BEIJING, December 29 (TMTPost)— JD.com announced a massive increase in wages for its core retail business despite gross margin weighed by ongoing low-pricing strategy.
Credit：Visual China
All the staff at JD Retails, a segment contributed abour 86% of overall revenue for the third quarter of this year, will get their pay with an average bump of no less than 20% from the start of 2024, according to a statement late Wednesday. It also said and all the frontliners including those responsible for procurement and sales of products across all categories will have an almost 100% increase in their fixed compensation for a year, effective on January 1, 2024.
JD Retail workers will get raise from salaries and their performance-based compensation will have an increase without cap, China Securities Journal learned from people close to the company on Friday. According to the state-run newspaper, starting from January 1, 2024, employees at all the online business of JD Retail will see their original performanc-based salary and floating year-end bonus added to the fixed compensation, and enjoy the year-end bonus four times of the monthly salary. In addition, head of the business units will receive additional incentives based on the year-over-year improvement of performance without cap, per the newspaper. Each business group is reported to release their own plans about such performance-based incentives in January.
The wage hike is one of the first major moves after JD’s iconic founder Liu Qiangdong urged the change at intranet to highlight his determination to address concerns over the company.
A JD employee who works for operations management posted an article on December 6 at the company’s private network, listing some of existing problems at JD including the complexity of promotion mechanism, and proposed to plan the pace and intensity of the online platform’s any major promotion in advance, provide more support for merchants as parts of the platform’s ecology and to hold the low-price mindset and implement the strategy to the end.
“So many problems broke out, which certainly are all due to my poor management, and I blame myself very much. But whatever (the problems are), I will not embrace lying flat, and wish our colleagues will by no means not,” Liu Qiangdong recently commented on the above-mentioned post on December 9. The post gets to the point and the company has to make a change unless it will come to a dead end, Liu said. The founder called for staff to have more patience as it takes time for a organization that has grown into large, bloated and inefficient to change.”JD still has its foundation and I believe we can will definitely bounce out of the bottom,” said Liu.”Any person or company will go through several ups and downs before they become great.”
Liu Qiangdong’s response came days after Alibaba Group’s co-founder Jack Ma rarely spoke out at the intranet. “I believe All the Alibaba staff are witnessing and hearing, and I firmly believe Alibaba will change and make correction, ” Ma commented on one of commentaries of the post, which is prompted by PDD’s market capitalization gap between Alibaba that narrowed to just US$8 billion on November 28. “Every great company is born in a winter. As the artificial intelligence (AI) era for e-commerce is right at its beginning, it is an opportunity for everyone as well as a challenge,” Ma wrote.
JD and Alibaba has taken steps to reinforce their competitiveness following Liu and Ma’s urging to revamp. JD released on Wednesday an updated dispute management guideline to add the “refund only” policy, a day after Taobao, the online shopping platform under Alibaba, rolled out a host of new rules including implementation of the same policy. JD will adopt the policy under various cases, such as the buyer and the seller’s failure to tell which side is accountable, seriously poor quality of the goods delivered , delivery of wrong goods. The platform has the right to determine whether to apply for the "refund only" or "returning and refund" policy based on its multidimensional evaluation for merchants during after-sales services as well as transaction disputes. The updated guideline is just an extension of application for the “refund only” policy since it has already been applicable for JD’s self-operated business since 2014, insiders at the company said. They suggests the latest adjustment mainly affect third party merchants on JD platform.
The “refund only” policy, initiated by PDD, is designed to improve shopping experience and reinforce protection for consumers while it also increases cost and risks of merchants. Taobao and JD’s move is the latest response to competitive heat.
Recent financial results highlighted PDD sales growth outrun major domestic rivals in the quarter ended September 30. PDD posted revenue of RMB68.84 billion (US$9.43 billion) that quarter, exceeding by about 25% more than the average analysts’ estimate. The sales surged 94% from a year earlier, accelerating from the previous quarter’s 66% year-over-year (YoY) increase, and refreshed the record set in the second quarter, increasing around 32% sequentially. JD’s revenue increased 1.7% YoY, better than the analysts’ estimated RMB246.59 billion. But revenue still slowed down from the second quarter with a 7.6% YoY increase.
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