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Share Prices Are Rising. "Jingdong Is Back!"

2020/5/20 8:51:00 0

Technology Jingdong

"Jingdong is back!" At 7 o'clock in the morning of May 16th, even though it was a rare Saturday, an early Jingdong retailer could hardly conceal his excitement and even caught two shots of the stock price.

After the latest quarterly report was released the night before, Jingdong shares opened higher in May 15th, closing at $50.85 / share, up 3.86%, and the market value reached $74 billion 680 million. This figure has exceeded the high of 50.6 US dollars in January 29, 2018.

Share prices continue to rise. In May 18th, Jingdong continued to open high, and it jumped to $52.56 in 5 minutes, or 3.36%. At the close, Jingdong shares rose 9.2% to 55.53 dollars / share, a record high, and the market value also exceeded 80 billion dollars.

Far exceeding market expectations is the biggest feature of Jingdong's quarterly report. Jingdong's latest report shows that as of March 31, 2020, Jingdong's net revenue in the first quarter was 146 billion 200 million yuan (US $20 billion 600 million), an increase of 20.7% over the previous year, far exceeding the expected growth rate of 13% in the market. The net profit attributable to ordinary shareholders of Jingdong was RMB 1 billion 100 million yuan (about 200 million US dollars), far exceeding the market expected loss of 110 million yuan.

On the face of it, Jingdong's brightest earnings report is the result of efforts made by a series of business departments such as retail and logistics. However, after careful investigation, technology is transforming Jingdong in a subtle way. It is also an important strategy that the Jingdong is cautiously treating now.

    "In the past two years, the top decision-makers of the Jingdong, no matter what strategic discussions are going on, whether they are discussing the vision, culture, mission or position of the company, every technology is an essential option," Zhou Bowen, chairman of the Jingdong group technical committee and President of cloud computing, told the twenty-first Century business reporter. "Technology has become the most important gene of Jingdong. One of them. "

From the beginning of the curtain to the formal announcement of the overall layout, Jingdong's technological transformation has been accelerating. In less than three years, Jingdong's transformation has allowed Jingdong to return to the growth cycle. So how does technology change Jingdong? What future will it lead Jingdong to?

Jingdong's technology gene

Since 2017, Jingdong has been trying to get rid of the hat of simple retail business and keep up with the technology companies.

It is not difficult to understand the reason for Jingdong's move. Amazon, which also comes from an e-commerce platform and built its own logistics, has grown into a super giant with a market capitalization of $1 trillion and 210 billion, with a P / E ratio of 115 times. By comparison, Jingdong's latest market value is US $81 billion 200 million, and the P / E ratio is 46 times.

However, in the view of Jingdong group chief strategy officer Liao Jianwen, Jingdong technology benchmarking is "neither Amazon nor Amazon".

When Amazon is still doing the central warehouse, Jingdong has divided the warehouse allocation system into regional warehouses, central warehouses, front-end warehouses and front-end stations, forming a warehouse system with mesh structure. When Amazon bought the whole food supermarket to enter the fresh market in 2017, Jingdong has already led WAL-MART to invest in Yonghui supermarket, and has developed Jingdong to the home business. "Actually, we are already in front of them." Liao Jianwen thinks.

In spite of the warehousing system and diversification of business, Jingdong is in the forefront of the world in terms of technological capabilities. On the other hand, the two tier market is willing to pay for the high valuation of Amazon, largely due to the prospect of its AWS cloud business. According to Amazon's latest financial report, AWS has contributed more than 12% of its revenue and has maintained a growth rate of more than 20% for 13 consecutive quarters.

Jingdong Zhi Lian cloud temporarily occupies the role of the pursuer. However, Liao Jianwen is confident of his development. Confidence comes from the judgement of the industry and the Jingdong itself.

According to the latest Gartner data, the global cloud computing IaaS market in 2019 increased by 37.3% over the same period, and the total market size was 44 billion 500 million US dollars. In Liao Jianwen's view, cloud computing can become the infrastructure to change the industrial supply chain in the next ten years. The current market size is still in the "infant stage".

At the same time, Jingdong has more industrial attributes than any cloud computing company in China. "Why can Amazon do the cloud, or even cloud computing, leaving behind the classic technology companies like Google and Microsoft? Because it has scenes, businesses, retail, finance and other To B scenes. " Liao Jianwen pointed out that "this is why Jingdong will unswervingly develop the cloud business."

Not only cloud computing, Jingdong's "technological ambition" has also spread in various fields. In an interview with the twenty-first Century economic report reporter, Zhou Bowen combed Jingdong technology into ABCDE strategy. Among them, A refers to Artificial Intelligence (Artificial Intelligence), B refers to Big Data (big data), C is Cloud (Cloud Computing), D refers to Devices (IoT), and D is a (frontier exploration).

      In Zhou Bo Wen's view, if the whole technology is a person, AI is the brain, IoT is responsible for the perception and acquisition function of the nerve end and the execution of the signal. The cloud is the trunk, muscle and blood vessels of the body, and it runs data, big data is oxygen, E represents a person's good heart, pulling people constantly learning, continuous progress, technology is also the case, so we We must make cutting-edge technology exploration and constantly promote technological iteration and progress. Jingdong combines AI, cloud, IoT and big data together to form stronger, more vigorous and competitive entities.

"Our core is to create value, create value for different types of customers, and also consider what the future trend of technology is." Zhou Bai Wen interprets the underlying logic of Jingdong's technology investment frontier.

From retail to supply chain

Long term technological precipitation has accumulated the technological genes of Jingdong. So what do Jingdong want to do with their technology?

Until November 2019, Jingdong positioned itself as a "retail based technology service company". However, when the clock moved to 2020, the key word "retail" in the positioning has quietly transformed into "supply chain".

It seems that it is just writing words, but the connotation behind it is enlarged. "Nowadays, the granularity of data is becoming more and more finer. In the past, we talked about a group of people, a group of goods, and now we talk about a person, a single product, a SKU." Liao Jianwen pointed out to the twenty-first Century economic report reporter that this change means that the supply chain can be restructured based on today's digital technology means, thus matching the spare resources in the value chain and forming the synergy of the value network.

Using new technology to restructure supply chain and form value network is to reconstruct traditional industries. In popular words, this caters to the industrial Internet. Unlike other technology companies that cut themselves into the Internet from the consumer Internet, Jingdong has been running for years in this field. Since 2004, after more than ten years, Jingdong has built online retail empire with full category, full channel, business covering retail, logistics and consumer finance.

"Jingdong is not just an electric business enterprise from the beginning, in the past ten years, we have done the industrial Internet in the retail industry." Liao Jianwen believes that when we rely on emerging technologies to restructure industries today, it is not only front-end, but also the reconstruction of the entire industry supply chain. "The logic of Jingdong is very simple, that is, based on the precipitation of the industrial capability of the retail sector, the ability to reconstruct the value chain of other industries is based on these precipitation capabilities."

Liao Jianwen gave an explanation of the T Theory: the upper end of the T word is experience, cost and efficiency, and they are the first nature of the industry. The reason why the experience, cost and efficiency are dragged to the top level from the iceberg is the transformation process of Jingdong from retailer to technology service provider.

"As a retailer, Jingdong's customers are mainly C consumers, and as an infrastructure technology service, Jingdong has to serve a large number of B clients. The cost efficiency is their most concern, and user experience is no longer a simple product, price and service."

Experience, cost and efficiency are technologies. In fact, the change of technology to the upper level has been verified in Jingdong. Continuous technological R & D investment and meticulous management have promoted the continuous improvement of Jingdong's operational efficiency.

According to the financial report, Jingdong retail business profit margin reached 2.5% in 2019, and the performance fee rate further dropped to 6.4%, down 0.5 percentage points from 2018. In the first quarter of 2020, when the new crown overlay the traditional off-season, Jingdong's retail business profit margin reached 3.2%, compared to 2.7% in the same period last year.

"Since January 2017, Jingdong has begun to take technology as the two direction." Liao Jianwen interpreted Jingdong's internal technology reengineering, "first, technology itself as a source of sustained competitive advantage, to promote changes in the whole industry. At the same time, we hope that based on the technical capability of the core plate, we will gradually move towards the process of component, product, platform and ecology."

"Jingdong is not only a Internet Co, but also a company that is most thoroughly transformed by the Internet." Zhou Bowen also pointed out to reporters. And deep ploughing supply chain for many years is also the characteristic of Jingdong's externalization of digital transformation.

"Jingdong initially insisted on building its own chain of intelligent logistics. The long chain touches the consumer as well as the threads of production, manufacturing, design, brand and warehousing. This is difficult for other companies to catch up with. Zhou Bo Wen said that Jingdong technology's opening to the outside world has its natural genetic advantage.

Technical chess

Jingdong has "technological ambition" and also smashed real gold and silver.

In 2019, Jingdong listed and unlisted companies invested 17 billion 900 million yuan in research and development. In the first quarter of 2020, Jingdong's R & D expenditure was RMB 3 billion 900 million yuan (US $600 million), compared with RMB 3 billion 700 million yuan in the same period last year.

But frankly, there are certain barriers between Jingdong's technology system, technology and business. Jingdong is located at the Jingdong headquarters of Jingdong, which is located in the National Conference Center. It includes cloud computing, AI, IoT, intelligent management and efficiency platform. What was clearly felt in the past was that although Jingdong's different technology departments were "camping together" in the same place, they tended to grow on their own and tended to act independently when faced with customers.

In the theory of T, the lower level of technology is organization. "In the past, Jingdong's technology solutions were scattered in different departments, and at the organizational level, they were faced with how to cooperate to form a systematic solution." Liao Jianwen said frankly. Therefore, in the face of a customer, how to integrate logistics, cloud, finance, procurement and other flexible combination into an integrated mode, Jingdong is exploring.

One of the changes in the level of Technology Organization took place in December last year. Jingdong reorganized cloud computing, AI and IoT business, and set up the cloud and AI division. Soon after that, Jingdong set up a group technical committee. In March of this year, Jingdong cloud and AI Business Department officially opened the cloud brand of Jingdong Zhi Lian, and Zhou Bowen was the president.

According to Zhou Bowen, today, in the process of the evolution of Jingdong, such as retail, logistics and many other sub group businesses, Jingdong's adjustment around technology is to build the T-PaaS (Technology PaaS, technology platform, or service) that the whole group can build and create together. It belongs to the core of Jingdong technology.

The establishment of Jingdong group's technical committee is just around this idea. It also means that Jingdong has a more systematic organizational structure.

Statistics show that the Jingdong Technical Committee consists of a decision-making committee and an executive committee. Zhou Bo Wen as chairman, executive vice chairman of Yan Weipeng and Cao Pengren, as executive member of Jian Qiang and Li Dehao, constituted a technical decision Committee and had the right to vote; the Executive Committee was composed of the group system and BGBU technology VP and T12 (or above) technical experts or senior technical business leaders.

"We have done a lot of work in terms of technology itself, technology products and services, technology infrastructure and data sharing value at the whole group level," Zhou Bowen explained to the twenty-first Century economic reporter. "We have formed a complete strategy around the whole group technology, and now we are building a joint venture."

For example, at present, there are 17 permanent working groups under the management of the group technical committee. Each group consists of top BGBU architects, excellent programmers and scientists. The working group is divided into big data, artificial intelligence, Internet of things, block chain, security, database, middleware, communication suite, mobile PaaS component and so on.

"T-PaaS breaks the organizational boundaries and takes Best-of-breed as the principle. Each working group is based on the best core technology in Jingdong, and builds a group of unified technology platforms and bases in the way of CO building and co creation, and builds and creates and shares together on the basis of the future development trend." Zhou Bowen said, in this way, technology promotes communication between different departments and technicians. On the other hand, it also reduces the prevalence of "chimneys" in large companies, reduces the phenomenon of "duplication of wheels" and effectively supports different B-PaaS (business platform as a service).

At the same time, the technical committee has systematically organized all the technologies, products and services of the group so as to clarify which technologies, products, solutions and services can exist independently and externally. This will also lay a good foundation for the coordination between the following technologies and business departments.

The Jingdong recently launched the new Jingdong kinetic energy plan is a practice. The first service of the program includes three major solutions, namely intelligent middle stage, intelligent collaborative management and intelligent procurement. It is jointly launched by Jingdong cloud computing and Jingdong business department.

"This plan will be independent of Jingdong's business, and will be pushed to the market through the strong solution of Jingdong's scenario, through the powerful customers of the business department." Zhou Bowen said.

The group technical committee also unified the internal computing infrastructure (servers, networks, storage, etc.). "How much resources does the technology committee decide to invest in different infrastructures, and the implementation and service of specific infrastructures are responsible for Jingdong's cloud." Zhou Bowen explained. This means that Jingdong cloud is the base of Jingdong group's technical services, and the group's support and location for Chi Lian cloud is also very clear.

In addition, the technical committee is responsible for promoting and opening up the data sharing of the group. By means of technology, data can be moved between business departments, resulting in greater value.

Driving business innovation

Not only is the technical committee at the group level working, but also the Jingdong retail group has a technical committee. Similar to the group technical committee, Jingdong retail technology committee will also promote retail R & D projects, thereby greatly enhancing the capacity of business delivery.

Yan Weipeng, vice president of Jingdong group and head of Jingdong retail technology and data center, told the twenty-first Century economic report reporter that at present, Jingdong retailing is carrying out the construction of technology stations, data stations and business stations, so that the whole retail system can share a set of services.

In fact, since the adjustment of Jingdong's retail organization structure at the end of 2018, retail related central Taiwan construction has started. After the development in 2019 and the first half of this year, the construction of China and Taiwan has taken shape, and many technology modules have been integrated.

"Now we have more than ten shared business domains, including trading domains, commodity domains, marketing domains, and member domains. Through the sorting out and construction of business, from the results, we can greatly enhance the energy efficiency of R & D." Yan Weipeng analysis said.

At the same time, Jingdong retail is also promoting the four modernizations of regularization, digitalization, intellectualization and ecology. On this basis, Jingdong retail put forward a solution to retail cloud, hoping to transform the R & D of retail from cost center to profit center and externally empower partners.

It should be noted that the construction of retail stations is not to respond to business needs in a small way, but to find common needs among different businesses and focus on frontier innovation. For example, the traditional Jingdong retailing focuses more on the C side sales. Nowadays, both To B business, LBS technology with full channel integration, offline stores and marketing of different sites need to be innovated.

"In the past, except To C goods and offline shops were" first-class citizens "who were technically supported, others were" two class citizens ". What we need to do next is to provide support instead of patching support for the common needs of the business. " Yan Weipeng pointed out.

With the support of China and Taiwan, the technological innovation of Jingdong retail has become easier. For example, Jingdong optimizes automated advertising through the AI algorithm, and develops a series of new products on the premise of improving advertising effectiveness and relevance.

"There are many complicated steps in traditional advertising. For this reason, we continue to empower and improve marketing through AI technology. At present, AI technology has already covered the whole process of Jingdong advertising. Through AI technology, we can provide one-stop advertising services including advertisers' creative advertising, intelligent advertising bids, and intelligent advertising orientation. Yan Weipeng said, "in addition to relying on advanced technology, we are constantly trying to introduce the most advanced marketing methodology in the Jingdong to the advertising system. For example, we recently launched TMA (Multi Touch Attribution multi touch attribution) and TMM (Touchpoint Mix). Modeling, contact mixture model, to evaluate the effect of different advertising contacts and allocate the budget accordingly, effectively solve the advertiser's marketing problems.

Behind the implementation of these functions is the AI algorithm, which is supported by the complex technology platform, but this is only the first step in the optimization of retail technology.

"We have a very heavy workload this year. First of all, we hope that the R & D efficiency tools, R & D management and synergy efficiency will be initially formed before the end of the year to push the high availability of the entire retail technology. Secondly, we hope to further push forward the construction of the three major retail platforms, and complete the construction of the business platform, and build the technology platform and data station to more than 50%. Yan Weipeng pointed out.

In addition, there is the construction of Jingdong retail cloud, which is based on the unified base of T-PaaS built by Jingdong Zhi Lian cloud. It will become a component of Jingdong external output cloud service in the future. "This year we plan to shape the whole retail cloud and form a benchmark customer, so as to prepare for next year's retail revenue."

 

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