Liu Qiangdong is the founder and CEO of JD.com, China’s largest online direct sales company in terms of transaction volume. JD.com has a market share of 54.3 percent in 2014, according to iResearch, and was listed on NASDAQ on May 22, 2014.
In 1998, Liu set up Jing Dong Company in Beijing to sell electronic products. The company expanded to 12 chain stores in Beijing, Shanghai, and Shenyang by 2003, earning annual revenues of 60 million RMB. Liu started the online store JD.com in 2004 and rapidly closed all offline retail stores in 2005 upon seeing the rapid growth potential of the online business model. The decision placed Jing Dong in the middle of China’s consumption growth trend for the next 10 years. By 2007, sales revenue had reached 360 million RMB. By the end of 2014, in response to Liu’s customer-centered strategies, net revenue of JD.com reached 115 billion RMB.
In contrast to other dominant e-commerce brands in China that provide platforms for companies and consumers to sell directly to each other and leave the handling of goods to outside delivery companies, JD.com sources goods directly from suppliers and resells to shoppers. The practice allows JD to verify the authenticity of goods being sold and hence has increased consumer trust in China’s e-commerce industry.
Liu’s focus on reliability helped JD.com grow into China’s biggest Internet-based direct retailer. This is a powerful selling point for Chinese consumers who have endured repeated scandals over fake products. At the time Liu started his business, it was common for shops to overcharge customers and pass off counterfeit goods. Liu saw an opportunity to establish a new kind of business based on trust and honesty. His shop was the first in northwestern Beijing’s Zhongguancun high-tech neighborhood to use price tags to avoid haggling with buyers.
In 2007, when Liu began to build a national logistics system, no Chinese logistics firm could deliver to every part of the country except for China Post. People living in China’s rural areas had to travel many miles to the nearest town to buy appliances and other goods. The prices in these small towns were much higher than those in big cities. Liu insisted that JD build its own national logistics system to avoid losing or damaging items during delivery, and to provide good service to the “last mile.” By the end of 2014, JD had established 3,210 delivery and pickup stations in 1,862 counties, two-thirds the total number of counties in China. In 2014, Amazon switched from using third-party logistics firms to making “last mile” deliveries itself, emulating JD’s China model in the U.S. market.
At a time when China’s retail market was rife with dishonesty and fake goods, JD’s honest and open business practices built confidence in China’s online shoppers and consequently changed their behavior. Liu’s efforts thus contributed strongly to China’s current love of e-commerce. As a testament to Liu’s admirable business practices, he has received numerous national and international awards for his entrepreneurship, business influence, innovation, and leadership.