Earlier this week, Richard Liu, founder of JD.com, organised a small reflection section with the media at the company’s headquarters. It is probably the most down-to-earth PR event that Liu ever did (his other sessions – such as delivering food himself – are usually full of passion).
We have published a transcript of his reflection earlier, where he talked about JD’s entry in food delivery, the company’s international plans, and JD”s “regrettable” past 5 years. Here are his original words:
“But the past five years have been regrettable; JD has declined with no innovation, growth, or progress. Crudely put, these have been the least distinctive, least valuable five years in my entrepreneurial journey.”
We also mentioned that Liu’s reflection met ‘a lot of scepticism’. Some people interpret this as a total dismissal of Xu Lei, who succeeded Richard Liu as JD CEO in 2019 but ‘retired’ in 2023.
Some are also pointing out the similarity between this episode and what happened at Alibaba – where Daniel Zhang, successor of Founder Jack Ma, also ‘retired’ after a few years at the reign.
To understand the leadership issues at major Chinese tech companies, we have discussed the topic extensively in the book “Seeing the unseen: behind Chinese tech giants’ global venturing”.
Here are some of the notable comments we saw about Liu’s reflections this week.
From Kate Kui, former VP of JD.com:
“I took a look at JD.com’s small-scale sharing session from last night, and there’s only one feeling: right now, none of our domestic online platforms in travel, food delivery, ecommerce, or on-demand services really have things figured out — everyone seems to be waiting for JD.com to come to the rescue and save the users from the mess. Honestly, it feels like all the years of work by (Meituan founder) Wang Xing, (Ctrip founder) James Liang, (PDD founder) Colin Huang, and (58.com founder) Yao Jinbo might have been in vain…
Let me count — the only ones who haven’t been criticized or challenged yet are (ByteDane founder) Zhang Yiming, (NetEase founder) Ding Lei, and (Didid founder) Cheng Wei, but I guess their turn is coming soon too…”
From Hou Yi, Founder of Alibaba’s Freshippo chain and former JD executive:
“I carefully read what Liu said. His supply chain theory was indeed an innovative and leading strategy in the Internet era. However, in the mobile Internet era, the supply chain efficiency of a self-operated retail + platform marketplace model can’t outperform the efficiency and service capability of Meituan’s instant retail model combined with hundreds of thousands of stores spread all over the country.
When Hema (Freshippo) was founded in 2015, the belief was we could not beat ecommerce on standardized factory goods, so we entered the fresh produce segment instead, since ecommerce couldn’t handle it well.
But looking at Meituan’s current business model, it can leverage a vast army of small shops — like countless ants — to negotiate resources and advertising with brands, achieving lower prices than ecommerce.
This is because the offline market share for FMCG is still much larger than ecommerce’s, and the local service experience is much better. Therefore, it’s only a matter of time before Meituan’s instant retail surpasses Tmall and JD.com in the FMCG category.”
From a former JD executive “who is familiar with the current company politics”:
“At present, Richard Liu’s restrained self-reflection is the best possible narrative both internally and externally — it’s the optimal approach.
As JD.com’s founder and the soul of the organization, Liu cannot issue a full self-criticism, nor can he negate JD.com itself. The banner of JD’s self-operated model must not fall. Everyone must stay united, look forward, and rally together for development.
There has to be a narrative of a “lost five years” — only by acknowledging a detour in the company’s history can there be a dramatic turnaround and a triumphant return. To correct past mistakes, one must overcompensate; without overcompensation, the correction would not be thorough enough.”
From an ecommerce market veteran:
“What has trapped JD was never the lack of ambition or dedication from its people. Sure, once a company grows large, it inevitably faces the ailments of a big organization, but to be fair, JD’s past teams — including its top executives — have all given their utmost. What has truly constrained JD and led to its current situation is actually the very thing that once made it great: the self-operated model.
Every approach has its strengths and weaknesses — no business model is flawless. JD’s self-operated model, with its genuine products and reliable home delivery, built a strong reputation and customer experience. It allowed JD to survive the cutthroat price wars of ecommerce, to stand out during the pandemic, to become a trusted choice for consumers, and to win market share.
But on the flip side, this same self-operated model also fenced JD in: the platform and third-party merchants often ended up competing against each other, consumers complained about high prices, and the model’s strengths came with inherent limitations.
This duality must be viewed objectively and dialectically. In 2014, JD secured the WeChat traffic entry point — yet by 2015, Pinduoduo suddenly emerged from nowhere. When the pandemic and antitrust measures reshuffled the ecommerce landscape starting in 2020, JD seemed well-positioned to benefit — but in the end, it was Douyin Ecommerce that rose to dominance. Why?
Beyond strategic, organizational, and managerial introspection, one must go back to the root cause: it all traces back to the model itself.”
From a few other former JD executives:
As a former JD employee, I fully agree — what made JD successful was its self-operated model, and what’s now holding it back is that very same model.
Over the past five years, the financials may have looked good, but there’s been no real breakthrough in value creation.
Personally, I think Xu Lei did a pretty good job because he focused on tackling the fundamentals of JD’s operations. Unfortunately, Liu believes it’s acceptable for operations to lose money, but the stock price must go up — so he replaced him with a CFO-type CEO, which is also linked to JD’s push for future diversification.
The decline of JD ecommerce is inevitable. Take the same product — on Pinduoduo there’s no free shipping threshold, plus you can team up with others for even lower prices. For example, look at JD’s top 10 incense brands: they’re expensive yet mediocre in quality, not even comparable to the Hong Kong brand Guotianxiang on Pinduoduo, which costs just a few dozen yuan but is far better.
Personally, I don’t think there’s anything wrong with Liu’s remarks — JD’s core ecommerce business is indeed losing momentum, but the main reason isn’t the self-operated model. In fact, it’s the self-operated model that has preserved JD’s ecommerce foundation, thanks to reliable delivery times and product quality.
The real problem lies in the platform side: apart from self-operated products, JD’s quality control for third-party merchants is poor. Many sellers treat JD as a price reference point — they set inflated online prices without caring about sales volume, then offer much lower offline prices to make themselves look cheaper to customers. This trick has become quite widespread.
If JD doesn’t stick to self-operation, it might as well exit ecommerce altogether: it can’t beat Pinduoduo on price, it can’t match Taobao in product variety, and it can’t compete with Douyin in traffic. So what would be left to compete on?
It has little to do with strategic positioning — the real gap is in organizational capability. JD has tried dark stores, community groupbuy, and offline convenience stores, but every time it gets beaten badly by Meituan, Pinduoduo, and even smaller players like Pupu Supermarket.
