plagued by issues such as a relatively small user pool compared to its rivals, high operating costs owing to its positioning as a high-quality service provider, and a complicated organisational structure that hinders strategy implementation, according to Zhuang Shuai, founder and chief analyst at e-commerce consultancy Bailian.

Liu's rallying call comes weeks after Alibaba Group Holding's retired founder Jack Ma left a comment on the company's internal forum, praising rival Pinduoduo and calling on staff to embrace change. "I firmly believe that Alibaba will change and adapt," he wrote.

Both Alibaba and JD.com have taken a hit from China's unstable economic recovery, with consumers cutting back on discretionary spending.

This year's Singles' Day online shopping festival saw only a 2 per cent sales increase from last year, much slower than the double-digit growth in 2022, according to data compiled by market consultancy Syntun.

In the September quarter, JD.com and Alibaba posted revenue growth of 1.7 per cent and 9 per cent, respectively. In comparison, PDD Holdings, owner of Pinduoduo, nearly doubled its revenue, helped by the budget retail platform's low-price strategy and its fast-rising overseas platform Temu.

While revenue at Alibaba, owner of the South China Morning Post, was still about three times larger than that of PDD, investors betting on Pinduoduo's growth prospects have driven up the shares of its US-listed parent, whose market capitalisation surpassed that of Alibaba as of market close on Friday.

Workers sort out parcels at a distribution centre for JD.com in Beijing. Photo: AP Photo alt=Workers sort out parcels at a distribution centre for JD.com in Beijing. Photo: AP Photo>

JD.com's Liu said he trusted that the company would be able to alter its course.

"Any person or company will go through peaks and troughs on their way to greatness," he wrote.

Since late last year, Liu has been urging JD.com to cut product prices. The company, which had traditionally been conservative with taking on third-party vendors, has been courting smaller merchants to sell more affordable goods on its platform.

That strategy may eventually pose a conundrum for JD.com, as it tries to retain its premium reputation while catering to price-conscious shoppers, according to Li Chengdong, founder of market consultancy Dolphin.

"The measures JD.com has taken so far will not yield results in the short-term," he said.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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