Summary

In 2023, JD.com's founder initiated significant changes. A major action was transforming managers purchasing department into platform operations role. A customized Business Simulation workshop was designed and delivered to empower over 400 JD.com senior managers to complete the role change. The consulting team applied the Business Model Canvas framework and customized it to reflect JD.com's new business strategy, helping the participants build business acumen and operations skills.

Over 400 procurement managers will move to e-commerce roles. 

With intense competition, China's e-commerce giant JD.com is reforming to low prices and a streamlined operations strategy. 

1. In 2021, Alibaba( orange ) dominated e-commerce with 53% of the market, and JD.com maintained a 20% share. 

2. However, the New competition, PDD ( Temu ), quickly took over 15%, and the following, TikTok, took 4%. 

3. By 2023, JD.com's revenue growth slowed to just 1.7%. In contrast, Pinduoduo experienced exponential growth, with a 93.9% revenue increase.

Reformation transfers many mid-level managers from procurement to platform operations roles.

Managers will plan procurement, merchandising, and marketing to boost G.M.V.

JD.com operates through self-operated and third-party seller platforms, where managers negotiate with vendors on payment terms and platform services to secure consumer product supply.

• Self-operated: purchases goods directly from brands and suppliers, handling everything from warehousing to last-mile delivery. 

• Third-party seller: sellers can list products on the platform, but JD.com maintains strict oversight on product quality and customer service.

• Based on brands, the platform segments suppliers into head, middle, and tail.

On the consumer side, managers make strategic decisions on advertising, pricing, and participation in platform promotions to attract and convert customers.

Customer Segmentation: The platform segments customers into three tiers—high, middle, and sinks—based on shopping habits and browsing duration. Manager decisions will attract different customer groups.

Product Attributes: JD.com classified products into four categories: Standardized Products, Commodities, Long-Tail, and Trending. Products' customer groups may change over time.

JD.com sets Gross Merchandise Volume (GMV) as the KPI for this role. 

Market insight, holistic business view, and financial awareness are critical for success.

Understand the connection between merchants, products, and consumers and stay updated on market trends;  managers strategically plan budgets for operations. 

1. Holistic business view:

By considering how different supply chains, marketing, and finance affect one another, managers can prioritize resources for balanced growth. 

2. Market insight:

Identify the unique characteristics of various product categories, customer demand, and merchants' preferences.

This insight allows managers to strategize around vendor negotiations and customer marketing efforts effectively.​

3. Financial awareness: 

Managers can anticipate potential financial risks by recognizing the decision's effect on costs, revenue, and profit to minimize losses.

Managers evaluate and adjust their strategies based on Financial metrics like profit or GMV.

Reform Forge a Product-Rich,  Cost-Effective Ecosystem at J.D.

JD.com aims for managers to leverage procurement expertise, platform knowledge, and e-commerce skills to attract vendors, establish a low-price strategy, and build a product-rich platform that drives traffic, protects market share, and supports sustained growth.

A Business Simulation  Workshop to explore and sharpen Managerial Business Approaches.

• Offer a risk-free environment for executives to practice, learn, and refine their strategic and operational capabilities, reducing potential losses in real-world operations.

• The program uses the globally recognized Business Model Canvas as its foundational framework, allowing flexible adjustments for various business types.

• The simulation interface and materials are customized to JD.com's system, incorporating the company logo, theme colors, and terminology to create a familiar experience for participants.

Simulation has product pricing, customer segmentation, and merchant negotiation to exercise a holistic view. 

• Mirroring fiscal quarters, the Simulation has four rounds with different customer demand trends. Managers will forecast inventory levels and strategically allocate budgets for Self-operated procurement and vendor onboarding to Assess their holistic operating skills.

• Understand industry growth stages across product categories, drawing on Jeffrey Moore's Crossing the Chasm and Gartner's Hype Cycle.

• Develop sensitivity to market trends, turning insights into strategy, supported by Gartner's Hype Cycle.

Planning marketing strategy for four product categories, Simulation evaluates managers in insight development.

• Through marketing strategy planning, managers understand the critical factors affecting product position, vendor preferences, and consumer demand. 

• By deepening their understanding of user needs across levels and merchant expectations on the platform, managers develop an all-encompassing approach to driving platform growth and ensuring a high-value product mix.

The Simulation develops financial acumen by incorporating profitability, cash flow, and GMV as crucial assessment points.

• Through simulations and case-based reviews, participants explore the composition of critical financial statements—the balance sheet, income statement, and cash flow statement—and their impact on business decisions.

• Introduces analysis of financial indicators and employs models like the DuPont framework to measure returns and drive practical, financially sound strategies.

By gaining operational logic clarity, managers reduce mistakes and drive results in future tasks.

• Knowing e-commerce variables, connections, and diverse analytical methods, managers gain purpose-driven insights into operations.

• Simulations identify strengths and areas for improvement in manager decision-making, enabling them to reduce errors and achieve better results in future tasks.