Liu Qiangdong: The business model of charging click fees by bidding ranking must be changed

　　This is the first time I have met you in "Nandu Dialogue".

　　Here, senior executives from Nandu personally took action to communicate with elites in the fields of politics, economy, business, culture, etc.

　　There are storms and clouds here, and there is foresight here.

　　The business model that charges click fees based on bidding ranking must be changed

　　Nandu: In the e-commerce field, JD.com is unique in its business of authentic products. Especially in the stage of consumption upgrading, Chinese people will put forward increasingly higher demands on the product itself.

　　Liu Qiangdong: I think the core values ​​of JD and Nandu are the same. Nan is the most conscientious media, fair and objective, and has many in-depth and important articles, with credibility and brand first-class domestically. JD.com has also emphasized quality since the day it started its business. We believe that one day Chinese people will not focus on quality of life, product quality and service quality in order to buy bargains. I believe that you are in the media field and JD.com in the retail industry, and ultimately, we can win the trust of users.

　　Nandu: To this day, fake goods are still the malignant tumors of many e-commerce companies. But you insisted on selling authentic products more than ten years ago and have consistently done so. What exactly makes you so determined?

　　Liu Qiangdong: Many people’s personalities are related to family background and growth experience. My parents, our family, have been doing business for generations. My parents have said many very simple words that I remember in my heart. They have repeatedly said that if you have the opportunity to make a dollar in business in the future, you will work hard to make only 70 cents and let your partners make an extra 30 cents. In this way, the first thing a partner thinks of when he has business next time is you. More than half of the 70 cents you earn must be shared with your subordinates. This is why I fought for 10% of the options for employees for the last time when I went public on JD.com. The shares I gave to my employees were almost the same as the shares I owned on JD.com.

　　Only in this way, whether it is an external partner or an internal employee who is always willing to do business with you, you can keep making money. This is actually a kind of belief. With such faith, you won't make that kind of dirty money.

　　Nandu: It is very difficult to eliminate counterfeit goods. How can JD.com ensure authenticity in internal management and other aspects?

　　Liu Qiangdong: The first thing is not about what specific measures you have, but about what you want to make a profit as an entrepreneur. At present, it can be said that 90% of fakes are concentrated online. The core reason is that fake sellers have high profits. With such a high profit, he can buy traffic and advertisements, and his store is ranked first. The stores that sell authentic products cannot be ranked first, which forces him to sell fake products to make profits. Authentic licensed goods do not have such high profits to support high traffic fees.

　　Nandu: Bad money drives out good money.

　　Liu Qiangdong: A typical bad currency is chasing good currency. Therefore, I think the business model of charging click fees based on bidding rankings is itself a fatal weakness. To solve this problem, you must change the business model, such as using deductions as the main source of income rather than advertising fees as the source of income. In other words, merchant rankings are no longer ranked by who gives more money, but are truly based on user experience. For every purchase sold by merchants, the platform charges a point fee like an offline shopping center. But now, 70% or 80% of the revenue of many e-commerce platforms comes from click-to-rank advertising. JD.com’s business model relies more on user experience and consumers’ evaluation of you.

　　Second, take a lot of measures to eliminate counterfeit goods. For example, when we require sellers (whether self-operated lenders or merchants) to sign counterfeit punishment clauses when cooperating with JD.com: for every counterfeit goods sold by merchants, JD.com has the right to fine you 1 million yuan. Two or three years ago, we checked a Hebei merchant to sell counterfeit goods. In the end, the warehouse of the company was sealed off and then we encountered a claim. Today it is also blacklisted by the industry and commerce and cannot open a new company in 10 years. Through this case, we keep promoting among sellers, and those who sell counterfeit goods dare not come. Of course, we also implement extremely strict systems for internal employees' violations. (Source of this article: Southern Metropolis Daily)

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