By YU Hao
Hot on the heels of a generational shift at Alibaba, JD Retail is set to overhaul its business structure according to local media outlet 36Kr Wednesday.
Sliced and diced
Current group leaders are to be repackaged and reassigned as unit leaders. Groups will be split into sales and procurement units based on product categories. After the reorganization, there will be a maximum of three steps in the chain of command from unit leader to sales and procurement staff. Unit leaders will report to CEO XIN Lijun.
The new set-up mimics the Big Boss (BB) mechanism that has proved so successful at JD Logistics. The logistics group discarded its model of seven major regions and instead, each province now functions as an independent unit. A provincial leader has a lot of autonomy and a role like that of a CEO, with autonomy in decision-making, operations, personnel and other matters.
Hiring and firing
In early 2019, JD.com adopted the BB model to decentralize power and enable frontline teams to make independent decisions. The biggest day-to-day change in operations is in hiring and firing. Leaders in each province can determine their own recruitment strategies. Bosses can hire whoever they want, the work with the results of their own decisions.
The various sales and procurement units will also work like provinces. Each will have greater decision-making powers and control of appointments and dismissals. Customer service and quality control teams will be disbanded and reformed within the new units. Each unit will also be responsible for its own profits and losses. Strategy departments in each unit will coordinate performance indicators.
At last year's JD Retail awards, group CEO XU Lei emphasized the importance of separating sales and procurement. Purchasing is to be done by professional buyers based on demand, while sales staff are responsible for front-end traffic and resource allocation.
Pinduoduo is catching up
All this tinkering with the sales and procurement system is a sign of the increased pressure faced by JD Retail. Since the end of last year, the founder of JD.com Richard Liu has emphasized a return to business fundamentals, focusing on customer approval and low prices.
JD's full-year GMV is expected to increase by 5.6 percent year on year in 2022 to about 3.3 trillion yuan. Pinduoduo's GMV is expected to exceed 3 trillion yuan in 2022, and the gap between the two is narrowing.
JD's commodity revenue in the fourth quarter of 2022 increased by only 1.2 percent compared to the same period in 2021, and traditionally strong categories are facing pressure, with electrical categories seeing revenue growth of only 0.5 percent.
