Photo/Han Yang (NBD)

On CCTV’s Spring Festival Gala, JD.com will send greetings, cars, and houses to the people of the whole country; as the year-end approaches, Richard Liu also did not forget to send warmth to his “brothers”.

On February 5, JD.com Group announced that since February 1, 2024, more than 20,000 frontline customer service employees of JD.com have achieved an average annual salary increase of more than 30%. The news went viral on the internet that day.

According to the data, JD.com’s customer service was established in 2009, and JD.com’s centralized customer service center is located in Richard Liu’s hometown of Suqian. At that time, JD.com moved all 80 customer service employees scattered across the country to Suqian. As JD.com’s business scale continued to expand, its self-operated customer service team also grew rapidly.

NBD visited JD.com’s customer service center in Suqian before and learned that JD.com’s customer service center phase one, phase two, and phase three that was just put into use last year-JD.com Smart City can accommodate tens of thousands of people, and more than 60% of the customer service staff are from Suqian, and they are mainly young people.

From the launch of the 10 billion subsidy channel at the beginning of last year to the explosion of JD.com’s sales live broadcast at the end of the year, the past year for JD.com was undoubtedly a year of implementing a low-price strategy and executing it with great intensity. In a sense, the low-price strategy and the quality e-commerce that JD.com has focused on in the past few years are somewhat contradictory.

And in order not to be hindered by the low-price strategy, and then lower the previous consumers’ cognition and expectations of JD.com’s “quality e-commerce”, every link of sales, delivery, and customer service, the service and ability cannot fall behind, the most direct choice, of course, is to stimulate the employees by raising their salaries. Behind Richard Liu’s continuous “big moves”, he will maximize the “intensity” of the e-commerce 2024 New Year competition.

Richard Liu Increases Payments to Boost Morale

After raising the salaries of sales and procurement staff, Richard Liu boosts the morale of frontline workers by increasing the pay of customer service staff JD.com, an e-commerce company with self-operated business as its core, regards customer service as the most critical link in ensuring consumer experience. In the past period, JD.com’s customer service has also provided special hotline services for users with special needs, such as opening a dedicated line for elderly users, and requiring the customer service team for mother and baby products to obtain professional certificates for maternal and infant consultation.

For the 12th consecutive year, JD.com’s customer service team will not close during the Spring Festival, and more than 10,000 people will be on duty this year. As the year-end approaches, and JD.com is in a critical period of transformation, stabilizing the frontline employees and raising their salaries is naturally the best choice.

In fact, not long ago, JD.com officially announced that all employees of JD Retail will receive an average salary increase of no less than 20%, and the annual fixed salary of frontline business personnel such as sales and procurement will increase by nearly 100%.

In recent years, JD.com has announced salary increases several times. In July 2021, “JD.com announces a two-month salary increase for all employees” topped the Weibo hot search, causing a social media frenzy. And at the end of 2022, when Richard Liu returned to the front stage, he also made the first move on the salary structure.

NBD learned that the current number of JD.com employees has exceeded 590,000, including hundreds of thousands of grassroots employees such as couriers, customer service, and sales and procurement.

The third quarter report of 2023 showed that in the third quarter, JD.com’s total expenditure on human resources (including its own employees and external employees) reached 25.9 billion yuan, and the total expenditure on human resources in the first three quarters reached 76.3 billion yuan, which was 3.7 times the net profit in the first three quarters. The large number of employees and the huge human resources expenditure require that the salary adjustment decision must be cautious.

In November 2022, at the critical period when the Deppon Group was incorporated into the JD.com system, Richard Liu issued a letter to all employees, stating that from January 1, 2023, he would gradually pay the social insurance and housing fund for more than 100,000 Deppon employees. At that time, JD.com announced that it would allocate 10 billion yuan to set up a “Housing Guarantee Fund” for all grassroots employees of the group, including all Deppon employees. Richard Liu himself also donated 100 million yuan, and the group and various BGs and BUs (business groups and business units) also took out a certain proportion of cash to greatly expand the scale of the “Employee Children’s Relief Fund”. Correspondingly, the executives took a pay cut.

What Should E-Commerce Giants Focus on When Explosive Growth has Gone?

It is not hard to see from the changes in the consumer environment in the past year that online retail and e-commerce consumption are in a recovery period, and the previous scene of “explosive growth” is no longer there. Under the tide, whether it is JD.com, Alibaba, Douyin, Kuaishou, or Pinduoduo, they all have different feelings about this change.

For JD.com, which has an annual revenue of over one trillion yuan and has 590,000 employees in various links such as self-operated e-commerce and express delivery, the turning of the big ship requires not only finding the right direction, but also more than usual “full horsepower”.

It is worth mentioning that in the quarterly earnings conference call, when there was new business expenditure or increased human resources expenditure due to salary adjustment in the quarter, analysts would focus on the issue of cost pressure when asking questions.

Especially when JD.com’s “10 billion subsidy” went online last year, JD.com CEO Xu Ran also gave a corresponding explanation for the cost pressure. Xu Ran, who came from a CFO background, may have more attention to cost efficiency, and JD.com has made several adjustments between business input and output in the past year.

At the end of last year, Richard Liu rarely spoke on the intranet, “There are so many problems, of course, it is my poor management, I am very self-blaming, but no matter what, I will not lie down, and I hope that the brothers will not lie down.” He said, “Now the organization is large, bloated and inefficient, and it does take time to change.”

At the Hunan TV New Year’s Eve Gala, Richard Liu gave away his favorite off-road vehicle and said: Don’t forget the users when making decisions, this is the starting point for us to do any work. He also said, “This is my favorite off-road vehicle, I hope you can withstand the pressure, break through yourself, and let users feel the best experience on JD.com.”

E-commerce competition has entered a new stage, and the key period of transformation requires the support of frontline personnel, creativity and combat effectiveness, and while “returning to the passion of entrepreneurship”, what needs to be faced together is to capture the users on the platform, let them return, stay, and then truly “keep them”.

This is not an empty slogan. The consumption environment is changing, and consumers’ behavior habits and awareness are quite different from the past. The old routines are no longer applicable, and before the new methods are explored, grab what you can: the hearts of hundreds of thousands of frontline employees, let them serve the users better, and let the users choose their own platform, which is the best solution at the moment.